City can’t answer to what they are paying in Hydro

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After a week of consultation with the mayor’s office, the finance department, the CAOs office and a local city councilor, there was no specific response as to what the City of Sault Ste. Marie is paying in hydro and how it is being affected by growing Global Adjustment fees tacked on by the province.

A product of Ontario’s 2009 Green Energy Act, the Global Adjustment fee is a charge billed to all hydro customers in the province.

For major manufacturers and large businesses, the fee appears separately on electricity bills. But for residential customers and small businesses, the fee is hidden – appearing on your electricity bill as a part of the per kilowatt hour charge.

What the City of Sault Ste. Marie is paying currently is almost 8 cents per kilowatt hour in Global Adjustment fees. What that amounts to for the city, no one seems to know at city hall. We even had to get that number from city councilor Steve Butland.

When the CAOs office and the CFO were approached with the question, we were told to talk to the PUC.

Later on in the week the mayor’s office said that they should be looking at a around $1-Million in savings since the conversion to LED street lighting, but then recanted and said it would take 7-8 years to pay back for that conversion so the savings wouldn’t show until that time.

Even the 2017 budget allots for that $1-Million in savings, a savings on electricity for street lighting of over 35 per cent from last year.

But wait a minute.

The City of Oshawa is planning their 2017 budget and they are allotting for $3-Million alone in GA fees as the Oshawa Express reported.

The City of Mississauga is looking at a raise of $1.3-Million in their hydro rates.

But in Sault Ste. Marie, no one seems to know what we are paying for electricity and GA fees, or at least they are not saying.

When SaultOnline.com talked to the PUC, the story was a bit different. They stated the fact that 82 per cent of their bill goes to the province. They stated that they know the city is struggling and they are trying to keep costs down. They stated that they have no affect on what the province issues on the bill and they also said that with the Sault’s current economy it is going to be tough to deal with the increases and GA fees.

So the PUC can see a struggle but no one at city hall can.

They are budgeting for a $1-Million savings on electricity, at least for street lighting.

Steve Butland tried to put things into perspective by saying “I don’t have a specific cost as to what the city is paying in Global Adjustment fees, what we are more worried about is the $20-Million in taxes owed by Essar.”

As Global News Reports:

First, there’s the difference between what the IESO pays energy producers for the electricity they produce, known as the contracted rate, and the actual fair market value of this electricity, known as the Hourly Ontario Energy Price, or HOEP.

In 2015, the average HOEP was 2.36 cents per kilowatt hour, while the IESO paid wind producers as much as 13 cents per kilowatt hour. The remaining 11-cent difference was then passed on to the consumer in the form of the Global Adjustment fee.

Solar producers, many of which signed contracts with the government for as long as 20 or 30 years, were paid as much as 80 cents per kilowatt hour for the energy they produced, despite the fact that fair market value for this energy was the same 2.36 cents per kilowatt hour. Here, too, the 78-cent difference was passed on to consumers.

And while the argument can be made that the Global Adjustment fee simply reflects the true cost of producing reliable, green electricity in the province, this ignores the fact that, in 2015 alone, Ontario sold more than 22.6 billion kilowatt hours of electricity – enough to power 2.5 million homes – to places like New York and Michigan at the fair market price of 2.3 cents per kilowatt hour – generating a loss of more than $1.7 billion for Ontario hydro customers.

So while Ontario customers are required to pay for producing green electricity, utility providers in the United States are able to access this same energy source for a fraction of the cost.

In other words, Ontarians pay the Global Adjustment fee, delivery fees, administration fees and HST, while American utility providers pay for the electricity alone.

The Global Adjustment fee also includes what’s known as “curtailing,” when the IESO pays energy producers not to produce electricity out of fear too much production could cause stress on the system and result in a blackout.

But when asked not to generate power, electricity producers must still be paid because the Government of Ontario initially agreed to purchase everything the energy producer’s facilities were capable of putting out.

The Global Adjustment fee also includes certain government conservation programs.

For example, when you receive a tax credit for purchasing new high-efficiency appliances or LED light-bulbs, that’s included within the Global Adjustment fee. When a delivery man takes away an old refrigerator for free, or when they recycle your old computer parts, the cost of these services are all part of the Global Adjustment fee.

Over the past seven years, Ontario has signed numerous agreements with energy producers guaranteeing minimum levels of revenue regardless of how much energy they produce.

TransCanada, set to open their Napanee Generating Station later this year, signed an agreement with the Ontario Power Authority in 2012 that guaranteed the company would receive a minimum of $13.7 million per month once the plant comes online – even if they produce zero electricity.

“Essentially… TransCanada is being paid nearly $165 million a year to leave their power generating station running on idle,” said Parker Gallant, former vice president of TD Bank and an outspoken critic of the province’s green energy strategy.

With agreements similar to this in place across the province, Gallant thinks it’s no wonder hydro rates in Ontario continue to rise.

The easiest way to explain it, said Gallant, is that when energy consumption drops due to conservation, the Global Adjustment fee must be increased to make up the difference. So the less power Ontarians use, the higher their electricity costs must be in order to cover the minimum revenues energy producers are guaranteed.

 

1 COMMENT

  1. Thank you for the comprehensive, easy to understand explanations on the Hydro system in Ontario. Very well written for the general population to grasp. Kudos!

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