Mayor McFadden Seeks Effective Strategy for Escalating Hydro Rates

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Rural municipal representatives are feeling the frustration as their residents, farms and businesses struggle with rising electricity rates with little evidence that the province is listening. Cavan Monaghan Mayor Scott McFadden brought this issue to Queen’s Park last week where he met with Ontario’s Auditor General, Bonnie Lysyk. With a long list of credentials after her name, Lysyk heads this independent office of the Legislative Assembly that conducts value-for-money and financial audits of the provincial government, its ministries, agencies and other organizations that receive provincial funding. Their objective is to ensure that taxpayers receive value for their tax dollars.

It is not news that Lysyk is critical of Hydro One, the Crown Corporation that handles nearly all the transmission of electricity in Ontario, as well as local distribution to 1.4 million customers. Her 2015 reports on the electricity sector centre provide scathing criticisms of the industry and of Hydro One in particular. She notes that during the period from 2010 to 2014, customers have experienced 24% more outages with durations 30% longer over this period. In their submissions requesting rate increases, the power distributor has requested replacing the same assets several times to justify their requests for the price increases, but then used the funds for other assets, leaving these failing ones yet to be addressed. Among large Canadian power distributors, Hydro One has consistently been ranked as the least reliable. One of the most common causes for their system outages is lines breaking due to falling trees and limbs. Hydro One operates on a 9.5 year vegetation management cycle, in contrast with the 3.8 year cycle which is the norm. Hydro One’s own analysis indicates that the extended cycle is more expensive, suggesting $84million could have been saved in 2014 alone had there been more frequent tree management. The $660 million investment in Smart meters is not yet used to proactively identify power outages to dispatch repair crews more quickly- most outages are reported by customers. Unfortunately the 2015 Value for Money report on Hydro One will be the last: as of December 4th, the office no longer has jurisdiction over the organization due to its privatization.

Lysyk has also commented on the Green Energy Act which was introduced by the Ministry of Energy in part to reduce greenhouse gases generated by traditional energy sources. Her reports indicate that greenhouse gasses have in fact risen since this time, partly because the original analysis did not include emissions generated by backup energy sources such as gas that are required to ensure consistent energy supply, and also because of increased energy that has been produced and then exported. She is also critical of the understated costs the Ministry used when seeking Act approval, as the original 1% annual rate increase attributed to this act was quickly readjusted to 7.9% once the act was passed.

After their discussions, McFadden came away with a series of steps to take to get the attention of the Ministry and to attempt to re-establish some degree of municipal jurisdiction over the development of energy projects in their own neighbourhoods. KG

 

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