This summer we’ll see a break on hydro bill costs, but some residents particularly hard hit by high rates and delivery fees, aren’t buying it.
Daren Goodchild, a horse farmer from Markham, has felt the pinch.
The electricity bill for his small farm from October to December 2016 totalled $592, including $130 in delivery fees alone. With an electric well-pump for water and an oil-burning furnace in his 160-year-old home, the costs of running the farm are fast spiralling out of control and he feels there’s little hope of slowing it.
“We save doing laundry until weekends. We have LED lights. We try and do everything after 7 p.m. (during off-peak hours). We try our best to keep the electricity off because it is so damned expensive,” he said. “It’s gotten to the point where we have changed our behaviour as best we can but it doesn’t seem to make a lick of difference.”
Premier Kathleen Wynne announced March 2 that the government would reduce hydro rates by 25 per cent, which includes the eight per cent rebate on the Ontario portion of the HST. In order to do this, the plan effectively refinances the payments to private electricity providers who signed on for 20-year contracts. Those contracts guaranteed a certain level of electricity purchase – whether Ontario needed it or not.
Under the new plan, the province has increased the payment term from 20 to 30 years, which will incur $25 billion in interest charges over that time.
QUIZ: Where can you save energy in your house?
Goodchild said the Liberals are just kicking the can down the road.
“Instead of reducing rates, it is going to cost us more in the long run,” he said. “This is not going to help us whatsoever. They’re doing this for votes.”
The government’s new measures also include helping low-income residents and broadening the rural and remote rate protection program by subsidizing rural homeowners who have unusually high distribution rates. The savings could be between $12 and $75 depending on consumption and rate plan.
Those subsidies will cost the government’s treasury, and taxpayers, about $2.5 billion over the next three years.
MAP: THE RANGE OF DELIVERY FEES, NOV. 2016
It remains to be seen whether that relief will help Erin couple Sheryl and John Oldfield whose January bill was $1,406 for their home and hobby farm. The delivery charge was $463. John doesn’t believe Wynne’s plan is a genuine reduction and Sheryl feels the premier is “buying votes.”
“It’s a shell game,” said John, adding the province is deferring debt charges and he believes these fees will be charged to Ontarians through their income tax. The government needs to come clean on the real costs of producing hydro and then develop a plan to adjust rates, he said.
“(Wynne’s) stuck in a tough place, and she’s made very bad decisions,” he said.
The premier, in her announcement last week, did acknowledge the government’s mishandling of the electricity file, but said blame falls on parties of all stripes.
“For decades, bad choices have been made,” Wynne said. “Those governments who put off investing in the system – that was a mistake. Asking hydro users alone to pay for policies that ought to be paid for by all taxpayers… that was a mistake.”
Critics say lowering the cost of hydro artificially without addressing broader structural issues is another mistake.
“Nothing in the government’s new plan changes the underlying costs of the power system,” said Tom Adams, an independent energy and environmental advisor.
He challenged the notion that Wynne’s plan was like refinancing a mortgage.
“Not true. Her plan is like refinancing monthly rental costs. The monthly rent payments will go down, but after the next election the renter will be in much worse trouble.”
Adams says Ontario is actually enjoying something of a “power cost sweet spot” at the moment, with relatively affordable nuclear power. But that’s about to change, he said, with nuclear generating units in Darlington about to go down for a refurbishment at a cost of approximately $13 billion. The nuclear units in Pickering will need the same refurbishment in about six or seven years, Adams estimates. Bruce B units are also in line for an upgrade.
“A decline in nuclear production and a sharp increase in cost is about to happen,” Adams said.
Keith Brooks, programs director at Environmental Defence, is pleased the government’s plan includes conservation initiatives like the $200 million Affordability Fund, which helps people make their homes more energy efficient.
But he said the government’s reforms make no changes to the supply mix – the amount of power we get from nuclear versus gas versus wind.
“… To keep costs low, we need to see more renewables in Ontario’s future,” he wrote in an opinion piece for Metroland Media. “Wind and solar power costs are plummeting, while costs for nuclear power are rising. Renewable energy has created a solid foundation for a clean economy – one that Ontario now needs to build upon.”
HOW TO MAKE EFFECTIVE CHANGE?
Brooks said the Ontario government needs to follow a proper tender process when it comes to all energy matters. He said, for instance, that the province did not put out a tender for feed-in tariffs, which provides payments to consumers who generate renewable energy for use in the system.
“They just said ‘here’s what we’re going to pay,’” he noted. Ontario’s PC and NDP energy critics both contributed opinion pieces to Metroland Media on the matter and both agree stopping the sale of public electric companies is priority Number 1. The cost to consumers is being hijacked by the drive for profit.
“…Because of the way these new private power contracts are written, we are stuck paying guaranteed profit for power plants whether we need them or not,” wrote Peter Tabuns, NDP energy critic. “Right now, Ontario generates more power than we can use, about $2 billion a year worth of surplus power that we sell to Quebec and New York at a deep — 75 per cent — discount. In fact, many times we have to pay them to take our power.”
Transparency on the government’s current energy contracts is also lacking, said Todd Smith, PC energy critic.
“In my own riding of Prince Edward-Hastings, I’ve watched power companies ask for and get extensions from the government that drag the project out years beyond what was envisioned by the original deal,” he wrote. “That’s not something you do if you’re on the side of the people paying hydro bills. It’s something you do if you’re on the side of the people sending them.”
MORE: Cutting hydro bills by 25 per cent is a fair and lasting plan, says premier Wynne
MORE: Ontario needs to stop the Hydro One sale and reduce our surplus power: NDP
MORE: Fixing hydro costs in Ontario starts with uncovering the details of government deals: PC Party
Mark Rodger, a lawyer with Borden Ladner Gervais and an expert in the utility sector, meanwhile, said delivery charges are a necessary hit. Simply being hooked up to hydro costs money even when energy is not being used.
Those costs could be cut, however, should some of Ontario’s 60-plus utility companies merge. By having different companies running their own distribution systems, he said, it adds $1 billion in costs.
“Through consolidation, you can remove those costs through efficiency gains,” he said.
WHAT CAN HOMEOWNERS DO?
Unless and until those steps are taken, it will be up to homeowners to find ways to save, whether through switching to energy efficient light bulbs and appliances, shifting the bulk of their energy use to off-peak hours or investing in their home.
With heating and cooling accounting for a huge percentage of many homes’ energy costs, investing in a smart thermostat with timers and remotes could lead to big savings down the line. “The cheapest thing is just not to use energy when you’re not there,” said Sheena Sharp of Coolearth Architecture.
“Get an ecobee smart thermostat with all the little remotes for your nest – I made a capital investment of $500 and got a $100 rebate, and I’ve been saving ever since.”
Similarly, stuffing up unused chimney flues and sealing your house can take time but save money. Older homes in particular can lose heat through drafts, said Greg Labbé of the Blue Green Consulting Group, and caulking wooden windows, baseboards and trim can help solve the issue.
MORE: 10 ways to save energy and cut your hydro bills
“For a lot of Toronto (and other older) homes, as much as a quarter of their energy use is lost through (winter) cooling and (summer) heating due to simple air leakage,” Labbé said.
An alternative energy-buying option has arrived on the scene by way of Kitchener-based EnPowered, a bulk energy buying company that negotiates better prices from generators and passes savings on to consumers. The company primarily serves small businesses that consume most of their energy during peak hours but it’s looking at solutions for average homeowners.
“People who are at home all day, if it works out, we can help them, but it’s usually not a big savings,” said EnPowered founder Tomas van Stee.
– with files from John Edwards, Simon Martin and David Nickle