Ontarians overpaying for electricity

Ontarians overpaying for electricity

People in Ontario are paying billions of dollars extra for electricity thanks to a flawed smart meter program and the above-market rates the province pays most power generators, Ontario's auditor general reported recently.

Energy Minister Bob Chiarelli disputed the auditor's conclusions, suggesting her numbers were inaccurate because she didn't understand the "complex" electricity system.

Ratepayers will pay $50 billion between 2006 and 2015 because of an extra charge on their electricity bills that covers the gap between guaranteed prices paid to contracted power generators and the market price, auditor general Bonnie Lysyk wrote in her annual report.

In her analysis of the smart meter program, Lysyk found the extra electricity charge, known as global adjustment, has increased by 1,200 per cent between 2006 and 2013 meanwhile, the average electricity market price has dropped by 46 per cent.

Most residential and small business ratepayers pay time-of-use pricing, enabled by a $2-billion smart-meter program that has so far spent double its projected cost and has not led to the government's electricity conservation goals being met, Lysyk wrote.

The global adjustment makes up about 70 per cent of the electricity charge on those customers' bills and as a result the difference between on-peak and off-peak pricing narrowed to the point where it is "undermining time-of-use pricing as an incentive for ratepayers to shift to off-peak," Lysyk wrote.

Peak electricity demand actually rose slightly between 2004 and 2010, the auditor general wrote.

The energy minister hit back hard, saying the global adjustment is "irrelevant" because it would be on people's bills with or without smart meters, and he said Lysyk got the numbers wrong.

"Why are my numbers more credible than hers?" Chiarelli said, in response to questions after the report's release. "First of all the electricity system is very complex. It's very difficult to understand."

He pegged the smart meter cost at closer to $1.4 billion, and said Lysyk's conclusions are premature.

"It remains likely that some significant charges will not be passed onto ratepayers after the Ontario Energy Board has an opportunity to review the appropriate regulatory submissions," Chiarelli said.

The government decided to mandate smart meters in Ontario before it did a cost-benefit analysis and when the analysis ultimately was done, it was flawed and its projected net benefit of $600 million was overstated by at least $512 million, Lysyk wrote.

"As a result, electricity ratepayers in Ontario are paying significantly more for this initiative in their monthly electricity bills than was originally intended," she wrote.

Source: The Canadian Press

SMART GRID Bulletin November 2017


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