In Ontario, the generation and pricing of electricity have become a never-ending story of confusion, secrecy, illogic and rising costs. The only thing that can be banked on with certainty is the rising cost. Earlier this month, the Liberal government released its latest long-term energy plan, an attempt to water down the cost-escalation brought on by the 2009 Green Energy Act – the gift that keeps on cooling the provincial economy and warming the opposition at Queen's Park. The government is now promising residential electricity rate increases of 9.6 per cent next year, 5.8 per cent in 2015 and 15 per cent in 2016. Ten years from now, the average family's bill will be 50 per cent more than today.
On Tuesday, the province's Auditor-General looked into one part of the electricity mess, and discovered what appears to be excessive compensation and nest-feathering at Ontario Power Generation, the provincially owned utility. Pensions are more generous than in the province's public service, and so is pay. Staffing levels are down 8.5 per cent since 2005, but the ranks of seniors managers are up 58 per cent. If OPG is overspending – and the auditor shows that it is – then those extra costs will be passed on to consumers. OPG generates roughly 60 per cent of the province's power, so it only stands to reason that, as the auditor puts it, "its operating costs have a significant impact on the cost of electricity."
The fact that the average director of accounting at OPG pulled down nearly $100,000 more than the equivalent bureaucrat elsewhere in the public service is a problem. But in the multi-billion-dollar fiasco that is Ontario electricity policy, it's not a very big problem. This isn't anywhere close to being the main reason why the province's electricity prices are now among the highest in North America, and going much higher.
According to OPG's most recent financial statements, it was paid an average of 5.7 cents per kilowatt hour for its power in the first nine months of 2013. But nearly half of Ontario's electricity comes from private sources, which are paid an average of 10 cents per kilowatt hour, according to OPG. That cost is climbing, as expensive wind and solar power is brought into the system, as demanded by Ontario's Green Energy Plan, and natural gas plants that must be built to account for the fickleness of the wind and sun are also brought online. As an unintended consequence, the province is now generating much more electricity than it needs, and selling the surplus at a loss to its neighbours. Two years ago, the Auditor-General noted that Ontario had lost $1.8-billion exporting power between 2005 and 2011. The losses appear to have grown since.
The Liberal government of Ontario is wearing this energy fiasco around its neck. It promises to get heavier each year. Residential power prices rising by 50 per cent over the next 10 years – as a best-case scenario? Launching an inquiry into generous pensions at OPG is fine as far as it goes, but it doesn't go far enough. And it misses the main source of Ontario's electricity troubles, not to mention the Liberal government's.