Bob Huggard is president and CEO of the Ontario Energy Association.
For the third time in a row, Ontario’s Auditor-General has left the province’s electricity consumers in the dark. The Auditor-General’s recent 2015 annual report mischaracterizes the facts about a decade’s worth of upgrades to Ontario’s electricity system.
While the report’s implication that ratepayers overpaid for electricity by $37-billion makes for a great headline, the facts tell a much different story.
To talk about $37-billion in overpayments, assumes – incorrectly – that every dollar in that $37-billion was unnecessary and excessive waste. However, the fact is those monies were used to maintain and modernize the electricity system for the province, transforming it from one in severe decline to one we can rely on. Those investments moved Ontario from instability and dirty coal to a model of stability, supported by clean and diverse generation including hydro, natural gas, nuclear, wind, solar and biomass.
If there is a charge that can be laid at the feet of government it is that the electricity bill is an overly complex document, difficult for the average consumer to understand. Need proof? Just look at Auditor-General Bonnie Lysyk’s latest report.
As if working from the electricity bill itself, the report concludes that the “market price” of electricity is strictly the day-to-day cost of operating the system, and that anything spent above that “market price” to maintain or improve the system is wasted money.
To understand how misguided this thinking is, consider the average homeowner in Ontario. Using the Auditor-General’s logic, the cost of home ownership is what you pay on a day-to-day basis: insurance, property tax, maintenance, home heating and so on.
But the Auditor-General is forgetting that you had to buy the home in the first place. The Global Adjustment should be understood as the mortgage payments that you need to make on your house: You can’t figure out your true cost of home ownership without including your mortgage payments! Moreover, the Auditor-General is failing to account for the fact that the family may one day consciously and deliberately decide to take out a loan to pay for upgrades on an aging house – new energy-efficient appliances, triple-glazed windows, better insulation and a new roof that will help to save on fuel expenses and reduce impacts on the environment. According to the Auditor-General, the cost of these essential upgrades would be wasteful and “overpayments” above the market price.
While one could argue that the province’s process for upgrading the electricity system could have been done with a sharper pencil and at a lower cost, the fact remains that a large portion of the alleged “overpayment” has gone toward maintaining the reliability of the system and making valuable improvements.
When the cost of this maintenance and the value of these critical upgrades to our electricity system is ignored in favour of headline-grabbing numbers, Ontario energy customers lose out.
The Office of the Auditor-General is one of our important democratic institutions. Its report on the energy sector, however, demonstrates a need for performance improvement. Can we really expect the Auditor-General to move from sector to sector (several times each year), and instantly become an expert in all of that sector’s intricacies?
We need to consider whether we are providing this institution the tools it needs to do its job effectively. What access to industry experts do we afford the office? How much time and what resources do we provide people in the office to truly understand the sectors they examine? Is there an issue with how the affected government offices and the Auditor-General’s office exchange information?
And is it appropriate for the Auditor-General to criticize not just the numbers, but the political decisions of a democratically elected government?
Unfortunately, this report is a failed attempt to present Ontarians with valid critiques of the sector due to poor reporting. To suggest that Ontarians “overpaid” by $37-billion underscores how hard it is for some to read our province’s electricity bill and to then understand the complexity and costs of our provinces energy system.
Alternatively, the Auditor-General is weighing in on political decision-making, even though it claims to be an apolitical entity. This undermines the purpose of the office itself, and calls into question all the statements that it makes about any issue.
Ontarians deserve a true accounting of their electricity system’s extensive upgrades and the costs at which they were achieved. The Auditor-General can and must do better next time to present the complete picture, even if it doesn’t attract as much media attention.Report Typo/Error
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