Councillor Seeks InnPower Sale

UPDATE: One councillor, Richard Simpson, supported Mr. Daurio’s motion (below). Deputy Mayor Dollin suggested he was making the motion for ‘his friends’ at Alectra – an accusation Mr. Daurio attributes to the fact that he relied on financial figures provided by Alectra. Dollin also suggested that a $25 million charge was made to Barrie when joining Alectra – something Mr. Daurio describes as “an opportunity for Barrie to invest in the purchase of Brampton hydro and earn an additional $5m annually in interest and dividends forever!”. Daurio contends that “Alectra had promised a 14% rate reduction, and interest and dividends and other savings of $4m annually, while InnPower promised a rate increase and little/no dividends for  the next 6 years — a loss to Innisfil of $8m annually, and $48m over the next 6 years.” Under existing procedural rules, the subject will not be revisited at Council for a year.

This Wednesday, June 7, Councillor Stan Daurio is moving a motion at Innisfil Council “that the Board of InnPower be requested to explore options to sell or partner with Alectra and/or other utilities…”.

The saga of missteps at InnPower is already well known: an ill-fated attempt at joint ownership with Edmonton-owned Epcor Utilities Inc.; an overly ambitious investment in new facilities based on the assumption of leasing space to Epcor; an urgent need for alternative InnPower financing when the deal collapsed; a six year suspension of dividend payments to Innisfil; loans from the Town and Simcoe County plus an application for a rate increase to cover the cost of mandated expansion of service to newly designated urban areas.

In light of the current popular uproar over electricity rates, Councillor Daurio argues it would be more beneficial to sell our local utility to Alectra, which was formed from the merger of municipally-owned Enersource, Horizon Utilities and Powerstream plus the acquisition of Hydro One Brampton as of February of this year. Headquartered in Mississauga, Alectra’s service area encompasses 1,800 square kilometres and serves nearly a million customers in 15 communities from Alliston to St. Catharines and Hamilton to Vaughan. Alectra is now “the second largest municipally-owned electric utility by customer base in North America”.

Councillor Daurio puts the minimum value of InnPower at $40 million (2015 estimate) and expects a dividend return of 4.4 to 4.5% or $1.8 million annually. Additionally, the former Powerstream told Council in 2015 that a merger would lower electric bills in Innisfil by $23/month. This would be equivalent to savings of $4.4 million annually for 16,000 Innisfil households.  Continue reading

The Price of Power

Bruce Laurie caused a stir with his article, “No one can make electricity cheap again”. I tend to agree with him, if only for his observation that the Darlington nuclear plant was built:

“10 years late and almost $12 billion over budget. No one could afford to pay the real cost of Darlington, so Ontarians carried that debt for the next three decades.”

With billions more committed by the Ontario government to refurbishment of our nuclear plants, there is no likely escape from this scenario in the near future.

Some critics blame Mr. Laurie for his role in higher prices as a “former director of the Ontario Power Authority (OPA) and Ontario’s Independent Electricity Systems Operator (IESO). He served as a member of the Electricity Transition Committee under the Harris government.”

So how high is ‘high’ for electricity prices? Hydro Quebec and Financial Post published comparative figures for 1,000 kWh of electricity from suppliers across North America (U.S.  figures were converted to Canadian dollars). InnPower came in at $182.09, which is not that different from Toronto Hydro at $181.95. ‘Low density’ rural Ontario had an average bill of $229. In Ontario our power relies on nuclear (60%) and hydro (24%).

Looking further afield, Montreal was $100, Winnipeg was $117, Ottawa $224, Halifax $220 and Vancouver $148. If we look across the US border, 1000 kWh averaged $409 in New York, $383 in Boston, $161 in Miami, $156 in Houston, $118 in Indiana.

How can we account for these variations?  Continue reading

The Buckhorn Challenge

A grandmother from Buckhorn made national headlines by confronting the Prime Minister about her financial struggle with electric energy costs and objected to Ontario’s carbon pricing as an additional burden. She pointed to a $45 charge added to a bill for propane fuel.

She didn’t understand that electric energy policy and carbon pricing are both Ontario initiatives and that the federal government hasn’t yet imposed a national carbon price. But we have to sympathize with her plight. It puts a human face on a dilemma many of us are facing. Her candid revelation of household expenses offered an interesting insight into a common situation. The electric bill was reported to be $1,085, possibly for a month.

The woman “claimed her hydro bill has reached as high as $1,085. She did not state if that figure represented a monthly total or several months, but said she’s in “energy poverty”.” (Huffington Post, Jan. 13, 2017)

According to a comparative data published by the National Post, the cost of electricity from Peterborough Distribution Inc. is $164.78/1,000 kWh. (This a median-range cost compared to Innisfil, which is reported to be the fifth highest rate in the province at $182.09/1,000 kWh.) Based on this cost and stated billing, her household consumption of electricity may be more than 6 times higher than the normal average. This is a staggering anomaly but, if so, probably seasonal. It can likely be attributed to the use of electric baseboard heaters during winter months, which operate at 150 watts or more per foot. It wouldn’t be hard to run up a winter bill of $1,000 with 6 feet worth of baseboard heating in almost every room.

Doing nothing isn’t an option, so what strategy should this homeowner adopt?   Continue reading

Our Electric Future – Renewable

It should be pretty clear by now that every aspect of life will be increasingly electrically driven in the near future. We’re not just talking about automobiles (there are something like 52 different models of electric and hybrid vehicles offered now). We might be plugging in toilets like the Propelair system (www.propelair.com) now being sold in Britain that uses water and compressed air for a 1.5 L flush. Computers and 3D printing are making huge advances in manufacturing: “In the next five years we will see what was seemingly science fiction-type research quickly make its way into mainstream processes in almost every industry.” (The Great Disruption, R Smith, D Free, 2016) So it is equally important that our electric resources be as affordable as possible.

Various missteps have led us to the situation where the delivery of electricity is more expensive than the power itself. While public outrage has grown over the cost of electricity in Ontario, there are conflicting ideas about how to correct the situation. The Ontario government is reconsidering how it buys electricity by becoming “technology agnostic”, i.e. not favouring any particular technology. It also has doubts about time-of-use pricing. Ontario’s Energy Minister went on to say:

People should have the flexibility to sign up for electricity plans that better suit their needs just like they can shop around for different telephone and Internet service plans”.

Wait! What? The people who brought us the useless basic ‘skinny’ cable TV packages and the world’s most expensive mobile phone rates are the model for future electric supply? Mobile phone and internet packages are like a corn field maze – it may look like a lot of choice, but in the end there is only one way out! That’s because these plans are not consumer driven but profit driven. ‘Bundled’ services show the price of everything, but not the price of anything. More reason for us to worry about the ongoing sale of Hydro One into more private ownership.  Continue reading

The Innisfil Water Wheel

The wheels continue to spin on a viable plan to bring sewer service to Innisfil Heights industrial lands. The prolonged examination of a strategy centred around the creation of a Municipal Services Corporation has come to an abrupt end.

An early staff report to Council (DSR-53-15, March 18, 2015) discussed a study from KPMG, which included an option for a Municipal Services Corporation:

“… the KPMG study concluded that the best option for the municipality was to create a municipal services corporation (MSC) and place the assets for both water and wastewater into that structure which would enable the MSC to separate the assets and liabilities from the Town’s books. The future debt capacity would vest with the new corporation consistent with the manner in which we handle the financial requirements of INNPOWER …”

“On January 1, 2016, the Town transferred the water and wastewater assets, including two water pollution control plants, one surface water treatment plant, municipal wells and the associated collection and distribution systems to InnServices [Utilities Inc.].  InnServices is also tasked with building over $200 million in new infrastructure …” [Town of Innisfil website]  Continue reading

Your Rising Hydro Bill

InnPower invited the public to a recent presentation (March 9) on the topic, “How your hydro bill is calculated” but the evening was intended to also explain why electric bills will be going up over the next 5 years. The first part of the meeting explained the different segments of a residential hydro bill: generation; transmission; distribution; and regulation/taxation. They were careful to point out that InnPower only has control over the cost of (local) distribution while the price of generation and transmission are set separately and only passed through to the consumer.

The price of electricity distribution, the part InnPower controls, affects 26% of the total bill. It’s that part of the bill that will be the subject of an InnPower application for a rate increase (2017-2021) at the Ontario Energy Board. This is a detailed and costly process, which occurs on a regular 5 year cycle that puts the operations of the local utility under a microscope. The application is a lengthy technical document, which will be open to public examination and comment.

The need for increased revenue is being driven by the need to invest in new infrastructure within Innisfil as well as the annexed lands that are now part of Barrie but continue to be within InnPower’s service area. Staff highlighted some of the necessary planned major investments such as realignment of the 20th Sideroad at Innisfil Beach Rd., Friday Harbour resort, and Lefroy residential development. Another major factor is preparation of the annexed lands for development, where Barrie is planning a future addition of 40,000 residents – rivaling the projected population of 56,000 for Innisfil in 2030. InnPower has to finance these infrastructure investments from its existing customers before it can begin to recoup the money through electric distribution to new consumers.

InnPower’s rate application, to be filed in April, will outline its expected revenue requirements beginning 2017 and for the next 5 years. A decision on this application will affect the distribution rate appearing on electric bills over that period.