Tag Archives: Hydro One

Is the selling of Guelph Hydro already a cooked deal?

By Gerry Barker

August 4, 2017

For those of us who were around when former Mayor Karen Farbridge attempted to persuade us to merge Guelph Hydro with electric utilities in Hamilton and St. Catharines, even members of her council caucus voted no.

So, here we go again, with a public relations campaign amply financed from public funds, to persuade us to merge our electric distribution system with another as yet unknown utility. The city website features a list of pop-up information tables at six locations around the city starting August 3 to August 22.

The title of the web address is energizingtomorrow@guelph.ca.

The city is inviting the public to ask anything about the plan to “merge” Guelph Hydro with another utility.

Here is the administration’s reason for selling off our utility with an asset value of $228 million.

“Guelph Hydro is a high-performing utility company with a solid reputation. In light of changing provincial policies and global energy technology trends, City Council appointed a Strategies and Options Committee (SOC) to review options to help ensure customers to continue receiving excellent service and value from the City-owned electric utility company.”

It should come as no surprise that the leading contender to grab Guelph Hydro and control of its 55,000-customer base is, Hydro One.

Now, you will recall Hydro One, the operator of the entire hydro power system in Ontario, is owned by a private, publicly traded corporation. The former owner of one of the world’s largest power distribution systems is keeping a minority share. It was a $9 billion gain for the provincial government. Also it was a key maneouver leading up to a pre-election provincial balanced budget eliminating the deficit just in time for the June 7, 2018 general election.

Gee, that looks a lot like we’re being bought with our own money.

But there is more. Premier Kathleen Wynne has unveiled a plan to cut electricity costs for four years by as much as 25 per cent starting in 2018. Part of that 25 per cent is already affecting hydro customers with the government reducing the HST by eight per cent. So there is another decrease coming just in time for the provincial election.

With the Premier’s personal approval rating settling in deep freeze territory, below 20 per cent, the hydro gambit is essential for her government’s survival. The fact that the Progressive Conservatives are holding a 13 per cent edge over the Liberals, portends deep trouble over the next few months for the Grits.

So, here are some questions:

  •  If and when this sale is consummated, what’s in it for the shareholders, the people of Guelph and Rockwood, who are the owners and customers of Guelph Hydro?
  • If this happens, who will service the system when repairs are needed in the event of a major weather event or power outage?
  • What recourse have citizens got to reject the sale?
  •  If Guelph Hydro is sold, what will the city do with the proceeds?  *
  • Why does the city persist describing the disposition of Guelph Hydro as a “merger” and not a sale?

This is all about a sale of the city-owned utility. The argument that the sale is provincial policy is just not true. It has been discussed and municipalities have been told that the province wants greater efficiancy of power distribution. There has never been any debate about this or any specific directive from the province to merge with another utility.

The second argument speaks of advances in “global energy technology trends.” That’s partially true but why is Guelph Hydro being put up for sale? Why indeed, following the disasterous experiment by Guelph Municipal Holdings Inc., personally administered by the former mayor and her Chief Administrative Officer, Ann Pappert? Neither of whom is no longer employed by the city.

The record shows that the loss of GMHI was more than $160 million, according to the GMHI consilidated audit costing some $2.8 million, some of the loses have already been written off.

Still glowing in the dark are the two unsecured debentures with outstanding balances of $103 million taken out by GMHI. The only clue of who provided those debenture funds came from the Chief Administrative Officer of GMHI, Pankaj Sardana, who said the debentures, came from a group of unnamed investors.

In my opinion, I believe those investors were soured through or part of Guelph Hydro.

Ask yourself, if you were owed $103 million by a city-owned corporation that is virtually bankrupt, wouldn’t the only way of recovering the capital would be to sell your organization (Guelph Hydro)? Or in this case, demand payment from the City of Guelph.

One of the most interesting items in the Guelph Hydro’s financial statement is a $94 million debt.

If Guelph Hydro is sold, then the purchaser will retire that debt and the proceeds return to the city as part of the settlement.

No purchaser in his or her right mind would want to take on a $94 million debt of a corporation with $228 million in assets. These figures are takeb from the 2016 Guelph Hydro financial report.

These are just some of the reasons why I will oppose any merger or sale of Guelph Hydro. The citizens have been excluded from the entire GMHI disaster and have paid a heavy price for an attempt to make Guelph a world-class renewable energy provider.

In my opinion, I believe that negotiations are currently underway to sell Guelph Hydro. The SOC schedule calls for the final consummation of the deal next spring before the provincial election.

Unfortunately, that deal is already baking in the oven.

Council will still have to agree on any proposal to sell Guelph Hydro. This means that as the date approaches citizens should express their opposition to members of council.

This is no frivolous attempt but a well-financed proposal, using your money, to sell Guelph Hydro.

Is this the price we pay for five years of total incompetence?

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The Ontario Liberals have rigged your power charges and there is more to come

By Gerry Barker

Posted Decenber 5, 2015

Ontario’s Auditor General, Bonnie Lysyk, reports that  Ontario users of power were overcharged by more than $37 billion in eight years. This is a stunning analysis of a utility that has been mismanaged by the Liberal government under Dalton McGuinty and Kathleen Wynne who were in charge.

Frankly, we believe Ms. Lysyk before Wynne or McGuinty. This is part of a huge series of mismanagement events by the present Liberal government headed by Kathleen Wynne.

My wife and I looked at our July/August Guelph Hydro bill that covers power costs and were astonished to see we paid a net $506.52 after the $56.28 “Clean Energy Benefit” rebate.

Now this doesn’t include the water portion of the hydro/water bill.

Home sweet home costing $1,500 a year for power.

We are just two adults living in a 2,800 square foot home and our hydro bill was 29.6 per cent higher in May and June compared to last year.

In all the years we have lived on this planet, we have never had a two-month increase in the use of power billed in this statement. Maybe we were power gluttons and we were using too much power at the wrong times. Nope. The highest usage was in the off-peak period in which we used 1,831.25 Kilowatts costing $146.50.

Now that’s the period from 7 p.m. to 7 a.m. In 12 hours we’re asleep for 8 of them. The power during that period draw is for the airconditioner, standby power for appliances and two fans for distribution of air in the home.

We have a natural gas water heater, gas fired furnace and fireplace, gas dryer and gas barbeque.

So where is the money going?

So, we checked with some friends about the differences they experienced between the July and August Guelph Hydro bills from the same period the two months before. The comparison is for the base power cost not including the HST. Here is a snapshot of our survey.

Barkers – two persons – Net increase: $119 = 29.6% increase

Home A – single person – Net increase: $92 = 28.7% increase

Home B – two persons – Net increase: $113 = 36.8% increase

Home C – single person – Net Increase $66 = 23%increase

Home D – two persons – Net increase: $82 = 29% increase

Home E – two persons – Net increase: $79 = 61.4% increase

Home F – two persons – Net increase: $111 = 27.7% increase

Home G – two persons – Net increase: $101 = 51.3 increase

The surging price growth of power in Ontario           

In this brief survey there is a similar pattern of substantial increases in the cost of power. In our case, there was a slight per KWh increase over the same billing period in 2014. The summer of 2014 was much warmer than the recent July/August period. Since that time we have monitored two billing cycles and our electricity cost has remained in the same range. These past four months, our electricity bills have remained steady at about $125 per person per month, or on average, 20 per cent higher than 2014.

Now the government has announced a $17 billion retrofit of the six Bruce nuclear reactors. Next comes another multi-million dollar retrofit of the Darlington reactors.

With the gradual sell-off to private investors of Hydro One, it has already been announced that new management is planning to consolidate the 74 small municipal power distribution systems. Read that buy them out. A leading candidate for consolidation, Guelph Hydro is controlled by a separate corporation called Guelph Municipal Holdings Inc (GMHI). Guelph Hydro is municipally owned, it means that the board of GMHI can accept an offer to sell the utility. But it must still be ratified by city council, the majority of which will support the sale.

What’s Guelph Hydro worth? Probably the utility has a book value of at least $150 million. That’s why the former chair of GMHI, mayor Karen Farbridge, manipulated control in order to sell it and use the money to fund her past and present agenda. That was before she was defeated at the polls.

This is causing province-wide distress

Before you have a heart attack over all this, let’s look at the back of the hydro bill where the explanation of charges is found.

The first is for electricity. It is the cost of power supplied to us and is subject to competition. Well, what does this mean to we power consumers? The province has made deals with a number of corporations to develop sustainable energy sources that range from windmill farms to hydroelectric generators to nuclear power to solar power arrays.

Many of these privately-owned generation operations have been awarded 20-year contracts guaranteeing a KW rate that exceeds what the Ontario Power Generating Corporation (OPGC) charges municipal untilities. That’s why we receive this “Clean Energy Benefit.” If the OPGC charged what they pay those mostly privater clean energy suppliers, our power bills would be through the roof.

How does the Wynne government expect to attract business and manufacturing to Ontario with these sky-hight electricity costs?

If you can’t use it, give it away

There’s another problem. Ontario is awash with power with all these private deals it has made. You cannot store power so the province sells its surplus power to U.S. jurisdictions at less than cost. But we are still paying for it.

So consumers are left holding the bag. Just think about the decision to charge the HST for electricity, an essential service that we, in this northern hemisphere, cannot exist without.

And now the province has started to sell off Hydro One, the vital backbone of power distribution throughout Ontario. It’s like taking pennies off a dead man’s eyes. The Wynne government is going sell 60 per cent of Hydro One to private investors because they are desperate for money. The net will be less than $6 billion and will be gone in a flash to be spent on more Liberal programs including funding the new Ontario Pension Plan.

It is possible that Guelph Hydro will be sold within the next 24 months. That has the potential to be a $150 million bonanza that was planned by the former mayor when she created the off-balance sheet, Guelph Municipal Holdings Corporation. This corporation now has more than 125 employees and lost $2.8 million last year. It did manage to send a dividend of $1.5 million to the city as a dividend. That money came from the Guelph Hydro treasury. To me, this is an illegal tax on electricty.

The use of electricity was never meant to be a cash cow for the government

Next, let’s look at the regulatory fees ($18), delivery (143.40), and debt reduction ($21.02). Using our bill, it adds up to $182,42 or 57.79% of the actual cost of the electricity, ($315.64).

The final charge is for the 13 per cent HST that taxes all the above-mentioned costs on your bill.

And what do we get in return? The 10% Ontario Clean Energy Benefit that doesn’t even cover the HST charge.

These billing period increases are the price we pay for a life sustaining basic necessity. In the same bill your water charges are included but there is no HST charged for that life sustaining necessity.

Now Hydro is moving to monthly billing and the water bill will be split off and billed separately.

The government’s management of these essential services has been appalling. No wonder Ontario has the highest electricity prices in North America.

Feel free to comment on this guelphspeaks article. Make your opinion known.

 

 

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The Wynning Way: The Premier can’t handle a two-out fly ball

By Gerry Barker

Posted October 1, 2015

Guelph, Ontario – There are two developments that have occurred under the Wynne watch at Queen’s Park. Both are self-inflicted by a premier who doesn’t seem to grasp that you cannot continue to spend tax dollars that you don’t have. For the seventh year in a row, the Ontario Liberals have held the reins of power and have spent more money than it had taken in from the taxpayers.

Today, Ontario is carrying a $10 billion plus deficit. That does not include the most recent example of spending $61 million on a Northeast Ontario telecommunications system called Ontara. Bell Aliant purchased the system for $6.3 million.

In its wisdom, the Liberals hired consultants, lawyers and “other advisors” to expedite the deal with Bell Aliant that cost taxpayers $6.5 million.

It’s the latest in a series of bungled fiscal management issues that have plagued Premier Kathleen Wynne, who succeeded Dalton McGuinty in the eight-year plundering of the Ontario treasury.

The gas plant demolitions are still around

Let’s start with the demolition of the two natural gas-fired power plants under construction in Mississauga and Oakville. They were decommissioned just before the provincial election because there were four Liberal members of the legislature that were facing defeat if the government completed the plants. The decision by the McGuinty government worked so well that the four were elected and gave the Liberals a majority in the Legislature.

It took two years to learn that ghastly project, part of McGuinty’s plan to reduce climate change, cost Ontario taxpayers just over $1 billion to tear down and clean up and settle aborted contracts.

It was nimby-ism gone wild.

Let’s turn to the latest scam perpetrated by an elected government — the semi-privatization of Hydro One. The premier is adamant that 60 per cent of the huge public corporation will be sold. The figures are assumed, as the offering of the private sector has not yet been made public.

Undaunted, the premier says the sale will gross $9 billion to the province. When $5 million is used to reduce Hydro One’s massive debt, the premier will be left with $4 billion to invest in infrastructure, but not reducing the provincial debt of $10 billion.

For many years now, consumers have been paying a portion of their electric bill for debt reduction of the former Ontario Hydro. Yet, with millions collected, the government has never been given the figures of how much that $34, billion amassed by the former Ontario Hydro has been reduced.

Nor has there been any annual report of the debt reduction plan or when the old debt will be paid off. Or are the public utilities collecting the debt repayment charges then submitting it to the government or the agency responsible?

It is one of the deepest secrets perpetuated on the public be a provincial govertment agency.

Why is the Wynne government imposing this sale?

The polls show that the majority of Ontarians oppose selling Hydro One. Yet the premier pushes on with the advice coming from Ed Clark, former CEO of the Toronto Dominion Canada Trust bank. He is the one who recommended offering beer in supermarkets. Instead, he opted not to end the foreign beer maker’s monopoly of price fixing and exclusively distributing beer in the province.

The Hydro One sale is another Clark-driven plan to free up badly needed capital for the Kathleen Wynne Liberals. The effect of this proposal will take years to establish whether it was a good idea at the time, or not.

Another disturbing part of this sale is the salary to be paid to Mayo Schmidt, the new chief of the privatized Hydro One. He is to receive up to $4,000,000 a year. That’s four times the salary of his predecessor, Carmine Marcello. But Marcello will be staying on in the new company earning $500,000 a year to facilitate the turn over to Schmidt and the new owners.

Despite these excessive salaries and benefits, the premier insists that the province will retain operational control of the new Hydro One. When you sell off 60 per cent of the utility, perhaps the premier should explain how the government retains control?

So, deny breakfasts for those students coming to school hungary

This is the same government that cannot manage its primary and secondary education systems. The only way, it seems, is to pay off the union teachers and support staff contract increases with money the government doesn’t have.

Earlier this year, Premier Kathleen Wynne told the parties involved that the government had no money to meet their demands.

Regardless, almost all of the teacher unions agreed to accept a 2.5 per cent increase plus increased benefits. The lame explanation from Minister of Education, Liz Sandals, was the money needed would be a “net zero” change in the education budget. She failed to say which programs would be dumped to accommodate the teacher’s increases.

Just two years ago the Wynne/Sandals duo paid $463 million to the various teacher unions to stop job actions that were creating distrust and anger among students and parents.

Despite the schools being open for three weeks this September, two remaining unions are working to rule because their contracts expired more than a year ago. This job action is denying students services and complicating life for thousands of families.

Kathleen Wynne needs to seek advisors who will get her out of the financial mess that she has created without the help of former banker Ed Clark. Business, and the business of politics, are two different worlds that do not cohabitate well.

The formula is simple, Premier, cut costs. Now in your second year of the four-year term it is the right time to tighten up costs and reduce capital spending.

Otherwise, the alternative is not attractive.

Retired newspaper executive, Gerry Barker is the editor of guelphspeaks.ca, a blog commenting on community, provincial and national affairs. He may be reached at: gerrybarker76@gmail.com

 

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