By Gerry Barker
October 16, 2017
Recent political events in the U.S. and our provincial and federal governments have markedly raised our collective anxiety. It affects our beloved existence that is under siege by incompetence, Anarchistic and self-serving power blocs exercised by political leaders around the world.
In Guelph, power is concentrated among a minority of progressives who have controlled our city for the past ten years. This week, a group announced they were supporting the return of former mayor Karen Farbridge. She was defeated in 2014 for being responsible for the wrongful dismissal of Urbacon Buildings Group, general contractor of the new city hall. They were kicked off the project in September 2008. That act alone cost taxpayers an additional $23 million over the original contract of $42 million.
We’ll discuss this matter later as we commence the examination of how our anxiety levels increase and appears to be mounting over our uncertain future and that of our children and their children.
Next June 7, Ontario will go to the polls to elect a new government.
In last Saturday’s edition of the Toronto Star, a team of writers produced a lengthy Q. and A. about successive Liberal government’s handling of power and energy. It states the requirement to produce it, since 2003 across the province. The question asked: “Is electricity more expensive in Ontario than in neighbouring provinces and the United States?”
According to a survey conducted in April 2016 by Quebec Hydro, we have compared prices of per kilowatt-hour usage for residential customers in 22 North American cities. Taxes were not included and all figures are in Canadian dollars.
Montreal – 7.23 cents
Winnipeg – 8.43
Edmonton – 10.37
Calgary – 10.4
Vancouver – 10.7
Houston – 11.25
Miami – 11.67
St John’s NL – 11.96
Moncton – 12.50
Portland OR – 13.94
Nashville TN – 14.28
Regina – 14.65
Chicago – 15.19
Halifax – 15.88
Charlottetown – 16.02
Ottawa – 16.15
Toronto – 17.81
Detroit – 20.24
Boston – 27.69
New York – 29.52
San Francisco – 31.05
Now let’s look at the details. Toronto, of all major Canadian cities has the highest per kilowatt-hour (KWH) rate for electric power. Living in Toronto costs 10.58 cents more for every KWH than what it costs in Montreal.
Ontario is the only province that uses nuclear-generated power. The reactors are located in Bruce, Darlington and Pickering and produce 61 per cent of 36,120 installed Megawatts generated by all sources in the province. This means that Ontario is generating more power than is needed, even at peak periods. The province’s power generating total is broken down with Hydro, or water generated power, 24 per cent of the total; 9 per cent is generated by natural gas plants; 6 per cent by wind turbines and less than 1 per cent solar panels.
If generating more power than we can use in the next ten years, what happens to the unused power? You cannot store power unless your home is equipped with racks of lithium batteries. Examining these data, do you agree that the management of Ontario energy, specifically electricity, is a costly, abject failure by the Liberal administrations?
So they give it away in low demand periods to utilities along the board in the U.S, or it has been reported that it is sold at below costs to other jurisdictions. Ontario’s daily power demand peaks at around 27,600 MW in mid-summer and in winter, which leaves almost another 10,000 MW to sell or give away.
Ontario is Number One when it comes to cost of power
It requires enormous management control over supply and demand. You can’t stop the fast-flowing Niagara River or shut down a nuclear plant or notify the operators of thousands of wind turbine scattered throughout the province to reduce supply. The result of this overbuilding of generation assets has thrust Ontario’s electricity costs to the highest in Canada.
In the past ten years there has been a drive to cut deals with private corporations to build wind-generating turbine farms and solar panel arrays to replace any fossil fuel fired generating plants.
This created a crisis in the cost of delivering so-called green power because the government signed rich contracts with private enterprises that were 20-year guaranteed prices of 20 cents per KWH. Their costs averaged less than eight cents. A lot of entrepreneurs got rich quickly as did many farmers who allowed the turbines on their land.
The sad fallout of this is the attempt by the previous administration in Guelph to copycat the Ontario Liberal programs to limit carbon emissions from coal-fired generating plants (now closed). The energy plans included promoting greater use of electric cars, recharging kiosks, encouraging use of power by retrofitting homes to reduce power. The crunch came when the nuclear plants supplying 61 per cent of all power consumed in the province required multi-billions in retrofitting the reactors.
The unforeseen consequences were the regulatory impediments that the nuclear-generating plants faced to make the necessary maintenance and operating changes. In the case of the Bruce reactor, now more than 30 years old, the retrofitting has taken more than seven years.
In Guelph, we know what was attempted to emulate the failed Liberal power strategy. The former mayor convinced a council whose knowledge of power generation consisted of flipping a light switch. The city-owned Guelph Municipal Holding Inc. (GMHI) headed by the mayor and selected councillors, controlled the objective of creating power self-sufficiency and offered thermal heating and cooling in selected areas downtown and at the Hanlon Business Park.
Failure started at the top
What we have learned in the past 17 months from reports by staff is that millions were lost, according to an audit of GMHI by the accounting firm KPMG. The former Mayor acted as chair of the GMHI Board of Directors.
It represented a double-edged abuse of power as all embedded checks and balances failed to stop the disastrous decisions being made by the GMHI Board that operated in closed-sessions. The public was only informed after the defeat of the former mayor in Oct 2014 as the new council opened investigations of the GMHI and Guelph Hydro combined operations.
What is the cost to taxpayers? GS estimated that taking the figures from the audited GMHI consolidated balance sheet, the shareholders equity of $63 million is actually worthless. Then, consider the $93 million loaned by a subsidiary of Guelph Hydro in two long-term debentures. We understand that any collateral or assets secured neither loan. GMHI certainly was in no position to pay the interest or guarantee the loans.
Those are the main costs contributing to the losses of GMHI. There is an item of unpaid interest on the debentures of an estimated $10 million. Regardless, right up until 2015, GMHI sent a $1.5 million “dividend” to the city’s general revenues.
Will someone please explain to me how you can pay dividends (more than $9 million in five years) and never make a profit in order to pay those dividends?
In 2016, there was a flurry of closed session activity by council to solve the debenture issue. The strategy that emerged was to transfer the debentures back to Guelph Hydro. The Hydro’s 2016 financial statement shows long-term debt of $94.3 million. Surprise!
So what’s Guelph Hydro’s long-term? The one debenture has a shelf life to 2030. The second debenture expires in 2045. To avoid a financial disaster, the two loans were transferred to the Guelph Hydro balance sheet. No foul, no penalty as the magic of accounting returns the debt back to the provider, Guelph Hydro.
But the question of the interest owed by GMHI to Guelph Hydro remains unanswered.
Poof! It’s gone, with the exception of the more than $10 million in interest never paid to the owner of the debentures (Guelph Hydro).
Because The City of Guelph owns GMHI, Guelph Hydro and its subsidiaries it’s a bookkeeping exercise like moving the deck chairs on the Titanic to get a better view of the iceberg.
The dust has barely settled and this happens
The author of all this Community Energy Initiatives is now considering running for the mayor’s position in the 2018 civic election.
Currently the Strategic Options Committee (SOC) is charged with negotiating the merger or sale of Guelph Hydro. This committee is composed of five individuals, none of whom are elected to council.
The way it works is that council provides the checks and balances of policy on behalf of the people who elected them. Unfortunately, in the past three years the majority of council defers that responsibility to the senior staff. This can be dangerous to the public interests, particularly if the staff makes recommendations that are questionable and thecouncil acquiesces.
This is part of the reason that in the past 11 years there has been little control of the people’s business and interests because bureaucrats are running the city. You will recall that of the four senior managers who received those large salary increases awarded by council, only one remains on staff, CAO Derrick Thomson.
Ironically, Mr. Thomson, on that December 10, 2015 night meeting, closed to the public, received the highest increase by percentage, 19 per cent.
Still open for explanation includes: Who planned the increases that totaled $98,202 paid to the four top managers? Which councillors voted in closed-session to approve those increases? Why, shortly after, did council, in closed session, approve bylaw 19995 to indemnify any employee or elected official if they are involved in a legal procedure initiated by a citizen or corporation? The bylaw states the city will reimburse the legal costs of any staffer or elected official in such an action.
Why was this bylaw needed? Were there other legal threats to the city that required this bylaw? I can only think of one and that ended abruptly when the city inadvertently leaked thousands of personal staff emails to the lawyer representing the claimant, Bruce Poole. The lawsuit was quickly settled in Mr. Poole’s favour.
Interesting times here in River City.