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Letter to the Editor – Globe and Mail and Toronto Star: Re: $37 Billion Hydro Fees

December 3, 2015

Dear Sir/Madam,While Ontario Auditor General Bonnie Lysyk's report raises legitimate concerns over the breakdown of the electricity system planning process in Ontario, her report incorporates a number of serious misconceptions and oversights:

  • Her claim that Ontario's have paid $37 billion in excess costs for electricity is based on a fundamental misunderstanding of the meaning of the 'market' price in Ontario. The prices generated by Ontario's wholesale electricity market, on which the Auditor General's claim is based, are almost entirely driven by long-existing assets and bear no relationship to the actual costs of providing new supply over the past decade. No new supply would have been built at all on the basis of expectations of the market price for electricity. Suppliers had to be provided with the means of covering the capital costs of new supply. These costs are not reflected in the 'market' price.
  • Ms.Lysyk gives extensive attention to the impact of new renewable energy sources on electricity costs, but completely ignores the single largest driver of the Global Adjustment to electricity costs - the refurbishment province's aging fleet of nuclear power plants. The enormous economic and technical risks associated with proposed refurbishments of the Bruce and Darlington nuclear facilities are also completely overlooked.
  • While Ms.Lysyk's call for a more structured and rigourous process for reviewing the province's electricity plans is very welcome, her proposed approach is focused on minimizing simple economic costs. It ignores the larger sustainability questions around the future direction of the province's electricity system. These include the short and long-term environmental impacts and risks, including risks of catastrophic events, and the ability of the system, whose character carries with it very high risks of technological lock-in, to adapt to changing economic, environmental and technical circumstances.

While Ontario's electricity system planning process is in need of serious repair, Ms.Lysyk's report provides an incomplete picture of the problems and an inadequate approach to addressing them.

Yours sincerely,

Mark S. Winfield, Ph.D.
Associate Professor
Co-Chair, Sustainable Energy Initiative