Why power pricing is off the grid

[Bugs]

We all peer into the future, wondering about our future prosperity ... of course, right now, the signs are ominous in the extreme. Probably none of has lived through what is to come. We are about to lose our favoured child status.

I am talking about inflation. Nobody talks about it, really. Ben Bernanke mounts the pulpit periodically to proclaim that, "Be of good faith ... for, when the time comes, your Fed, which is in Heaven, will make the problem vanish ... "

The journalists (mostly) feel their skin crawl when they have to report a story with numbers in it. Inflation ... is even worse.

History indicates that Inflation starts with the public sector, which is the main beneficiary. Then it moves to the banks, who are the next beneficiary. By the time it gets to most of us, the benefits are illusory. We experience rising prices. When the crash comes, everybody loses ... but some lose more than others.

So far, we have experienced very little in price increases, but it looks like they're coming.

I’ve been struggling to come up with two words to describe electricity pricing policies under Ontario Premier Dalton McGuinty.

I think I’ve found them: Insane and misleading.

Insane because no government in its right mind would do what McGuinty is doing in the middle of a deep recession, which is to send electricity prices skyrocketing.

How? By (a) hiking prices 8% on July 1 under his Harmonized Sales Tax ( pushing Ontario into a regional cap-and-trade market in carbon dioxide emissions with a handful of other provinces and U.S. states © yelling at Stephen Harper to get ahead of Barack Obama in creating a North American cap-and-trade market and (d) forcing us to subsidize expensive and (as yet) unreliable renewable energy under his new Green Energy Act.

All four of these initiatives amount to the same thing — putting new consumption taxes on electricity and sending prices through the roof in a province reeling from a multi-year, job-killing recession, which has gutted its manufacturing sector.

Worse, because electricity is used to create so many goods and services in an industrialized economy, these will in many ways be new taxes on everything.

That’s the insane part. The misleading part is the years of pledges by McGuinty and his energy ministers — the last of whom was George Smitherman, now running for Toronto mayor — that things like installing “smart meters” in millions of homes will save us money on our hydro bills.

No they won’t — at least not in the common sense way most people would interpret “saving” money to mean that, using smart meters, our bills will go down compared to what they were before we had them.

That’s not going to happen. All smart meters will do going forward is perhaps save us a (very) small amount of money (and the jury’s still out on that) on the far higher electricity prices we’re all going to be paying very soon.

http://www.torontosun.com/comment/columnists/lorrie_goldstein/2010/01/15/12485481.html

It looks like our first taste of the coming misery.

Comments?

Edited January 17, 2010 by Bugs

[Topaz]

Well, I don't know where you live, but, my hydro bill grows, even after my area has the turbines spinning! My actual use of Hydro is smaller than all the add-ons!!! When delivry charges are more that the actual usage, I say something smells!!!!

[Riverwind]

Well, I don't know where you live, but, my hydro bill grows, even after my area has the turbines spinning! My actual use of Hydro is smaller than all the add-ons!!! When delivry charges are more that the actual usage, I say something smells!!!!

Wind power and other renewables are the most expensive form of electricity available. Each time you see a wind turbine goes up your hydro bill will increase. The cost of the wind power is factored into the 'delivery charges' since these projects are funded by forcing the distributor to buy wind power at much higher than market rates.

If you are really worried about your electricity bill then you should be telling your MPPs to stop fooling around with expensive and ultimately useless power sources like wind. If GHGs are a concern we need more nuclear plants.

[Bugs]

Well, I don't know where you live, but, my hydro bill grows, even after my area has the turbines spinning! My actual use of Hydro is smaller than all the add-ons!!! When delivry charges are more that the actual usage, I say something smells!!!!

I know exactly what you mean. I live in Toronto, and a couple of years ago, my landlord approached me. He wanted to put my electricity on a separate meter. I was on the same meter with another vacant unit. Naturally, I was interested in seeing what the bill would be. He pulled it out ... with only my usage on there, it was about $90, but less that $20 was for actual current.

That's why this 'smart meter' crap will fail, imho. The consumer doesn't actually control that much of the cost of what they pay. The connection is larded up debt retirement costs, as well as wire charges. Unless you are a heavy user, the smart meter won't save you much money.

[Bugs]

Wind power and other renewables are the most expensive form of electricity available. Each time you see a wind turbine goes up your hydro bill will increase. The cost of the wind power is factored into the 'delivery charges' since these projects are funded by forcing the distributor to buy wind power at much higher than market rates.

If you are really worried about your electricity bill then you should be telling your MPPs to stop fooling around with expensive and ultimately useless power sources like wind. If GHGs are a concern we need more nuclear plants.

Ontario Hydro used to be a state-of-the-art power company. Over time, it became, in fact, an instrument of government planning of the economy, an inducement to industry, etc. What killed it was that it become over-involved with nuclear energy. Nuclear reactors that had originally been amortized over a 50 year lifespan had to be written off in 25 years due to design flaws. The reactors had be to be closed down, and expensive retrofits had to be done. Expensive. The politicians hid from responsibility. In fact, Ontario Hydro's credit had also been used to raise money for other big developments that were being undertaken in the 1980ies.

It was Harris' biggest failure, but no one else has solved it, or even told the public what the problem is. But, the situation is similar in other jurisdictions. Hydro Quebec issued its own bonds, to build huge dams and generate massive amounts of power. Perhaps they are a guarantee, but the cost appears on people's hydro bills to this day ... in one form or another.

It's because of government mismanagement. Not one party, not one province.

[Riverwind]

Nuclear reactors that had originally been amortized over a 50 year lifespan had to be written off in 25 years due to design flaws.

One of the problems with government sponsered technology is it is not possible to learn from failures. e.g. in the private sector companies can try a concept, fail and then some other company learn from that failure, try the same concept and succeed. Perhaps the best example of this is is the Newton computer which was a failure but was the ancestor for the PDA which was successfully marketed by Palm.

Governments can't do that because governments can't go under and sell off their assets to someone better able to use them.

Edited January 20, 2010 by Riverwind

[Wild Bill]

It was Harris' biggest failure, but no one else has solved it, or even told the public what the problem is. But, the situation is similar in other jurisdictions. Hydro Quebec issued its own bonds, to build huge dams and generate massive amounts of power. Perhaps they are a guarantee, but the cost appears on people's hydro bills to this day ... in one form or another.

It's because of government mismanagement. Not one party, not one province.

Harris' biggest failure? I'm confused! The nuclear energy debacle had been going strong since it began in the early 70's. At that time Harris would still have been a golf caddy, just getting out of high school.

What's Harris got to do with it? I might agree that he could have tried to fix it but what other premier has done anything either?

[madmax]

My actual use of Hydro is smaller than all the add-ons!!! When delivry charges are more that the actual usage, I say something smells!!!!

Your Hydro Bill is like mine. I too pay more in Delivery then in Consumption of Hydro.