SKY-HIGH HYDRO ONE BILLS ANGERING CONSUMERS ACROSS ONTARIO
Carol Paranuik once loved to bake. “I used to bake pies and tarts and cakes and cookies all the time,” she said. “I rarely bake now.” This grandmother’s problem is not her health, but rather her hydro bill. Forty years ago, she and her husband, Dave, built a modest brick bungalow on a winding road north of Madoc, Ont. — about 225 kilometres east of Toronto. At the time, the government offered them a $1,500 grant to wire their home for electric heat. “Fifteen hundred dollars was a lot of money back then,” recalls Carol, drinking coffee at her dining room table. She adds bitterly: “They’ve gotten their money back since.” And then some. On May 1, 2014, she received a Hydro One bill for $2,389.28.
“It’s ridiculous,” Carol said. She refused to pay, so Hydro One sent her a new bill: for $ 1,793.22. “How did they come up with that?” she asks. “It’s a wonder they haven’t sent the cops around to see if we are running a grow-op.”
The bills have subsided somewhat; still, her most recent bill totalled $ 523.25. ( Hydro One says it did not send the Paranuiks a bill for four months in 2014, which explains the May bill).
Ontario’s soaring electricity bills have become the biggest test to Premier Kathleen Wynne’s Liberal government. Amid furor over massive subsidies to wind and solar energy producers, the loudest outcry has come from the 1.1 million customers of the province’s biggest power distribution company, Hydro One Networks Inc.
Toronto, Ottawa, and dozens of smaller communities maintain their own poles and wires. The rest of Ontario has Hydro One. Created in 1999 by former Progressive Conservative premier Mike Harris, Hydro One has since purchased more than 100 small utilities across Ontario.
Efficiency should have produced savings, but the opposite is true: An analysis of 86 utilities Hydro One bought before 2005 shows that those customers’ distribution charges rose 99 per cent over the next 10 years. Distribution rates for utilities that remained in municipal hands rose at about the inflation rate, about 16 per cent.
“They are becoming more inefficient,” said Tim Curtis, president of municipally owned Niagara- on- the- Lake Hydro, who did the study, “because their rates are going up much more quickly than ours.”
Ontario this year sold 30 per cent of Hydro One on the stock market, and vows to sell another third, which will leave just 40 per cent of the utility in public hands. Customers and opposition parties are outraged and demand Ontario halt the sale.
“There is only one set of wires,” said Todd Smith, Progressive Conservative MPP for Prince Edward-Hastings. “This is a monopoly. We believe we have to keep electricity in public hands.”
Smith spoke those words on Sept. 28 at a “Hydro One public meeting” at a community centre in a converted cheese factory in Cor- byville, a suburb of Belleville. The standing- roomonly crowd of 120, many with canes and hearing aids, came clutching their hydro bills to tell Smith and Fiona Crean, Hydro One’s ombudsman, their horror stories of Hydro One, which they call a rapacious, arrogant and distant giant.
“The transformer at my place has blown up twice,” Colleen Trip, a retired civil servant, told the crowd. “We’ve had the fire department out. I called Hydro One and the woman said, ‘Well, if you don’t like Hydro, we can come and take the lines out.”
Kim Egan, chief financial officer for GH Manufacturing in Belleville, told Crean, “If Hydro One were competing for customers, they would be out of business.”
Crean looked as though she longed for her previous job, ombudsman for Toronto, when all she had to grapple with was Rob Ford.
Hydro One said the Ontario Energy Board allows the company to earn a “return on equity” rate of 9.19 per cent. On top of that, the company argues, it is pricey to maintain the network that takes power to remote areas.
“We have 1.6 million poles,” says Daffyd Roderick, a Hydro One spokesman. “It t akes a l ot of equipment to deliver power to all our rural customers.”
But this does not explain why Gordon and Dianne Marasco in the Town of Pelham, in the Niagara Peninsula, pay a lot more for electricity than some of their neighbours.
Pelham has two electricity distribution companies. Some residents get power f rom Niagara Peninsula Energy Inc., of which the town is an owner. The Marascos get electricity from Hydro One, and their bill is 20- per- cent higher than Niagara Peninsula bills.
Among the reasons: Five years ago, Hydro One reclassified some parts of Pelham to “medium density” from “high density,” which increased distribution charges. This seems odd, since the 2011 census showed Pelham’s population rose 2.7 per cent from 2006 — in other words, it is getting more dense, not less.
Hydro One appears to have taken a chunk of Thorold, a much more rural municipality, and grafted it to part of Pelham to create a “medium density” billing area. ( A 2011 consultant’s report for Hydro One noted that the utility’s “current demarcation rules allow for interpretation, in particular when determining the specific geographic boundaries between rate classes.”)
The change in density brought an average increase of $ 25 per monthly hydro bill, estimates Marasco, a retired electrical engineer. He estimates the changes cost Pelham’s 5,000 Hydro One customers $1.5 million a year.
“My sole goal is to put pressure on Hydro One to get these damn rates down to where the hell they should be,” said Marasco, eating Caesar salad at Mossimo’s, a local pizzeria. “These people are hiding behind the fact that they are inefficient.”
Roderick said Hydro One’s reclassification of customers was revenue neutral.
“It was a correction of a historical error,” he said. “The system is designed to be as fair as absolutely possible.” Hydro One adds, “Our records indicate that Mr. Marasco has always been classified in the medium density rate class.” His bills say otherwise. Hydro One later revised its reply, and noted that in 2011 “Hydro One renamed its rate classes. High density renamed to medium density.”
Customers of nearby municipally owned Niagara-onthe-Lake Hydro who use 800 kWh of electricity pay $ 145, compared with $185 for their Hydro One neighbours.
“Hydro One rates are going up five per cent a year,” said Niagara- on- the- Lake Hydro’s Curtis. “Yes, they should be higher ( because they have so many rural customers), but it doesn’t mean their rates should be increasing faster than ours. Serving Pelham should not be more expensive than serving Niagara-on-the-Lake.”
Despite the rate hikes, Hydro One can still find towns willing to let it take over. In August, Hydro One bought the electrical distribution business of Orillia, the setting for writer Stephen Leacock’s classic book, Sunshine Sketches of a Little Town. Mayor Steve Clarke said Hydro One’s commitment to build an Integrated Strategic Operations Centre won him over.
“We have some social issues and we could use a shot in the arm for our family income,” said Clarke, a local bar owner and father of four.
The town plans to sock away t he proceeds and spend just the interest. Hydro One has vowed to leave rates flat for five years.
Sarah Valiquette-Thompson is among three councillors who voted against the sale.
“The press about Hydro One has been terrible,” she notes. “It’s very scary.”
Roderick said Hydro One has empathy for customers.
“We see that they are having a hard time paying electricity bills,” he said. “Their total bills have risen over the past decade, like the cost of groceries.”
Back in Madoc Township, Hydro One concedes that it bills the Paranuiks for two to three times the power that a typical family of four consumes, but has no explanation. The Paranuiks are left struggling to reduce their bill. They use a clothesline, switched to a smaller hot water heater, and turn off nearly all lights at night. They no longer hang Christmas lights. They bought a new fridge. They heat with firewood.
“We sit with blankets on us to watch TV in winter because it is so cold,” Carol said.
It’s a crowning irony that her husband spent his career at Ontario Hydro. Retired, Dave now drives a school bus to pay his hydro bill.
Still, once in awhile the urge is too great, and Carol returns to her oven. “Sometimes if it’s a rainy cold day and I have some ripe bananas, I’ll bake some banana bread to take the chill off the house.”