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Ontario auditor general blames lack of oversight for high hydro costs

The province's financial watchdog says the lack of a power plan and oversight is why Ontarians are paying billions more for electricity than they did a decade ago with rates slated to rise yet again.

Province paying for decisions that were not vetted by energy board, Bonnie Lysyk says

Bonnie Lysyk, Ontario's auditor general, says the law mandates a provincial technical electricity plan be vetted and made public. (Darren Calabrese/Canadian Press)

The province's financial watchdog says the lack of a power plan and oversight is why Ontarians are paying billions more for electricity than they did a decade ago with rates slated to rise yet again. 

Ontario Auditor General Bonnie Lysyk appeared on CBC Radio's Metro Morning with host Matt Galloway to discuss her latest report that acknowledges government decisions made without a second set of eyes led to higher costs paid for less reliable hydro. 

"Without a power plan, things can happen that can impact bills," Lysyk said.

"We believe that it's important that there be a technical electricity plan that's reviewed and vetted and is public and indicates what the plan is for electricity in Ontario with all the information around it disclosed right down to the financial impact for consumers," Lysyk said.

The watchdog adds there's a role for technical expertise, third parties and even the public to provide feedback on what the province is doing. 

Overall, some of the prices that were paid to renewable energy companies were quite a bit above market.- Bonnie Lysyk, Ontario auditor general

​Lysyk released her annual report Wednesday at Queen's Park, which revealed Ontarians have paid $37 billion above market price for power over the past eight years. 

"Really, it comes down to having a power plan, a technical power plan, reviewed and approved by the Ontario Energy Board (OEB). That was the law, those were the regulations and we didn't see that happening." Lysyk noted.

"The fact that that wasn't done — we were surprised."

On Wednesday, Energy Minister Bob Chiarelli called the auditor general's annual report "a helpful roadmap" moving forward. (CBC News)
"Our suggestion is it's a good idea to have a plan prepared," Lysyk said of the 20-year technical energy plan. 

"Our point is if there's legislation that requires something to be done, and the intent is for a second set of eyes on a power plant to ensure that there is cost-prudence for consumers, that we think that those types of processes should be followed." 

The auditor general notes the OEB would be able to vet for cost-effectiveness and provide feedback on the best way forward. 

"There are a lot of decisions over the years that cost ratepayers money that didn't have that fulsome discussions around them," Lysyk said.

$37B paid for generators

The auditor general appeared to point the finger at the Liberal government for the increase in hydro rates. 

"The minister took responsibility. Obviously, they have a complete right over policy issues, but we do see that they went and they did impact operational decisions of the electricity system."

The auditor general acknowledges some private energy companies have been the beneficiaries of costly, new projects.

"The $37 billion went to generators — a lot of it renewables and nuclear."

Lysyk did say the province made these high costs known in 2011 and did try to renegotiate with companies such as Samsung to reduce the prices

"We don't think they came down far enough," the auditor general said.

"Overall, some of the prices that were paid to renewable energy companies were quite a bit above market," Lysyk said. "We questioned why the cost of the contracts had to be so much higher than in a previous program."

On Wednesday, Energy Minister Bob Chiarelli said Lysyk's report was "a helpful roadmap as Hydro One moves forward," adding the electric company can be "a better-run, better-managed company."

By 2032, $133 billion is expected to be paid by Ontarians with the next step starting Jan. 1, 2016, when the clean energy benefit that slashes 10 per cent of hydro costs comes off the books.

It's expected to cost most households in the province an additional $137 in electricity payments next year. A rebate program will be available for low-income residents. 


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