Hydro customers paying for scuba gear, car washes: AG report
Ontario Auditor General Bonnie Lysyk talks about her report on the costs of cancelling the Oakville gas plant project at the legislature at Queen's Park in Toronto, Tuesday, Oct. 8, 2013. (Frank Gunn/THE CANADIAN PRESS)
Allison Jones, The Canadian Press
Published Wednesday, December 6, 2017 12:03PM EST
TORONTO -- Ontario electricity ratepayers are paying millions for power generators' ineligible expenses -- including scuba gear and raccoon traps -- and are footing the bill for large industrial companies' savings, the province's auditor general reported Wednesday.
Auditor general Bonnie Lysyk said in her annual report that the Independent Electricity System Operator hasn't implemented repeated recommendations from the Ontario Energy Board, including one that could save ratepayers $30 million a year.
Lysyk also wrote that teachers and other school board employees are taking more sick days -- almost 12 days each per year up from nine days five years ago -- that more families are waiting for social housing than are actually living in social housing, and that Ontario is paying tens of millions to send cancer patients to the U.S. for stem cell treatments that don't exist in the province.
In the energy file, a frequent target of Lysyk's, her report looked at a program that pays power generators for fuel, maintenance and operating costs when the IESO puts them on standby to supply energy.
Nine generators claimed up to $260 million in ineligible costs between 2006 and 2015, Lysyk said, and about two-thirds of that has been paid back. One natural gas plant in Brampton, Ont., "gamed" the system for about $100 million, the OEB has reported.
Generators claimed thousands of dollars a year for staff car washes, carpet cleaning, road repairs, landscaping, scuba gear and raccoon traps, "which have nothing to do with running power equipment on standby," Lysyk wrote. One generator claimed about $175,000 for coveralls and parkas over two years, she said.
The program was originally started in 2003, when Ontario's grid had supply issues, though now the province has surplus power.
The OEB found in 2014 that the standby program was relied on less than one per cent of the time to meet domestic demand, and has recommended repeatedly that it be scaled back to stop reimbursing generators for certain operating and maintenance costs. Doing so would save ratepayers $30 million a year, the OEB says.
The IESO is working on a redesign of the electricity market, but Lysyk noted that some members of a working group advising the system operator on that work for companies that have claimed ineligible costs. One member resigned his post on Friday.
Lysyk also found that as electricity charges for large industrial ratepayers decrease under a program that gives them savings when they reduce consumption during peak demand, that results in higher costs for residential and small business ratepayers.
The Industrial Conservation Initiative reduced charges for the large ratepayers by $245 million in the first 10 months of its operation in 2011, and that same amount was directly added to residential and small business electricity bills, Lysyk wrote.
Since then, electricity charges for residents and small businesses have nearly doubled, while they have decreased for large industrial ratepayers, the auditor found.
Those charges come in the form of the global adjustment, a charge consumers pay for above-market rates guaranteed to power producers in long-term contracts. In 2016, the global adjustment accounted for 85 per cent of residential consumers' electricity charges, Lysyk said.
The energy ministry says lowered peak demand ultimately reduces system costs.
Lysyk also announced through her report that her office would be auditing the IESO's books. That comes amid one of two accounting disputes the auditor has been engaged in with the Liberal government.
She recently accused the government of purposely obscuring the true financial impact of its 25 per cent cut to hydro bills by keeping billions in debt used to finance that plan off the province's books. Lysyk said she will audit the IESO because of its role in the hydro plan's complex accounting scheme.
Lysyk has previously clashed with the government over how public pension plan surpluses are accounted for, suggesting that the government's method makes its bottom line look better and hides a deficit. The government disputes that and tapped an independent panel to look at the issue. It sided with the government.
The auditor has also frequently complained of the government's changes to advertising rules, which she says forces her office to rubber stamp government ads they feel are partisan.
In the 2016-17 fiscal year, the government spent a record $58 million on advertising -- 30 per cent of which Lysyk would not have approved under the old rules, she said.
Some of that advertising, such as promoting the 2017 budget and ads about the creation of daycare spaces, could be seen as political given their timing just ahead of the 2018 election, Lysyk said.
Here's some of the highlights:
- Nine coal and gas generators claimed as much as $260 million in ineligible expenses for items including thousands of dollars each year for raccoon traps, scuba gear, carpet cleaning and staff car washes.
- The Independent Electricity System Operator has not implemented some recommendations made by the Ontario Energy Board which could have saved ratepayers millions over the past 15 years.
- The report found long wait times for key biopsies to diagnose cancer, with only 46 per cent performed within the Ministry of Health's 14-day target.
- The government is spending millions to send cancer patients to the United States for stem cell transplants because of limited capacity to perform the procedure in Ontario. A stem cell transplant costs $660,000 to perform in the United States, compared to the $128,000 average cost in Ontario.
- A provincial target to provide radiation therapy in 48 per cent of cancer cases has not been met, with 39 per cent of patients actually receiving the treatment in 2015-2016.
- There are more households on wait lists for social housing than actual people living in social housing in Ontario. The report found there are 185,000 households on the provincial wait list and 167,000 households who on average receive social housing annually.
- Sick days are up by 29 per cent over a five-year-period at 50 of Ontario's public school boards --from nine days to 11.6 days per average employee -- causing financial and resource allocation pressures.
- The increased cost of sick leave paid as a percentage of school board payroll rose from 4.2 per cent in 2011-2012 to 5.3 per cent in 2015-2016. The change came after the last collective bargaining agreement stopped allowing teachers to bank their sick days.
- The province is not prepared for a large-scale emergency, the auditor found, and has not updated its emergency preparedness plan or provincial nuclear response plan since 2008 and 2009 respectively.
- Staffing and budget cuts at the province's Emergency Management Office have limited its ability to respond to a prolonged event, with the report estimating it could not adequately respond to a disaster longer than two-weeks with current staffing levels.
- Government advertising spending was $58 million in 2016-2017, a 10-year high, with what the auditor describes as 30 per cent of the ads appearing intended to help make the government look good.