Whatever the government wants: The only explanation for Ontario electricity costs in Premier Ford’s 3rd term

 I hastily posted some nasty thoughts on X today after looking up an obscure “Final RPP Variance Settlement Amount”. It will take some work to explain what that is, and why it affirmed my worst thoughts of some people in current government and the formerly public service areas of the energy regulator (OEB), and perhaps the electricity system operator (IESO).

Here’s the OEB’s description of the RPP Variance Settlement amount (the amount):

This amount will reflect the consumer’s share of any accumulated variance between the actual price paid to generators and the forecast price paid by RPP consumers. If consumers have been paying more for electricity than was paid to generators, this amount will be a credit. If consumers have been paying less, it will be a charge. 

The best I can do to estimate and evaluate the amount posted on February 18, 2026 is to use figures for January. To use the OEB’s method: If the $128/MWh regulated price plan is more than the average of approximately $98/MWh class B commodity rate for the month, there is a credit.

There is not a credit: there is an increase of $343 million.

The timeframes don’t line up and it’s only one month: but applying my estimation method and the OEP’s reported amounts back to 2000, it is a month that is exceptional in a way my most cynical self anticipated. For the statistically inclined, the average difference between my method’s estimates and the OEB’s reported variance change was a little under $6 million prior to yesterday, but the standard deviation was about $75 million – which indicates the expected inability to line up timeframes but most months the moves are directionally the same, and larger deviations correct in the following months. This monthly the difference in my estimate is $545 million, breaking the  previous record of $211 million in what is a 4-sigma event; probability of which is 1 in 15,787.

But I expected something like this.

 

I’ve written a couple of pieces on Ontario’s rates lately: an analysis of 2025 rates for different consumer groups, a quick summary of January’s rates, and an earlier critique of the work leading to RPP rates being raised 28%.  January’s charges featured a big credit in the global adjustment – which resulted in it shifting savings to Class B consumers (which contain RPP). As the industrial conservation initiative was designed to save large customers money by shifting global adjustment charges away, I expected somebody to just pretend the opposite hadn’t happened. It remains to be seen how they’ll credit Class A consumers, but the RPP Settlement Amount is clearly how somebody has arbitrarily decided to claw-back the benefit our current structure gives Class B during periods of high prices. I see this as problematic for 3 reasons.

1. The OEB just makes stuff up – which is a sad state for Ontario’s energy regulator;

2. The high RPP rates are because the OEB feels the population deserve them,

3. They’ve announced a market will never to be allowed by function in pricing scarcity.

So why have a market?

Or a process for setting regulated price plan rates?

Or a regulator.

If this is all due to the OEB, and or the IESO, it would be a great justice to see their ranks culled by recognition of the pointlessness of their work – or whatever this is supposed to be.

As for the government, I’ve grown to distrust its integrity in accounting matters, largely through the full-frontal sleaziness in their handling of another obscure body, the Ontario Electricity Finance Corporation (OEFC). The OEFC was set up as the continuation of Ontario Hydro, meaning it was the body holding the “stranded debt” after the assets were picked off and split into, mostly, the generator (OPG), and the wires (Hydro One). It’s not uncommon to hear this called the nuclear debt, based on the strong mythology that nuclear bankrupted Ontario Hydro. I would continue to challenge both those things, except after the stranded debt was retired in 2022, it was brought back by Ontario’s Finance Minister Peter Bethlenfalvy for 2023/24. For decades the province had held a note resulting in the OEFC paying them 5.85% a year, while the sector profits that were supposed to be used to pay down the debt were simply shown on the OEFC’s balance sheet, with no interest at all. This apparently seemed like a bad deal to the current Finance Minister, as it was decided since the money was never coming the asset at the OEFC never existed: which means electricity sector profits were little used in reducing sector debt.

Now the old so-called nuclear debt lives on; born again as the Ford government’s first nuclear debt. With financial fuckery accompanying big plans for the current government’s legacy projects, it might just be the first of many.

 

Note 14 of OEFC 2024 Annual Report