Pensions driving up the cost of electricity? I don't think so

So, according to several people/reports, the cost of the pensions at the four provincial hydro agencies are responsible for driving up electricity rates. To the tune of $480 million in 2013 (that was the total pension contribution by those agencies). A lot of money to be sure. But to put that in perspective, we probably spent around $728 million buying wind power in 2013 (wind production was 5.2TWh in 2013, and the average price paid to wind producers is estimated to be around $140/MWh). You know, wind power which typically is produced when you least need it? At really, really high prices? That is then sold to Quebec and New York at prices much less than what it cost to produce?

So in a sense, wind power is a much bigger factor in rising hydro rates than those pesky pensions. Especially given that it rarely is being produced when it is needed, and is often displacing hydro power.

The Toronto Star published the following article today:

http://www.thestar.com/business/economy/2014/08/15/nuclear_funds_power_opg_profit_increase.html

That's an interesting article. You see that OPG's average price for the power it produces is less than HALF of what all the other private producers get (5.1 cents/KWh vs 10.7 cents/KWh). Yes, HALF. What that means folks, is that even after accounting for those "expensive" pensions, your provincially-owned generator is still HALF as expensive as all the other (private) sources of power in this province. 

Now, you could say that if OPG was less generous with its employees, and cut its pensions costs, it might receive 4.9 cents /KWh, rather than the 5.1 cents it got. So yes, it is true that those pension costs are causing the overall rates to be higher. But when other private producers get an average of 10.7 cents/KWh, you can see how the pension costs (and indeed, ALL costs at OPG) are a drop in the bucket in terms of overall hydro rates.

So what is the bottom line in all this? What you should take away from this is that while you may be envious (even outraged) that those employees at the hydro agencies get nice pensions, they really don't have that big of an impact on hydro rates. Heck, even when those pensions are factored in, provincially-generated power is still HALF the cost of privately-generated power.