Bad books: How Ontario’s new hydro accounting could cost taxpayers billions

Posted: April 23, 2018 by oldbrew in Accountability, fraud, government, News, Subsidies

Hydro power lines in Ontario

Once again the high cost of so-called ‘green’ policies turns out to be politically embarrassing, and attempts to hide the true facts seem to have made things much worse.

As Ontarians head to the polls in June, voters have to make sense of two competing versions of their province’s bottom line: The Auditor-General’s and the Kathleen Wynne government’s, reports Toronto’s Globe and Mail.

Matthew McClearn investigates how creative accounting in hydro revenue made their math so different.

In March last year, Kim Marshall called and left a message for Bonnie Lysyk, Ontario’s Auditor-General. Ms. Marshall was the chief financial officer of the Independent Electricity System Operator (IESO), the agency that manages the province’s electrical system and acts as an intermediary between power generators and consumers. The IESO had just made a big change to its accounting practices, and Ms. Marshall said she wanted to give the Auditor-General a “heads up.”

Ms. Lysyk was already well aware of the change. She and her staff had found the IESO’s latest financial statements online. Poring over them in their downtown Toronto office, they found a terse footnote describing the new accounting policy.

“And my staff go, ‘What the heck is this?’ ” Ms. Lysyk told The Globe and Mail. “You’re not supposed to do this.”

Ms. Lysyk believed the IESO’s new practice – a method known as rate-regulated accounting – violated government accounting standards. What she didn’t know was that it represented a radical departure in how the government of Premier Kathleen Wynne – not just the IESO – planned to disclose its future borrowing activities to the public.

Continued here.

  1. oldbrew says:

    Report: Ontario had been racking up large deficits every year since the 2008-09 recession and already owed more than $300-billion – almost $22,000 for every person in the province. Bond rating agencies had downgraded its credit rating.
    . . .
    Rate-regulated accounting allows utilities to place such costs in special accounts to carry them forward into future years, provided their regulator gives them the right to recover those costs through future bills. Such rights can be recorded as assets – even though no electricity has been generated, used or billed for.

    The main criticism of the practice is that it can produce books bearing little resemblance to reality. [bold added]

    Of course hiding reality is the idea. Some other leaders in future can deal with the consequences :/

  2. Bitter@twisted says:

    The cover-up is always worse than the crime.

  3. Russ Wood says:

    It’s just as well the incompetents who are running South Africa’s ESKOM aren’t bright enough to do this kind of ‘fiddling’. It’s bad enough already that the power generator and distributor is almost bankrupt because of crooked dealings by its board, but a side-effect of those same dealings has left the generator without enough coal to see its major power stations through the winter!

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