The Ontario experience of just two hours recently illustrates why electricity rates keep climbing, says Parker Gallant
The early morning hours of June 12th demonstrated clearly why Ontario’s electricity rates keep climbing. The two hours commencing at 5 AM had IESO forecasting wind power generation of over 5,100 megawatt hours (MWh), but actual generation for the two hours was less than 600 MWh — IESO curtailed most of what they forecasted.
Ontario’s electricity ratepayers picked up the cost of the 4,800 MWh of curtailed generation, and also paid the cost for steaming off about 2,400 MW of nuclear power.
IESO doesn’t disclose how much hydro was spilled and paid for, but they did report we also exported almost 4,800 MW to Michigan, New York and Quebec in those two hours. And we paid them to take it! The hourly Ontario energy price was negative (-$4/81 & -$4.85) for those two hours.
Taken together, the curtailed wind generation, steamed off nuclear and the inability to collect the Global Adjustment for the exports added about $1.4 million in costs for just two hours.
On the demand side Ontario consumed less than 22,000 MWh for those two hours and the generators of those MWh will be paid about $2.6 million, raising the total costs to Ontario ratepayers to $4 million for the 22 million kWh. If you calculate the cost per kWh it works out to over 18 cents/kWh.
The 18 cents/kWh is 104.5% higher than the current “off-peak” rate of 8.7 cents/kWh ratepayers will be charged for those two hours. The cost for those two hours (and all the other similar hours) will filter through the system and cause our rates to increase on November 1, 2016 when the Ontario Energy Board resets prices for the following six months.
So tell us again, why did (now former) Energy Minister Bob Chiarelli told IESO to contract for another 600 MW of utility-scale wind power?
The Ontario government seems determined to ensure Ontario’s residential electricity rates soon surpass both Alaska and Hawaii, so Ontario can claim to have the highest rates in all of North America.
© Parker Gallant
June 13, 2016
The views expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy.