Wind Concerns Ontario is a province-wide advocacy organization whose mission is to provide information on the potential impact of industrial-scale wind power generation on the economy, human health, and the natural environment.
Auditor General report confirms: the “guru” was right
The Auditor General of Ontario’s report, released December 9, 2014, confirmed what many of us have been saying for years: the electricity sector in Ontario is a mess and the Liberals created it! As this writer noted in an article, now four and a half years old, the Ontario Liberals were throwing ratepayer money around hoping some of it would actually create some value. About that time then Minister of Energy, Brad Duguid, referred to me as a “self-appointed guru” on television program. Well, sadly, the guru was right…about everything.
Perhaps I should ask for an apology, and here’s why: I called the mess correctly, from the perspective of both the energy portfolio to the mess in Infrastructure Ontario! The latter, according to the AG report, is an $8-billion mess and the former a $50- billion dollar mess, including the $2 billion wasted on those not so smart, “smart meters.” The following excerpt from the AG’s report verifies what I and several others have been saying:
“The total Global Adjustment charged to ratepayers has grown from $654 million in 2006 to $7.7 billion in 2013, as shown in Figure 10. With more new contracted generators, especially of renewable energy, expected to begin producing energy at higher contract prices, the total Global Adjustment is expected to grow further, to $8.5 billion in 2014 and $9.4 billion in 2015. From 2006 to 2015, the 10-year cumulative actual and projected Global Adjustment is about $50 billion—an extra charge to ratepayers over and above the market price of electricity.”
While deficit spending in Ontario was increasing our debt to as much as $325 billion (noted in the AG report) by 2017−18 the ruling Liberal government was also slamming ratepayers with additional billions, perhaps missing the obvious conclusion that ratepayers and taxpayers are one and the same!
The Christmas pudding delivered by the Wynne-led Liberal Government is full of lumps of coal!
Ontario ratepayers kept in the dark despite promise of transparency by Wynne
Premier Kathleen Wynne sent a letter on October 21, 2014 “To the people of Ontario” promising the following: “Our Open Government initiative will help create the transparent, accessible government that the people of Ontario deserve. Over the months and years to come, we’ll be bringing forward additional initiatives that will improve transparency, accountability, and connectivity.”
On the same day, the CBC reported: “The Liberals are using their new majority to block attempts to get to the bottom of two of their biggest scandals involving cancelled gas plants and the Ornge air ambulance service”.
Almost one month earlier on September 25, Wynne sent a letter to Bob Chiarelli, Minister of Energy: “We want to be the most open and transparent government in the country.”
Ontario’s taxpayers and ratepayers would welcome a little transparency. For the electricity sector however, transparency is elusive. Wynne’s refusal to have two key witnesses testify at the committee investigating the gas plant scandal is just one indication.
The insincere Liberal commitment to “transparency” can also be traced to the addition of solar generation to the electricity grid costing ratepayers hundreds of millions of dollars. Finding out how much power this generation sourcecontributes and costs is impossible. Likewise, any wind generation project below 20 megawatts (MW) of capacity, and what it contributes to Ontario’s power production is unknown, yet each19.9 MW of capacity cost ratepayers about $650,000 annually. The Independent Electricity System Operator (IESO) doesn’t report on the generation and cost of 1,200 MW of imbedded solar or 400 MW of imbedded wind, despite what the $2 billion spent on “smart meters” cranking out data every millisecond.
Have the IESOs data standards have been severely compromised? A recent example of that compromise came to light when the writer conducted an analysis of IESO’s September 2014 Monthly Market Summary. This 27-page report has information which one assumes is transparent. The report details average, minimum and maximum hourly values of Total Market Demand, Ontario Demand, Weighted Average of the HOEP (hourly Ontario energy price), Imports & Exports, etc. On page 22 of the report you find the total “Weighted Average” of the “market results”.
The latter is a summary of the purecommodity charge (HOEP + GA [Global Adjustment]), the Wholesale Market Service Charges (Regulatory on our bills), the Wholesale Transmission Charge (included in the “Delivery” line on your bill) and the Debt Retirement Charge or DRC.
If one starts with the premise Ontario demand was 10,836,546 MWh (megawatt hours) on page 10, and multiply it by the total “Weighted Average” of $118.13/MWh on the “Report,” the total cost to the two ratepayer classes (Class A and Class B) for the commodity comes to $1,280,121,000 for the month. The total includes HOEP, GA, Wholesale Market Service Charges, the Wholesale Transmission Charge and the DRC.
In an effort to reverse audit the total GA for the month I deducted the following from that total:
To wit: $1,280,121,0001. less:
the HOEP of $15.54/MWh ($168,400,000),
the Regulatory cost of $4.56/MWh ($49,415,000),
the Wholesale Transmission Cost of $11.40/MWh ($123,537,000) and
the DRC Charge of $7.00/MWh ($75,856,000)
That should equal the total GA, which IESO indicates was $784.5 million!
It doesn’t! In fact the number left ($863 million) is approximately $78.4 million more than the GA reported by IESO for the month.
My inquiry to IESO about why reverse balancing the GA didn’t work disclosed that they don’t differentiate the two ratepayer classes and the $78.4 million difference was simply what the Class A customers didn’t pay towards the total GA costs. According to IESO, Class A ratepayers picked up $75.2 million of GA costs or less than 50% of what they should have. IESO doesn’t publicize how many MWh are consumed by Class A customers so reverse balancing the monthly report is impossible.
Interestingly a January 2013 report prepared by Strategic Policy Economics carried the following message: “The current formula for the GA recovery assigns a Class B consumer rate that is almost twice that for Class A consumers. Furthermore, reductions in the HOEP translate to a higher Global Adjustment. While HOEP changes accrue equally to all rate payers, Class B rate payers bear a higher portion of the GA increase than Class A rate payers.”
What the non-payment of the $78.4 million and the above clearly highlight is, Class A customers pay considerably less per MWh of consumption than Class B and as the GA grows (as a percentage of the “commodity cost”), the burden borne by the Class B ratepayers increases.
IESO does not report on consumption by class of ratepayer. This lack of transparency was conveyed to the party responsible for preparation of the report. That individual agreed that the summary lacked transparency, and promised to bring this issue forward to more senior executives at IESO.
So Premier Wynne’s message “To the people of Ontario” and to her Energy Minister are simply hyperbole. Transparency to Premier Wynne is a smokescreen.
Ontario hydro customers are trapped by the Wynne Liberals’ mad obsession with expensive and unneeded green energy
Lorrie Goldstein, Toronto Sun, November 8, 2014
TORONTO – For anyone who wants to understand what a complete mess Ontario’s Liberal government has made of our hydro bills, Parker Gallant is must reading.
A retired banking executive, he easily dissects and explains in English the never-ending nonsense the Liberals pump out to justify their green energy financial disaster.
An occasional Sun News Network contributor and newspaper columnist, Parker and Scott Luft, an energy analyst and blogger, published a report last week on energy pricing for Wind Concerns Ontario — an anti-wind turbine group — that was truly alarming. (See the executive summary and link to the Gallant-Luft report here.)
Titled: “October, 2014, Ontario’s breath-taking, record-breaking month for electricity bills”, Parker and Luft reveal that last month, Premier Kathleen Wynne’s Liberal government paid $1 billion more for electricity than the market value of that power.
Put another way, the so-called “Global Adjustment” in Ontario — the difference between the market value of electricity and what it actually cost to produce — topped $1 billion, for the first time, ever.
For the average Ontario household, Parker and Luft note, that will mean an extra charge of about $30 on November’s hydro bill alone, although it won’t appear as a separate item on many residential hydro bills because the Global Adjustment is incorporated into “time of use” rates.
The Liberals say the main reason for the Global Adjustment is to “cover the cost of building new electricity infrastructure … as well as providing conservation and demand response programs.”
But as Parker and Luft explain it:
“The situation has developed as a result of Ontario’s rush to incorporate renewable energy in the form of wind, solar and biomass into the grid, without proper planning on how this new capacity would align with demand.
“The result is that during the spring and fall seasons, when demand is lower, IESO (Independent Electricity System Operator) has a surplus supply capacity of over 100% during many hours of the day. Through the Global Adjustment fund, Ontario’s electricity consumers pay contracted generators to idle or curtail generation of thousands of megawatts.
“In October, wind power generators produced almost 600,000 MWh of electricity at a cost of $81 million and additionally were paid another $11 million for 100,000 MWh that they could have produced, but were asked not to add to the grid.
“Due to the glut of power in October, Ontario sold this power to neighbouring jurisdictions at an average of 4.31 per MWh, or $2.6 million, meaning a loss of almost $90 million for Ontario electricity users.”
Parker and Luft note these costs do not include the amount the government had to pay to the province’s privately-run nuclear operator not to produce electricity, because under the 20-year deals it signed with wind (and solar) operators, it has to buy their power first, meaning other sources have to be reduced when there’s a surplus of wind and solar .
Their advice to the Liberals is the same as energy analyst Tom Adams and University of Guelph economist Ross McKitrick gave in their recent report for the Fraser Institute, What Goes Up.
That is, at least stop making the situation worse by bringing more wind and solar power on line.
As Adams put it: “Wind and solar power systems provide less than 4% of Ontario’s power but account for 20% of the cost paid by Ontarians, yet the government wants to triple the number of wind and solar generators. That’s a good deal for wind and solar producers but a raw deal for consumers.”
(The Liberals insist wind and solar power only account for 8% of the cost of our energy bills — and that they were needed to close down polluting, coal-fired electricity. But that’s absurd because the Liberals didn’t replace coal power with wind and solar, but with nuclear power and natural gas).
Sadly, the longer the Liberals double down on their green disaster, the faster hydro rates are going to rise.
Even the Liberals acknowledged last year that hydro bills would jump 42% over the next five years.
Now-retired auditor general Jim McCarter produced similar numbers in his 2011 report that was sharply critical of the Liberals’ renewable energy programs, noting green energy initiatives would account for more than half (56%) of a 7.9% annual increase in hydro bills over the next five years.
Hydro rates were bumped up again on Nov. 1 and there’s no relief in sight.
Then again, Al Gore does think the world of the Liberals.
October 2014: Ontario’s breath-taking, record-breaking month for electricity bills
Wind power significant in surplus power sell-off
Special report by Parker Gallant and Scott Luft
New figures reveal that in October, the Ontario government paid $1 billion more for electricity than the electricity market value of that power. Numbers released by the Independent Electricity System Operator (IESO) show the Global Adjustment for the month of October topped $1.0 billion for the first time ever. This estimate exceeds the September estimate by more than $200 million.
The record-breaking month will eventually affect all electricity users, but the immediate direct impact is on any electricity user holding a retail contract. In November, they will be charged an additional 10.1 cents per kWh on top of their contracted price, likely in the range of 4 – 6 cents per kWh. For an average household using 800 kWh per month, this would mean an extra charge of $80. For industrial or agricultural users, the added cost would be much higher.
The situation has developed as a result of Ontario’s rush to incorporate renewable energy in the form of wind, solar and biomass into the grid without proper planning on how this new capacity would align with demand. The result is that during the spring and fall seasons, when demand is lower, IESO has a surplus supply capacity of over 100% during many hours of the day. Through the Global Adjustment fund, Ontario’s electricity consumers pay contracted generators to idle or curtail generation of thousands of megawatts .
In October, wind power generators produced almost 600,000 MWh of electricity at a cost of $81 million and additionally were paid for another $11 million for 100,000 MWh that they could have produced, but were asked not to add to the grid. Due to the glut of power in October, Ontario sold this power to neighbouring jurisdictions at an average of 4.31 per MWh or $2.6 million, meaning a loss of almost $90 million for Ontario electricity users.
This estimate does not include the amounts paid to Bruce Nuclear for 400,000 MWh of “steamed off” nuclear production. As wind power is guaranteed priority access to the grid under the Green Energy Act, other sources of production must be reduced in the event of surplus wind and solar power generation.
Despite this situation, Ontario continues to push for an expansion of unreliable wind power capacity. Currently there are over 700 megawatts of capacity under construction, in the approval process, or the subject of various appeal procedures. In each of these cases, the Ontario government has options to do the sensible thing and end these projects, saving Ontario electricity consumers from a 20-year commitment to the green energy folly. Instead, the Ontario Power Authority has plans to issue an RFP for an additional 300 MW of on-shore wind capacity in early 2015.
Another $20-million autumn weekend with Ontario power sold off cheap to neighbouring states and province
Another October weekend has come and gone—and so has at least another $20 million of Ontario ratepayer dollars, due to selling off surplus Ontario power cheap.
This past weekend of October 24-26 saw Ontario sell off another 189,000 megawatt hours (MWh) of electricity to our neighbours in Michigan, New York and Quebec. Those MWh went for a song generating, $4.31 each and earning about $820K. The flip side is, ratepayers paid over $110 per MWh for that power generation. We lost $106 for each MWh (10.6 cents per kilowatt hour); that means the subsidized cost of those megawatt hours was over $20 million, or a one-time hit of about $4.50 for each of Ontario’s average electricity ratepayer. The trouble of course is that it is not a one-time hit, as this situation occurs frequently during spring and fall when demand for power is low.
Included in that $20 million we paid to export our surplus is the cost for the spasmodic production of electricity from thousands of industrial wind turbines throughout the province and, presumably, some solar production. Wind turbines produced over 52,000 MWh Octover 24-26, and wind power producers were paid for not producing another 17,000 MWh. That 69,000 MWh cost Ontario’s ratepayers half of the $20 million. It doesn’t include what Ontario Power Generation spilled in hydro, what gas generators were paid to idle, or what Bruce Nuclear was paid to steam off nuclear power.
What this past weekend and others before it should be telling the Ontario Liberal government and the Minister of Energy Bob Chiarelli is that Ontario’s ratepayers are consuming less of this expensive commodity. Premier Wynne’s “Conservation First” initiative, as Tom Adams notes in a recent post titled “Crock of Conservation,” has driven demand down but the energy ministry keeps adding more inefficient renewables to Ontario’s grid.
During the past weekend, Ontario exported 20% of its average electricity demand. If each Ministry of the Ontario government wasted 20% of their budget, the main stream media might pay attention but it seems that the Minister of Energy is allowed to waste ratepayer dollars without any serious oversight because the money is simply extracted, without effect on the Ontario deficit.
We can only hope for the day when it is recognized that ratepayers are also taxpayers, and that their money is being wasted with regularity due to Ontario’s energy policy.
Selling off surplus power: Loss, loss, and more losses
Ontario was once again busy exporting surplus power on the weekend of October 17-19. For every MWh (megawatt hour) we exported, we generated revenue equivalent to purchase one small “Timmies” coffee. How bad was it? A MWh sold at an average price of $1.58 on the HOEP (hourly Ontario electricity price) market, but Ontario’s ratepayers paid upwards of $110 for that same MWh. The beneficiaries of that cheap price were the electricity companies in New York, Michigan and Quebec.
That same weekend Ontario exported 186,000 MWh at a cost of about $20.4 million and sold it for $300K; the net cost to Ontario’s ratepayers was $20.1 million. That is without factoring in: the costs of constraining wind (around 10,200 MWh at a cost of $1.1 million) and solar, spilled clean hydro, steaming off Bruce Nuclear (around 70,000 MWh at a cost of $4.2 million), and the gas plants paid to simply idle! The constrained and curtailed generation probably equaled or came close to the cost of the exports.
From the perspective of the ruling Liberal party in Ontario, the good thing about the cost of those exports is it doesn’t directly increase the deficit—it’s the ratepayers picking up the cost of the subsidy. Nevertheless, they should be aware that extracting the cost of a cup of coffee each day for the purpose of subsidizing exports takes away cash that those ratepayers could spent on other local goods. Removing that cash from our pockets makes the climb out of the high unemployment rates and the reduction of Ontario’s deficit much tougher. No economist would or could dispute that!
The contracted developers of wind power produced 68,900 MWh on the three days, representing 37% of the total exported MWh. That generated $9.3 million of revenue for the owners, plus $1.1 million for constrained generation. They operated at about 34.5% of capacity (40% if one includes constrained power) during that time-frame.
If wind power exports were a regular event for Ontario, the costs of just the wind exports would be $3.4 million daily and about $1.2 billion for a full year.
Imagine what $1.2 billion could have paid for—every year for 20 years.
Magic tricks: how the OEB explains electricity bill increases
The Ontario Energy Board’s (OEB) news release of October 16, 2014 tells us that our rates will once again increase on November 1, 2014, but only by 1.7% on the total bill. In their Backgrounder, the OEB tells us that “Electricity prices make up about half the total of an average household bill.”
If they are telling us they have increased “electricity prices” they should be explaining how much rates are going upin dollars and percentages, and not relate it to the total bill—but maybe that’s a way to lessen the visual impact. If they were truthful they would annualize the increase. If they had done that, the story would then be that the electricity portion of our bills has increased 13.2%, measured from the prices applicable on October 31, 2013.
The On-peak rate as of October 31, 2013 was 12.4 cents/kWh and effective November 1, 2014 will be 14 cents/kWh. That’s an increase of 12.9%. Mid-peak rates one year ago were 10.4 cents/kWh and on November 1, 2014 will be 11.4 cents/kWh, an increase of 9.6%. Off-peak rates will jump to 7.7 cents/kWh from 6.7 cents/kWh, an increase of 22.3%.
Taken together, those increases in the price we pay for electricity increased 13.2 %, or $8.87 a month, and $106.44 for a full year.
OEB not coming clean
The OEB has also never come clean about the requirement to no longer include “line losses” on the electricity line of ratepayers’ bills. That should have driven time-of-use/TOU pricing down by 5.2%, but didn’t! Those line losses, effective August 2013 should have reduced electricity costs and increased the delivery line on ratepayers’ bills by an equivalent amount, yet were “forgotten” in the explanations offered by the OEB. The 5.2% line loss reallocation would represent 33.3 kWh on an average (800 kWh) monthly ratepayer bill. In dollar terms, that’s a $3.95-per-month decrease or $47.40 annually—but it didn’t. Taken together, the hidden line loss increase, coupled with the approved OEB increase, raised average electricity prices by $12.82 monthly or $153.84 annually.
In just one year, the 4.6 million residential ratepayers in Ontario will have had another $707.7 million removed from their disposable income just to cover the cost of electricity. That’s way over the rate of inflation. Added to that will be the dollars extracted for rate increases for distribution and regulatory charges for the other “half the total of an average household bill.”
Energy poverty in Ontario
For stay-at-home parents, seniors living on fixed incomes, or the disabled, the increases will affect their ability to simply put food on their tables!
Time for the OEB to come clean with ratepayers and issue “transparent” news, rather than abuse the ratepayers by hiding the true costs of the “greening” of Ontario with wind and solar intermittent generation.
Money lost in just one week could have paid for 580 nurses
So far this October, Ontario’s electricity sector has been blowing our money away at an awesome pace.
Scott Luft, whom I admire for his ability to assimilate comprehensible data, posted on Tumblr some disturbing information about the first 10 days of electricity production (and curtailed production) in Ontario. Because the fall means low demand for electricity, our current surplus energy supply (principally, wind, solar and gas) was curtailed to the extent that it cost ratepayers $20 million, while the HOEP (hourly Ontario energy price) generated only $8.2 million. That $20 million of curtailmentcost will find its way to the Global Adjustment (GA) pot and onto ratepayers’ bills.
I took a different route and looked at the cost of Ontario’s exports for the week of October 3rd to October 9th —those numbers are also disturbing. During those seven days, Ontario exported 399,048 MWh (megawatt hours) which was 15.7% of total Ontario demand. Wind turbines generated and delivered 184,204 MWh, which was surplus to our needs and probably exported. The money generated via the HOEP from all of the export sales was $56,300 or 14 cents a MWh. Wind turbines produced just $15,164 and we sold that production for just 8 cents a MWh.
To put this in perspective, the exported production’s cost all-in (contract value per MWh + regulatory + transmission + debt retirement charge) averaged $110/MWh, according to the latest monthly IESO Market Summary August 2014 report’s findings. Using $110/MWh the 399,000 MWh exported in those seven days hit Ontario’s ratepayers with about $44 million (less the $56,300) via allocation to the GA—that will show up on the electricity line on our bills.
Wind generation alone at the contracted rate of $135/MWh cost ratepayers $24,900,000 plus another $5 to $6 million for their curtailed production, according to Scott Luft. That $30 to $31 million plus the cost of steaming off Bruce Nuclear, paying idling gas plants, etc., and the additional cost of solar generation, would confirm the $44 million is a reasonable estimate.
What has Ontario missed out on by having ratepayers subsidizing those exports by $44 million for those seven days?
the annual salary of 293 family physicians, or
580 nurse practitioners, or
repairing all the Toronto District School Board’s school roofs, or
one and a half days of interest on Ontario’s public debt, or
all of Ontario’s 301 MPP salaries for a full year, or
40 MRI machines, or
100 months of mortgage payments on the empty MaRS Phase 2 building, or
increasing funding for autistic children by 30% over current levels.
Just a few examples of how the wasted subsidy money that cost each Ontario ratepayer $10 for just one week could have been used!
The 2,483 MW of rated capacity of wind generators reported by Independent Electricity System Operator (IESO) in the past three days (October 6 to 8) generated 67,000 MWh (megawatt hours), or enough power for 7,000 average homes.
They just weren’t in Ontario.
The province exported over 145,000 MWh to New York, Michigan and elsewhere over those three days. The wind power developers were being paid $135/MWh for power that was surplus to our needs because demand was low. The price we received for our exports averaged $2.29/MWh on October 6, $1.88/MWh on October 7, and on October 8 we paid our neighbours $3.31/MWh to take our exports.
Not included in that price is the money paid to the wind power developers for “curtailed” generation.
Wind power tends to be produced out-of-phase with demand, or when we don’t need it (spring and fall and middle of the night). As a result, the HOEP (hourly Ontario energy price) has been driven down meaning those surplus exports represent a significant cost to the ratepayers of Ontario. The cost for just the wind exports in the past three days was in excess of $9 million. Add another $9 million for the other exported power, and it becomes $18 million. The latter doesn’t include the cost of the curtailed wind power, steamed off power from Bruce Nuclear, spilled hydro losses, idling gas plant costs; the total approaches $30 million, or $10 million per day.
People all over Ontario are asking, what else could have been done with that money?
My recent article about “conservation” provided some detail on the presumed consumption of electricity in 2013 by the 4.6 million residential ratepayers in the province. The estimate was that this rate class consumed 45.5 terawatts (TWh) or 32.3% of total Ontario demand, which IESO reported was 140.7 TWH. While that is an estimate it at least can be compared to estimates from previous years as in the Yearbook of Electricity Distributors on the Ontario Energy Board’s (OEB) website back to 2005. All the other data on the Yearbook site is grouped by “consumption” i.e., “General Service: 50 kWh to 4,999 kWh per month, Large: over 5,000 kWh per month”. Presumably all the government entities from Ministries to Crown Corporations are included in those two groups, so comparing the success or failure of the public sector versus the private sector on “conservation” is impossible.
I set about trying to determine what each sector consumed recognizing the principal ones were: large industrial clients (referred to as Class A ratepayers), small and mid-sized commercial enterprises (manufacturers, food processors, retail outlets, service companies, etc.), Municipalities, Universities (and colleges), Schools and Hospitals (referred to as the MUSH group), large government crown corps, (OPG, Hydro One, LCBO, OLG, IO, etc.), the Ministry of Justice (court houses, etc.), the OPP and the Ministry offices of Public Health, Transportation (GO Transit, Metrolinx, etc.), Environment, Natural Resources, etc.
The objective was to determine how effective those groups have been at “conservation” compared to the 4.6 residential ratepayers, but finding information on them proved a hopeless endeavour. The information is scattered. For example, a report in January 2008 prepared for IESO indicated “Municipalities” consumed 6.6 TWh or 4.3% of Ontario’s consumption, but no other data is available to determine current or past consumption. Likewise, data is missing for all of the other sectors except for the occasional snippet! For example, a testimonial on OPA’s saveonenergy website claims Bradford High School reduced consumption by 84,000 kWh (19% of annual usage) through a lighting retrofit, meaning they consumed about 450 MWh. If one extrapolates the Bradford example to the reported 913 secondary schools in Ontario this group consumed 4.1 TWh but again there is no way to measure that against prior consumption or to determine whether the estimate is even close to actual consumption.
No information on electricity usage in the 3,978 elementary schools could be found. As for universities, a 17-page report entitled Ontario Universities: Going Greener Report 2011, authored by the Council of Ontario Universities, is a disgrace to higher learning and would be marked by every professor as a fail! For example, contracting with Bullfrog Power by some universities is seen as a “conservation” initiative.
The search failed to turn up any meaningful data on electricity consumption by hospitals, the OPP, the Ministry of Justice or the big Crown Corporations.
Perhaps the OEB should enlist those “smart meters” and the “smart grid” to generate data that show the public how well government entities are doing on their “conservation” targets.
Reports a rehash
In desperation, I felt a read of the December 5, 2013 OEB’s Conservation and Demand Management Report-2012 Results might provide answers, but that turned out to be a rehash of CDM reports submitted by the 73 local distribution companies who either brag about exceeding conservation targets or make excuses for why they missed them. It does have claims about Annual Savings such as 2012 “Net Peak Demand Savings” (KW) which totaled 253,086 KW. It also has a section on “2012 CDM Spending” ($136,211,152) so you can determine the cost of saving a KW of capacity by category.
One example is the “Industrial Program” which produced Net Peak Demand Savings of 75,144 KW at a cost of $10,726,749. Cost per peak KW saved was $142.75 ($10,726,749/75,144KW = $142.75). To put that savings per KW in perspective, the U.S. EIA on a chart claims the full capital cost of a KW of on-shore wind capacity is $2,213/KW so the money spent per KW on the “Industrial Program” is equal to the wind turbine operating for 16 years reputedly providing a 16:1 payback. If discounted for how many kWh wind produced at the wrong time of the day/year (80%) at 29% of capacity, however, that ratio would reduce to less than a 1:1 ratio. Another example is the Business Program: spending was $89 million to save 98,217 KW of Net Peak Demand Savings at a cost of $907.43/KW. This is a much higher cost to us ratepayers; it is equivalent to the full capital costs per KW to erect a combined cycle gas plant which would produce power for a minimum of two decades. That ratio would prove to be about 1:1/20th or, for every dollar spent on conservation, the capital cost savings would be a nickel!
The worst example
The worst example however is related to the Home Assistance Program which cost $6,963.15/KW—more than it would cost to build a nuclear plant ($5,530/KW) that would operate for up to 60 years at an all-in annual cost of $93.28/KW, producing about 8,000 kWh (just over a penny per kWh) every year for those 60 years.
Didn’t Energy Minister Bob Chiarelli and others like Environmental Defence tell us “Conservation provides significant economic and environmental benefits; for every $1 invested in energy efficiency, Ontario has avoided about $2 in costs to the electricity system.” If they were actually spending the money on “energy efficiency” instead of schemes that avoid a cost/benefit equation, I might be sold but they’re not. Instead the bureaucracy simply throws money at every hair-brained idea crossing their path.
Time for Minister Chiarelli to take a refresher math course and for the Auditor General to have a serious look at our “Conservation” spending, which is scheduled to cost us $483 million in 2014 alone, and has cost Ontario’s ratepayers in excess of $4 billion since 2004.