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.
Two Auditors General in Ontario have noted that the government never did any cost-benefit study on its renewable energy program; moreover, wind power is produced out-of-phase with demand in Ontario, and is a significant portion of the surplus power the province is forced to sell off cheap. Parker Gallant comments on who is really benefitting from Ontario’s energy management policies.
Michigan outperforms Ontario. And why not? They have our cheap power
Parker Gallant Energy Perspectives
September 6, 2016
The state of Michigan is outperforming Ontario. That’s according to a recent study by the Fraser Institute. Since the end of the “’Great Recession” Michigan has out performed Ontario, increasing their GDP in 2013 by 2.8% versus Ontario’s growth of only 1.3%. Unemployment levels in Michigan are currently at 4.6% versus Ontario’s 6.4%. Those are two very important economic indicators.
That news plus the fact Ontario has become a “have not” province in Canada, it seems policies adopted by the Ontario Liberal government to “build Ontario up” is having the opposite effect.
One of those policies resulted in Ontario’s electricity sector focusing on acquisition of renewable energy from industrial-scale wind turbines, solar panels and biomass. The passing of the Green Energy Act (GEA) in 2009 resulted in adding intermittent and unreliable renewable energy that is unresponsive to demand (wind power is produced out-of-phase with demand in Ontario). This had the effect of driving down the price of electricity.
The free market trading (HOEP) of electricity has resulted in Ontario exporting a rising percentage of our generation to buyers in Quebec, NY and Michigan, with the latter the biggest buyer. In 2015 Michigan purchased 10,248 gigawatts (GWh) or enough to power1.1 million “average” Ontario residential households. We sold it at an average of 2.36 cents per kilowatt hour (kWh) and were paid $242 million, but it cost Ontario’s ratepayers just over $1 billion.
Michigan doesn’t have to pay the Global Adjustment. You do.
Michigan appears delighted to be able to purchase our cheap subsidized electricity. Now they are seeking further transmission links to Ontario with an eye on the grid out of Sault Ste Marie.
Part II of Parker Gallant’s series on how Ontario continues to mismanage the energy file.
The previous article in respect to Ontario’s decision to close our coal plants examined the MW (megawatt) capacity and the type of generating capacity added to our electricity grid since 2011. The added capacity replaced the 4,484 MW of coal-fired generation at the end of 2011 in anticipation of increasing demand.
What I’ve done is approximate the costs of the added capacity versus the 4.1 TWh generated by the 4,484 MW of coal-fired plants, which cost only $135 million (3.3 cents/kWh) in 2011.
Nuclear instead of wind and solar
As an example, the 1,532 MW of emissions-free Bruce Nuclear refurbished generation, at a capacity factor of 90% supplying 12.08 TWh, easily covered the loss of 4.1 TWh of coal-fired generation and left 8.7 TWh for added demand due to its flexibility to steam off or bypass the turbines. The 12.08 TWh could have supplied most of the 2015 solar generation of 3.04 TWh and the 10.2 TWh of wind, which proved to be unneeded. The latter two alone in 2015 added an additional $2.7 billion to generation costs before curtailment (wind) costs of $88 million.
Bruce Power supplies from the 1,532 MW would have cost ratepayers $800 million, reducing the ratepayer burden by almost $2 billion annually. Additionally “nuclear maneuvers” (reductions), of 897 gigawatt hours added about $60 million during surplus baseload periods, caused mainly by (unreliable) intermittent power generation from wind.
Too much gas?
Let’s look at the gas plant addition of 602 MW: In 2011 the 9,549 MW of gas generation produced 22 TWh, operating at a capacity factor of 26.3%. Fast forward to 2015: the 10,151 MW generated 15.5 TWh operating at a capacity factor of 17.5%. Gas plants are quite capable of operating at a capacity factor of 40% to 60% (combined or single cycle). In either case, they are regarded as peaking plants and for that reason investors know they will be called on when needed. Their contracts pay them for simply being “at the ready.” Those costs vary but generally payments are $7,000 to $15,000 per MW per month. The additional 602 MW of gas added about $100 million annually to the costs. With gas generation falling from 22 TWh in 2011 to 15.5 TWh in 2015, ratepayers were burdened with the costs of the drop of 6.5 TWh at a cost of approximately $100 million per TWh, raising the cost of gas generation by $750 million since 2011.
Adding costly hydro
The bulk of the 754 MW added to the grid since 2011 came from the Niagara tunnel, (“Big Becky”) with a promise of 150 MW, and the Mattagami expansion added 438 MW of run-of-river hydro. Both of these projects by OPG were hugely expensive, costing ratepayers $4.1 billion plus interest on the money borrowed to fund the projects. If one amortizes those costs over 50 years it adds about $80 annually to ratepayer bills and the interest costs annually add about $120 million at 3% per annum. So that is $200 million for those two projects, without adding their OMA (operations, management and administration) costs.
As well, OPG is frequently forced to “spill” water under SBG (surplus baseload generation) periods mainly due to excessive intermittent wind and solar generation. In 2015 the latter was 3.4 TWh which cost ratepayers $150 million. The other event affecting hydro costs was an amendment to change “unregulated” hydro to regulated pricing. This change added $474 million to ratepayers’ bills for 2015 for the 30.4 TWh generated by OPG versus 2011. So hydro costs in the four years from 2011 jumped from a cost of $37.7 million/TWh to $53.3/TWh. The total additional costs of hydro (OPG only) in 2015 was therefore over $800 million.
The Ontario Energy ministers also issued directives instructing conversion of the 200-MW Atikokan and the 300-MW Thunder Bay coal plants operated by OPG. A 2005 directive from Dwight Duncan was the first and told OPG to convert Thunder Bay “to operate using a fuel source other than coal”. Later on when Brad Duguid sat in the energy chair he ordered it converted to gas but in the end it became a shareholder direction from Bob Chiarelli, ordering it to be converted to “advanced biomass” and agreed to cover the annual $30 million operating costs. As disclosed by the Auditor General, if Thunder Bay produces any power, it will cost $1,500 per megawatt hour (MWh). In respect to the conversion of Atikokan it may produce cheaper power in the 20 cents/kWh range but will probably operate at 10% of capacity and generate an annual cost of about $35 million. So collectively, both of these conversions will produce almost no power but will add approximately $65 million annually to ratepayers’ bills.
Conservation is expensive
The long-term conservation budget for 2015-2020 is $2.6 billion, meaning IESO will allocate spending of $433 million annually to local distribution companies (LDC) to reduce consumption by 7 TWh. Should the LDC be successful, their delivery revenue will drop. Assuming the delivery charge represents about 35% (on average) the revenue drop for all LDC would be approximately $300 million. Then the LDC will be entitled to apply for a rate increase based on the drop in revenue, meaning the $300 million may be fully recovered. Adding that to the monies spent annually convincing us to reduce our electricity consumption via the “conservation budget” adds another $483 million annually ($433 million + [$300/6 years = $50 million] = $483 million).
$4 billion … a year
So the cost of replacing the 4.1 TWh of coal generated at a cost of about $135 million in 2011 is in excess of $4 billion annually.
Confirmation of the foregoing cost can be simply calculated. If one reviews the “average” cost of a kWh on the OEB “Historical Electricity Prices” as of November 1, 2011 was 7.57 cents/kWh versus 10.70 cents/kWh on November 1, 2015. The increase of 3.13 cents/kWh (+41.3%) translates to an increase of $31.3 million per TWh and applied to the 143.6 TWh consumed in 2015 provides an annual cost increase of $4.5 billion to ratepayers since 2011.
The cost blows away the purported healthcare costs supposedly caused by coal generation. At the same time, it removes about $1,000 of after-tax money from the pockets of the 4.5 million ratepayers in the province every year.
This is a sad commentary on what the Ontario Liberal government has done to Ontarians.
While concerns about Ontario’s electricity bills mount, with families increasingly finding it hard to pay the “hydro bills,” Ontario’s new Energy minister revealed in a Global TV interview that he doesn’t know that the situation is a crisis … in fact, he doesn’t know much about the entire portfolio. Here’s a fact: wind power in Ontario is less than 5% of the power supply, yet accounts for 20% of the bills. And, Ontario is exporting huge amounts of power while paying wind power generators to “constrain” production.
Parker Gallant this week sent a letter to the new Energy Minister Glen Thibeault, with an earnest offer to help, as a private citizen.
The Honourable Glen Thibeault, Minister of Energy,
Dear Minister Thibeault:
I was intrigued with your interview by Shirlee Engel of Global National and your humble admission that you still have much to learn about the portfolio that Premier Wynne handed you. Just to somewhat set your mind at ease I have been observing the Ministry of Energy and its complexities for six years and I too, on occasion, have doubts of my knowledge and understanding of the sector.
One thing I noted during the interview was your responses were not always factual perhaps reflecting your belief that your predecessors or the Ministry staff were, and still are, always correct. For example, you answered one of the questions on electricity rates by saying our “rates will rise 1.7% over the next 15 years”.
You may or may not be aware that when George Smitherman held the “energy” portfolio and shortly after he introduced Bill 150, the Green Energy and Green Economy Act (GEA), he appeared before the Standing Committee on General Government in 2009 and said this:
“We anticipate about 1% per year of additional rate increase associated with the bill’s implementation over the next 15 years.”
The Ontario Energy Board (OEB) says the “average” rate as of May 1, 2009 for electricity alone was 6.07 cents per kilowatt hour (kWh) and today, the OEB reports the “average” rate seven years later, as of May 1, 2016 was 12.10 cents/kWh. The increase of 6.03 cents/kWh is a 99.3% increase — not the Smitherman forecast of 7% for that period. In respect to delivery costs, Hydro One’s have increased by over 100% since 2009, and all of those increases were approved by the OEB.
Your predecessor Minister Chiarelli also made predictions. A year ago in an interview with the Windsor Star he said, “Rates are going to continue to go up everywhere. There was a blip in rate pressures because of the investments that we made, but starting in 2016 that will be flatlined very significantly.”
The electricity rate actually increased by 10% since his prediction …
Wind industry trade association study says Canada needs more wind power. Well, they would, wouldn’t they? Problem is, it doesn’t help anything, least of all the environment, says Parker Gallant. But it does plenty to hurt your pocketbook.
The Canadian Wind Energy Association (CanWEA) press release of July 6, 2016 was headlined “Canada can integrate large amounts of wind energy reliably, cost-effectively, says report” followed by the industry trade association’s assertion that “Canada can get more than one-third of its electricity from wind energy without compromising grid reliability – and at the same time realize economic and environmental benefits”.
The claims were based on a study they undertook (using a chunk of taxpayer dollars to co-fund the study) which GE (General Electric), a major manufacturer of industrial wind turbines, executed.
I recall the story that a wise engineer recounts. A senior research engineer gave him this advice when he joined a large electricity generating company’s “research studies” sector: “Remember to always ask your client what answer they expect to get before you start the experiment. You will need to know that information so you can carefully design the experiment to ensure it will not produce results that prove the opposite.”
One should expect with the objectives of CanWEA and GE so closely aligned the conclusions reached in this study did not produce results that prove the opposite.
Interestingly, only days before, the IESO (Independent Electricity System Operator) posted their 2016-2020 nine-page Strategic Plan which said the opposite of the CanWEA/GE study and its claim about not “compromising grid reliability.” Specifically, “Increasing variable generation, integration of distributed energy resources, and changing demand and supply patterns are creating operability challenges with respect to regulation, voltage control and flexibility.”
So, variable generation (wind and solar) are creating challenges and what CanWEA/GE propose in this study is to add more wind capacity and to urge Ontario to increase its industrial wind to 16,124 MW … and then back that capacity up with 2,500 MW of combined cycle and 600 MW of single cycle gas.
Based on the study’s suggestions we would expect the HOEP (hourly Ontario energy price) market to show further deterioration and the GA (Global Adjustment) to jump higher with exports increasing and ratepayers picking up those GA costs.
The experience of two recent July days makes this very point. Canada Day, July 1st was a moderate demand day for Ontario, but a relatively high generation day for Ontario’s 3,900 MW capacity of industrial wind turbines (IWT), operating at about 38.5% of their capacity. As a result, the combined cost of IWT (output and curtailed) generated payments to the IWT operators was almost $4.7 million. The HOEP averaged a miserly $4.21 per megawatt hour (MWh), meaning the 53,500 MWh exported, generated revenue of only $225,000. Meanwhile ratepayers were required to pay the GA ($113.03/MWh average as at May 31, 2016) which created a subsidy for New York, Michigan, and others of $5.8 million.
In short, the 4.8 million Ontario electricity ratepayers got dinged for about $1.20 each for those exports for that one day.
One week later, July 7th was a relatively high demand day and a typical summer generation day for those 3,900 MW of IWT operating at only 7.5% of their capacity. The cost of the MWh generated by the IWT dropped to about $650,000 for the day, and the HOEP averaged $35.95/MWh, meaning the cost of exports for Ontario ratepayers for that day was $1.5 million or only 30 cents each.
What this means is, simply, power from wind is intermittent and unreliable. It is also not needed and has a bad habit of driving down the value of the HOEP. The effect of the latter simply increases the subsidy Ontario’s ratepayers pay to cover the GA costs of our surplus exports.
Here’s the bottom line: More industrial wind turbines will compromise grid stability and will not result in economic and environmental benefits, contrary to the claims in the partially taxpayer-funded study.
Here’s what Ontario’s new Energy Minister, Glen Thibeault, needs to understand: Ontario doesn’t need to acquire another 600 plus MW of new wind power generation, and he should cancel the recent Chiarelli procurement directive, to save ratepayers the associated expense of over $200 million every year.
As the Independent Electricity Systems Operator announces more Feed In Tariff or FIT contracts for more “variable” power generation (i.e., intermittent or, in a word, unreliable), and still plans to launch its Large Renewable Procurement II program this summer, Parker Gallant says Ontario’s electricity rates are set to keep climbing, with no end in sight.
The IESO (Independent Electricity System Operator) just announced the award of 936 MiniFIT contracts that will add another 241.43 megawatts (MW) of long-term renewable high priced energy contracts to your local LDC (local distribution company) grid.
While most of the awards were for solar power and only 3 MW of wind capacity, the announcement follows former Energy Minister Bob Chiarelli’s April 5, 2016 directive to IESO to acquire another 600 MW of industrial wind turbine capacity. This directive was issued despite his knowledge that Ontario consistently exports surplus production and curtails (and pays) wind power generators, spills cheap hydro, steams off nuclear and pays gas plants to idle.
The IESO announcement means more tax dollars coming out of ratepayers pockets, too: a large percentage (over 30%) of the MiniFIT contracts were awarded to school boards, municipalities, and even a few local distribution companies, etc., to install solar panels on the roofs of their buildings allowing them to generate income for upkeep of the schools, etc. With the renewable energy subsidies, Ontario ratepayers are now picking up tax costs that rightfully should be in the purview of the Province who have responsibility for funding primary education and the facilities occupied by the students with our tax dollars.
More ‘variable’ generation forecast—that means, more expense
Just days before IESO’s MiniFIT announcement, the IESO Strategic Plan 2016-2020 was posted. I found this disturbing statement in the nine-page document:
“Operability – With the evolving supply mix, we face new operating challenges in managing the bulk power system. Increasing variable generation, integration of distributed energy resources, and changing demand and supply patterns are creating operability challenges with respect to regulation, voltage control and flexibility. The IESO, with stakeholder input, will develop cost-effective solutions to address these challenges.”
As Ontario ratepayers know that last sentence hasn’t exactly played out the way IESO suggests it will in the future, with rate increases that have defied reason. Nothing has been “cost-effective”!
For example, a news release referenced as the Ontario Energy Report Q1 2016 has an “Electricity Prices” chart on page 11. Comparison of the “Commodity Cost (cents/kWh)” discloses all-in costs for Class B ratepayers for January 2016 versus January 2015 were 31.4% higher, for February 2016 were 22.3% higher and for March were 26.5% higher. If IESO’s display of a “cost-effective” solution means average increases of almost 27%, Ontario ratepayers can only expect things will get a lot worse.
The Smart Grid: a gloomy picture on cost?
Another example is related to IESO’s ability to manage the development of the “Smart Grid.” As previously noted by Ontario’s Auditor General, the current government failed to produce a cost/benefit study for many of their decisions affecting the energy sector. It now appears the Ministry of Energy finally commissioned a cost/benefit study which was completed by Navigant and referenced as the “Ontario Smart Grid Assessment and Roadmap”. While the date on the 135-page “Roadmap” is January 2015, a check on the Document Properties of the file shows it appears to have been modified June 5, 2015. Did the original document painted a gloomy picture and the Ministry required a tempering of the costs or forecasts?
The “Roadmap” provides an estimate of the costs of development of the smart grid and the estimated payback with the latter offering a best, expected, and worst estimate. (One should recall that Navigant designed the Global Adjustment but it was originally called the “Provincial Benefit”. We all know how that turned out!)
The Navigant Roadmap estimates the cost of development of the smart gridNB:, including the $2 billion cost of smart meters out to 2035 will total $8.3 billion.. The “benefits” they estimate will flow from that investment are $3.8 billion at the low end and $9 billion at the high end. The “expected” benefit is estimated to come in at $6.3 billion — that’s $2 billion short of the projected costs.
More bad news for ratepayers
So, putting all the bad news together, we should expect higher electricity rates come November 1st , 2016 when the Ontario Board resets the rates based on the big jump year over year in just the first quarter. We should expect the additional MiniFIT contacts will result in higher prices as they are installed and the contracts click in, and we should expect the “smart grid” costs will grow much higher than forecast and add costs to our bills.
Finally we should expect the additional 600 MW of wind turbine capacity to be acquired under the Large Renewable Procurement II (set to begin in August) will result in increased costs due to both curtailment and an increase in surplus exports subsidized by ratepayers.
NB: The original cost estimate provided to the writer by IESO related to development of the “smart gird” (without costs of the smart meters) was $1.6 billion and contained in a Financial Post article on July 6, 2010.
The opinions expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy.
In short, just paying and paying. Parker Gallant reviews the first five months in the electricity sector in Ontario, and asks what new Energy Minister Thibeault will do about the impact of the province’s renewable energy policy.
The Independent Electric System Operator (IESO) a few days ago released the 18 Month Outlook; sifting through the pages one finds some alarming comments such as this one: “The need for greater flexibility is related to our current supply mix. Forecast uncertainty from increased quantities of VG [variable generation] is compounded by demand forecast uncertainty.”
More alarming is this quote: “The need for additional flexibility increases as the VG fleet grows.”
“Variable generation” is of course a reference chiefly to wind and solar which is causing IESO grid management grief; the situation may well lead to blackouts or brownouts as more power generation in Ontario is variable.
Coincidentally, IESO also released a quarterly publication called “A progress report on contracted electricity supply” which highlights that IESO had, as of March 31, 2016, contracted for 5,814 MW of wind generation and 2,490 MW of solar generation. In fact, 1,434 MW of wind and 334 MW of solar were classified as “Under Development”.
Immediately following, IESO released the May 2016 Monthly Market Report which contained some disturbing facts such as disclosure that the “Weighted Average” for the month for Class B ratepayers was $133.81 per megawatt hour (MWh), or 13.4 cents/kWh (excluding the Debt Retirement charge). That is 20.7% above the average price of 11.1 cents/kWh levied by the OEB as of May 1, 2016.
What that means, is we are heading for another significant rate increase commencing November 1, 2016.
With this in mind let’s look at some events in the first five months of 2016.
The Global Adjustment climbed by over $1.7 billion from the same period in 2015 with Class A clients (large industry) seeing an increase of $310 million or 88%, and Class B ratepayers a $1.435 billion increase (43,3%). That happened even though consumption was virtually flat!
Another hit was related to curtailed wind (paid at an estimated $120/MWh) and, according to Scott Luft’s conservative estimates, was 730,000 MWh for the five months of 2016. The cost to ratepayers of almost $88 million is about 44% of the estimated $200 million annual cost for the OESP (Ontario Electricity Support Program) which kicked in January 1, 2016. That means, Ontario ratepayers are paying mainly large foreign-owned wind generating companies to cut back on power production at the same time as we pay to support as many as 571,000 households suffering from “energy poverty”! The irony? Intermittent power generation from wind, produced out-of-sync with demand, is causing households to pay for power not delivered and also pay for power needed by low-income households!
In the first five months of 2016 the average intertie (exports minus imports) was 6.570 million MWh; Ontario generated revenue of $68.4 million from the average HOEP (hourly Ontario electricity price) sale price. The ratepayers in Ontario, however, were obliged to pick up the Global Adjustment costs of $674 million (average GA cost per MWh was $102.61), meaning it cost almost $150.00 per “average” household just to support surplus export sales.
While all this was going on, OPG was also spilling hydro (1.7 million MWh1) as they report in their 1st Quarter results, Bruce Nuclear was steaming off nuclear power, and wind power generators were being paid an average of $133/MWh to produce out of sync with demand intermittent power that is now apparently causing IESO grief in ensuring they can manage the grid.
The waste and expense: does new Energy Minister Glenn Thibeault know that his predecessor instructed the IESO to acquire another 600 MW of wind in the next procurement phase?
One might ask, will Energy Minister Thibeault have the intestinal fortitude to cancel that directive and save Ontarians from paying for power that is clearly not needed?
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.
The cost of Ontario’s giant climate change plan is promised to be only $13 a month–but overspending is a Wynne government hallmark, says Parker Gallant
Despite the news about the Pan Am Games being over budget by $342 million, the media was swept up with the formal release of the 86-page climate change action plan ushered in by Premier Kathleen Wynne and Minister of the Environment and Climate Change, Glen Murray.
The initial leak of this document caused a stir based on the autocratic way it was seen to impose changes to the way Ontarians live, work and play. As a result, some of the initial proposals proved to be absent in the final presentation. This begs the question: was the leak of the document intentional?*
We were told the cost to households would be only $13.00 a month and the benefits would be a reduction of carbon emissions that would benefit our children and grandchildren. In an effort to assuage criticism, the rollbacks on the leaked document became a daily occurrence. This was reflected in a speech Tuesday night at the C. D. Howe directors’ dinner when Premier Wynne defended her government’s approach to climate change, insisting “cap and trade is the best way forward. It puts a price on pollution. Some costs will rise modestly. Other costs, like electricity, will not because Ontario’s electricity sector now emits almost no pollution.”
When the big event occurred on Wednesday morning at the Toronto Brickworks, the weather failed to cooperate and the Premier arrived in a gas-guzzling SUV. She also ended the press conference early because “everyone is freezing”! Perhaps “Mother Nature” was demonstrating her frustration?
Looking at the “Climate Change Action Plan” one finds a dazzling array of subsidies including: $14,000 towards the purchase of an electricity vehicle (EV), $1,000 for a charging station, a rebate to replace older cars, free electricity to charge your EV, money to replace your wood stove, pre-sale home energy audits, retrofits for apartments and social housing, money to install geothermal and heat pump systems for homes, rebates for people who build or own net-zero emission homes, money to offset the cost of climate change initiatives on residential and industrial electricity bills, money to help businesses switch to low-carbon technologies, money to increase walking and cycling, etc. etc.
Curiosity got the best of me so I added up the costs of the planned incentives/subsidies (per the release); they came to over $8 billion, which is at the high end of the estimates announced by Minister Murray. Knowing the ability of the Ontario Liberal government to exceed their major spending plans, we should all be concerned with the potential cost overruns (61% for the Pan Am Games, according to the Auditor General).
There is a caricature of utopia (seen through the eyes of the Ontario Liberal government) in 2050, depicting wind turbines, solar panels, green industry, sustainable agriculture, etc., surrounding Queens Park. In 2050, apparently, a river will run behind Queens Park — perhaps the glaciers melted?
Anyone reading this plan would think Finance Minister Sousa suddenly found the estimated $5.9 to $8.3 billion to provide these subsidies in his back pocket, and Premier Wynne and Minister Murray are simply handing it back to the taxpayers of the Province. Not true!
The annual cost to pay for these gifts will come from households who will, according to Minister Murray, pay $13.00 per month or $156.00 annually for all these benefits. Now, if Minister Murray does the math, the 4.9 million households in the province will have to cough up $760 million (via an additional tax on gasoline and natural gas heating) leaving a very large shortfall. One assumes the additional money will come from the suggested “cap and trade” revenue the government says will generate $1.8 to $1.9 billion paid by Ontario’s remaining carbon spewing industries.
Incidentally, that is what California planned too, but they have just experienced a severe failure in an auction of carbon credits — it generated only 10% of the funds anticipated.
The Independent Electricity System Operator (IESO) claims it “works at the heart of Ontario’s power system – ensuring there is enough power to meet the province’s energy needs in real time while also planning and securing energy for the future.” IESO claim its “Vision” is “Powering a reliable and sustainable energy future for Ontario.”
The “Mission” will accomplish their vision by “Operating and shaping the electricity system and market in an effective and transparent manner”.
This claim of transparency is worth a closer look — transparency is not something you should claim unless you mean it and your actions support the claim.
Visit the IESO website and simply enter either “transparent” or “transparency” in the search bar; you get 1,860 or 1,870 hits. You could be impressed by that but for those who really crave transparency and have an interest in the results, IESO is disappointing, particularly in the energy environment Ontario now finds itself . The myriad of generators of all types, different rate classes, time-of-use pricing, conservation programs, low-income support programs, curtailment, spillage, steam-off, etc., etc. have also created a demand for meaningful and “transparent” data.
So, is the data on the IESO website “transparent” and useful in the context of disclosing the effectiveness of their immediate boss, Energy Minister Bob Chiarelli and his policies/directions on the “energy portfolio” and the policy costs? The “burden of proof” should rest on the shoulders of IESO to provide information in a format allowing anyone to analyze the “data” but instead, the IESO fails to deliver. Hard for Ontario ratepayers to discern why their monthly hydro bill keeps rising.
That monthly bill includes a hidden charge for IESO’s operational costs along with a hidden “smart grid” development charge!
Here are other examples where the concept of “transparency” either eludes IESO personnel capabilities or perhaps masks political mandates from the Energy Ministry.
The amount of generation produced by wind and solar generators connected to local distribution companies (LDC) are referenced as “Dx” or “embedded” generation. IESO: “At the end of 2015 there were nearly 3,000 (MW) of IESO-contracted embedded generation”. IESO are required to use the data to determine monthly payments to those contracted parties, yet they fail to provide details on how much energy was produced (principally solar and wind) or the costs of that generation.
Since September 11, 2013 IESO have had the right and ability to curtail both wind and solar generation when they felt the grid might be impacted. They have been doing that on a regular basis since. IESO even installed meteorological stations (paid by ratepayers) to measure curtailed production by wind generators yet they don’t disclose how much wind and/or solar is actually curtailed and how much it is costing ratepayers.
IESO also has the right to instruct Bruce Nuclear to “steam off” nuclear generation but again don’t disclose the amount of generation steamed off or the cost of that wasted generation.
Spilling hydro is also a common and regular occurrence and again IESO fails to provide the information that would enlighten us. The only information in respect to spilled hydro comes from OPG (Ontario Power Generation), not from IESO or other private sector hydro generators. OPG report, being paid for 1.7 terawatts (TWh) in just the 1st Quarter of 2016 which is enough to power 570,000 average households for the quarter.
IESO also fails to provide the actual MW capacity of industrial wind turbines in their “Hourly Generator and Output Capability” claiming some are not fully “commissioned,” so the capacity levels provided change hourly.
IESO fails to provide the necessary data allowing ratepayers to see on a daily, weekly or monthly basis how much of the Global Adjustment (GA) they are forced to pay because of the sale of surplus electricity to markets outside of the province.
IESO fails to provide daily or weekly data on their “summary reports” that would allow ratepayers to be aware of just how much their extra costs are due to the portion of the GA that is picked up by Class B consumers in support of Class A consumers.
IESO fails to provide the costs of production by generation source which should include: spilling of hydro, steaming-off of nuclear, curtailment of wind and solar, fixed payments for gas plant idling, fixed prices paid for biomass contracts, etc., etc.
IESO fails to provide natural gas generation costs which would include total costs associated with idling and production allowing a calculation to determine the cost per kilowatt hour.
The above list could be expanded with a closer look or perhaps by a visit from Ontario’s Auditor General, Bonnie Lysyk; however, I think most will agree even without a report from the AG’s office the transparency claimed by IESO is sadly lacking.
I leave it to others to decide if the lack of transparency by IESO reflects incompetence, or is intentional and perhaps directed by the Ministry they report to.
Ontario continues its buy-high, sell-low policy for electricity by wasting cheap hydro in favour of expensive, intermittent wind. And the government is contracting for more, says Parker Gallant.
Ontario Power Generation or OPG just released their first quarter 2016 results; while revenue increased 9.1% or $123 million, net income was down from $234 million in the 2015 first quarter — a drop of 47.4%. The blame for the drop in net income was principally laid on the “Regulated-Nuclear Waste Management segment” caused by lower income from the “Decommissioning Segregated Fund.”
But they didn’t blame water spillage for hydroelectric power. Why? Because OPG now are paid for wasting what would cost ratepayers a miserly 4.4 cents a kilowatt hour (kWh) delivered to the grid.
The spillage and waste of cheap hydroelectric power increased from .3 terawatts (TWh) in 2015 to 1.7 TWh in 2016; the OPG quarterly statement makes reference to that stating “Reducing hydroelectric production, which often results in spilling of water, is the first measure that the IESO uses to manage SBG [Surplus Baseload Generation] conditions.”
Bear in mind that power generation from wind which has “first to the grid” rights in Ontario, is the real reason for spilling hydro. That means ratepayers pick up the costs of spilled hydro at $44 million per TWh and at the same time, customers paid for surplus wind generation at $133 million per TWh or $226 million for the spilled 1.7 TWh. Ontario’s benevolent electricity ratepayers also picked up the cost of idling gas plants tasked with backing up wind and solar generation. A rough estimate of those gas plant costs (we pay from $10K to $15K per MW per month) would be 9 cents/kWh, or about $150 million (to back up 1.7 TWh of wind generation). That brings the total cost of wind generation displacing 1.7 TWh of spilled hydro to a cost of $450 million or 26.5 cents/kWh.
Do the math, Bob
Wind generation cost @ $133/MWh (1.7 TWh @ $133 million per TWh = $226 million)
+ gas generation backup of 330 MW (assuming an average of $12,500 per MW per month and 60% capacity generation per MW) = $150 million
+ the cost of spilled hydro @ $44 million per TWh = $75 million for 1.7 TWh.
The total cost (without inclusion of steamed-off nuclear, cost of solar power, losses of revenue for exports, etc.) is
$451 million for the 1.7 TWh OPG spilled.
Cost to Ontario ratepayers for the 1.7 TWh OPG spilled cost ($451 million/1.7 TWh) = an average of 26.5 cents per kWh.
What this means: the Green Energy Act and its many flaws has created a situation where publicly and privately owned generators suffer no consequences from producing power “out of sync” with demand, and as a result, electricity ratepayers are penalized by paying six times the actual cost for a kilowatt of electricity (including a built-in profit).
Our Energy Minister, Bob Chiarelli appears to lack the ability to apply basic math to the management of his portfolio, as is apparent from his April announcement that he wants another 600 MW of power we don’t need from wind.