Wind power industry claims Canada needs more wind power–with a hefty price tag for electricity customers

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.

What wind power is really all about: not the environment
What wind power is really all about: not the environment

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.

© Parker Gallant,

July 15, 2016

 

The opinions expressed are those of the author and do not necessarily represent Wind Concerns Ontario Policy.

 

More bad news for Ontario electricity customers

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.

Former Energy Minister Chiarelli (centre) and IESO's Campbell (R) with CanWEA president at wind power lobbyist event: more variable generation means higher bills for you
Former Energy Minister Chiarelli (centre) and IESO’s Campbell (R) with CanWEA president at wind power lobbyist event: more variable generation means higher bills for you

 

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.

© Parker Gallant,

July 4, 2016

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.

Ontario: paying for power not delivered, paying for wasted power, and paying to help with skyrocketing bills

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.

Energy Minister Glenn Thibeault: what will he do about paying for power we don't need, paying for power we don't get, and paying for the economic impact of constant increases?
Energy Minister Glenn Thibeault: what will he do about paying for power we don’t need, paying for power we don’t get, and paying for the economic impact of constant increases?

 

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?

© Parker Gallant

June 24, 2016

 

 

  1. OPG were paid for spilling the 1.7 TWh of hydro which could have supplied almost all of the low-income households with free power for those five months.

Ontario’s power giveaway: why rates keep going up and up and up

The Ontario experience of just two hours recently illustrates why electricity rates keep climbing, says Parker Gallant

More wind power not needed
More wind power not needed

 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.

Adding up Ontario’s climate change plan numbers: Parker Gallant

The Wynne government's climate change dream: giant noise-emitting wind turbines in downtown Toronto
The Wynne government’s climate change dream: giant noise-emitting wind turbines in downtown Toronto

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.

Why should Ontario expect to do better?

© Parker Gallant

June 10, 2016

 

NB: The “Document Properties” indicate the PDF was created 6/8/2016 9.06:02AM and modified on 6/8/2016 9.06:47AM.  Simply amazing!

 

 The opinions expressed here are those of the author and do not necessarily represent Wind Concerns Ontario policy.

Ontario’s IESO: reporting data missing by directive?

Information missing by accident, or design?
Information missing by accident, or design?

From Parker Gallant:

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.

© Parker Gallant,

June 7, 2016

The views expressed are those of the author and do not represent Wind Concerns Ontario policy

Ontario spills cheap hydro for expensive wind –and wants more

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.

Your energy future: losses by the million
Ontario’s economic future: losses by the million

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

Calculations are:

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.

© Parker Gallant

May 16, 2016

The views expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy.

Energy policy in Ontario: botched planning and bad forecasting

Ontario, you just can’t win, says Parker Gallant

Energy Minister Chiarelli (centre) and IESO's Campbell (R) at wind power lobbyist event: announcing  more money for Big Wind. For you? More pain.
Energy Minister Chiarelli (centre) and IESO’s Campbell (R) at wind power lobbyist event: announcing more money for Big Wind. For you? More pain.

One would think that recent revelations such as from Germany where it was stated “Wind Farms Paid €500 million-a-year-to-stand-idle” and China where they have put “a Chill on New Wind Energy Projects” would give Energy Minister Bob Chiarelli pause.

Instead in his luncheon speech at the CanWEA Spring Conference he announced Ontario would seek another 600 MW of wind capacity.  Maybe it was a way to obtain donations to the Ontario Liberal Party (OLP) from CanWEA and its members before rules on political donations are amended to the detriment of his party.

But if Minister Chiarelli had waited or inquired of the Independent Electricity System Operator (IESO) he might have discovered that wind played a big role in the unwelcome announcement from the OEB about the electricity rate increase that came into effect May 1, 2016.

The 2016 first quarter results, compared to 2015, might have opened his eyes. Alas, there was no pause, his eyes are not open, and Ontario ratepayers will feel the effects of his wind power announcement in the future.

Looking at 2016’s first quarter compared to 2015 shows wind generation from grid-connected and distributor-connected sources, coupled with curtailed generation (see above on the cost to Germany’s curtailment), in Ontario increased by 26.3% (772,500 megawatt hours [MWh] to 3.7 million MWh). This jump occurred as Ontario ratepayers were curtailing their demand, reducing consumption by 6.2% (2,308,000 MWh) or enough to supply one million average ratepayer households.

You might think Minister Chiarelli would tout his “2013 Conservation First” document as the reason for the drop in demand, but instead, he blamed the milder winter as compared to the prior two as the reason for the latest increase in electricity rates.  Because Ontario ratepayers didn’t use as much electricity, there was a shortfall in the forecast of revenue.

It is worth a look at the revenue generated in the 2016 first quarter versus the 2015 comparable quarter:

In the first quarter of 2016, Ontario Demand, as recorded by IESO, was 35,159,000 MWh and the cost of that power based on IESO’s record of both the HOEP (hourly Ontario energy price) plus the Global Adjustment (GA) paid out $3.847 billion for that demand.

The first quarter of 2015 saw Ontario Demand of 37,467,000 MWh and the cost of that power, HOEP plus the GA, paid out by Ontario’s ratepayers was $3.276 billion.

Those who can’t get the point of “paying more for less” will quickly note, in spite of consuming 6.2% less power in 2016, it cost $571.1 million more.  Quick math shows revenue jumped 17.4% despite the consumption drop, but it apparently wasn’t enough, hence the increase come May 1, 2016.  Had Ontario demand matched 2015, the cost to ratepayers would have been $875 million higher for the three months.

The other missing ingredients include: the 13% HST collected on the additional revenue which put $50 million into Minister of Finance Charles Sousa’s coffers, and the second benefit was he no longer had to budget for the 10% Ontario Clean Energy Benefit — that reduced the cost of the electricity line in 2015 by $328 million reducing our electricity bills by a like amount while increasing the provincial debt.

Wind power generation played a significant part in the cost to ratepayers producing power surplus to Ontario demand. The cost of wind’s generation in 2016 was about $494 million versus $391 million in 2015, an increase of $103 million. Its generation in 2015 of 2,941,000 MWh grew by 26.3% in 2016 to 3,713,000 MWh and represented 60.1% of Ontario’s gross power exports, up from 46.2% in 2015.  Ontario’s exports in 2015 generated revenue of $270.1 million in 2015, but only $67.3 million in 2016.  The cost to ratepayers to produce those exports in 2015 netted out to $280 million and grew to $609 million in 2016, an increase of $328 million or 117.2%.

What the first quarter clearly demonstrates: there is no need for more intermittent and unreliable industrial wind turbines producing out-of-sync with demand electricity, adding to ratepayer costs.

It also demonstrates the Wynne government’s conflicted messaging.  Wynne and Chiarelli both insist their policy is “conservation first” but when we comply, Chiarelli he blames rising prices on lower consumption. Ontario, you can’t win.

It is time Mr. Chiarelli examined the obvious: botched planning and bad forecasting by the agencies his Ministry directly manages or controls. The public is not being served.

© Parker Gallant

May 2, 2016

The opinions are those of the author and do not necessarily represent Wind Concerns Ontario policy.

Correcting Ontario’s energy minister on the cost of wind power

It’s not just the cost of wind power contracts, it’s the other costs that accrue because of wind power, Parker Gallant says mean Ontario ratepayers are “wind-whipped.”

Rate increases due in large part to the cost of wind: ratepayers are 'wind-whipped' says Parker Gallant
Rate increases due in large part to the cost of wind: ratepayers are ‘wind-whipped’ says Parker Gallant

Energy Minister Bob Chiarelli and the Ontario Energy Board (OEB) both blamed the upcoming May 1st increase in electricity prices on lower consumption. But the blame clearly lies with wind power and what the industrial-scale wind turbine projects delivered to the grid, delivered to local distribution companies (LDC), and also curtailed.  (Curtailment means, the Independent Electricity Systems Operator [IESO] requests that power not be supplied to the grid.)

Future rates are set by the OEB, based on both estimates of future demand and the cost of contracted power in the six months following each rate setting, in mid-October and mid-April.

Looking back, it appears that the OEB failed to forecast wind generation correctly in the mid-October price increase. They explained that the “pot” established to track settlements with generators came up short. Then they blamed that shortfall on our lack of consumption.

Here’s what really happened: wind — generated and delivered to the grid, generated and delivered to LDC along with record curtailment (based on Scott Luft’s conservative estimates) in the five months starting November 1, 2015 through to March 31, 2016 — produced power at levels of about 47% of capacity.  What that means is, wind turbines could have produced about 6.2 terawatts (TWh) in the five months versus 4.9 TWh in the comparable five month period, one year previous.

That difference of 1.3 TWh cost ratepayers an average of $133 million/TWh (13.3 cents per kilowatt hour) meaning the extra generation and curtailment (1,082,600 MWh) of those industrial wind turbines ran the bill up by $173 million, based on an average cost of $133 per megawatt hour.

Based on the foregoing added cost of wind generation and curtailment, let’s look at revenue the recently announced rate increase will generate.   With 4.5 million residential households in Ontario, the ½ cent per kilowatt ($3.13 per month) increase will generate about $169 million — almost exactly what the wind power companies were paid for the additional generation delivered to the grid and LDC (year over year about 745,000 MWh more) and the incredible amount of curtailed power generation increasing from 548,000 MWh (rounded) in the comparable five-month period to the above noted (rounded) 1,083,000 MWh, or 535,000 MWh more.

It should also be noted wind (including curtailed) generation in the comparable five-month period (2014/2015) represented approximately 26% of Ontario’s exports to New York, Michigan, Quebec, and other jurisdictions. In the latest five months (2015/2016) it represented almost 62% of Ontario’s exports to those same markets.

It is time Minister Chiarelli1. and the OEB came clean and finally admit wind power is produced completely out of sync with Ontario’s demand.  The admission should logically lead to a cessation of acquiring any more wasteful renewable energy from a source whose biggest benefit is to line the pockets of mainly foreign developers at the expense of rate-paying Ontario households.

© Parker Gallant,

April 25, 2016

  1. The following quote from Minister Chiarelli appeared in a letter to the editor of the Toronto Sun April 24, 2016 in response to a critical report from the Fraser Institute: “In fact, for the first time, wind power generation is below the average cost of electricity production in our province.” But, it’s out of sync with demand and only adds to the cost of generation billed to ratepayers!

Chiarelli magic: how millions of your dollars are nothing to Wynne government

Energy Minister claims $408 million increase is simply an “aberration” 

At least it's not double digits, Bob says of the latest power bill increase. That makes it weird.
At least it’s not double digits, Bob says of the latest power bill increase. That makes it weird.

 

When asked about the latest increase in electricity prices coming into effect May 1, 2015, Ontario Energy Minister Bob Chiarelli told the Legislature it was an “aberration.”  He went on to blame Ontario consumers for the price rise because they “used less electricity than expected this past winter”.

Decreased electricity demand was also the reason given by the Ontario Energy Board (OEB) in their press release. The OEB said the price of the average bill would increase by “$3.13 per month for households and small businesses”.  That makes no sense: the OEB’s press release of April 2015 made no mention of the fact that more energy was used in the prior winter because it was exceptionally cold — yet the price went up.

Using more or less electricity doesn’t affect continually rising electricity prices despite claims made when the local distribution companies (LDC) are spending those hundreds of millions of our ratepayer dollars telling us to “saveONenergy”.

Let’s look at the electricity line on the “average bill” for the actual cost to Ontario’s 4.5 million residential ratepayers.

The message from the OEB was: it will only cost the “average ratepayer” $3.13 more per month and together with the same cost in the October 2015 press release of $4.42 more per month, adds $90.60 annually to the “average bill”.   If one applies the $90.60 annual cost to just residential ratepayers, the amount removed from ratepayers pockets is huge.  With 4.5 million ratepayers (based on the OEB’s Yearbook of Distributors for 2014) it represents $408 million. That’s without including the additional costs to tens of thousands of small and medium sized businesses.

If it seems like power bill increases never end in Ontario, let’s look back. The all-in average electricity rate as of November 1, 2008 was 6.02 cents per kilowatt hour (kWh) so the 4.2 million ratepayers, at that time, consumed 40.3 terawatts (TWh), costing them about $2,4 billion.  Fast forward to November 2015 and the 4.5 million ratepayers were paying an average of 11.6 cents/kWh, and the cost of the 43.2 TWh consumed was $5 billion. The increase in just seven years was 108%. That’s well above Ontario’s inflation rate.

The rates for every kWh of electricity consumed since 2008 have cost ratepayers $9.5 billion more than if the rates been maintained at 6.02 cents/kWh. The average annual increase ratepayers have paid for just electricity has been almost $1.4 billion1. and has been caused mainly by the addition of renewable energy, principally in the form of unreliable and intermittent wind and solar requiring back-up support from gas plants.

With the increase effective May 1, 2016 and the prior one of November 1, 2015, the added cost of over $400 million annually to residential ratepayer’s bills for the electricity line will be an “aberration” only in the sense that it represents an increase of 8% as opposed to the double digit growth of the previous seven years.

 

©Parker Gallant

April 21, 2016

1.Please note the $2 billion cost of smart meters, transmission lines to connect wind and solar to the grid are billed in the “delivery” line.

The opinions expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy.