Wind power generation whacks ratepayers: surplus power sold at fire sale prices

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IESO just released their January 2016 Monthly Market Report with details on electricity generated and demanded, along with prices and impact on ratepayers.   It is interesting to compare January 2016 with January 2015 to get an idea of how the push for renewable energy is hurting Ontario’s ratepayers.   The comparison of the facts (and some estimates) year to year is disturbing and solidifies the notion that rate increases will not slow down or stop, no matter what Bob Chiarelli, Minister of Energy claims.

Ontario’s demand fell 5.6% or 735,000 megawatt hours (MWh) but exports of surplus generation increased by 10.2% or 247.000 MWh even though IESO reported generation decreased by 4.5% (net of exports/imports) or 668,000 MWh. The reduced demand and increased exports wound up costing ratepayers a lot more in the current year than 2015 for a variety of reasons as we will show.

The IESO Market Report for January 2015 valued the cost of electricity production at $80.23 per MWh (GA of $50.68 + HOEP of $29.55) versus a cost in January 2016 of $105.48/MWh (GA of $91.79 + HOEP of $13.69). The cost increased $25.25/MWh or 31.5%, without factoring in the 10% reduction we received in 2015 from the Ontario Clean Energy Benefit (OCEB) or the nominal savings from the removal of the DRC, both of which became effective January 1, 2016.

A lot of the big jump in costs can be attributed to: Ontario’s net exports (exports less imports) which increased 67,000 MWh; the drop in the market value (HOEP) down by $15.86/MWh or 53.7%; a huge increase in curtailed production1. from wind (up from 41,000 MWh to 141,000 MWh) and nuclear (up from 26,000 MWh to 68,400 MWh).   Additionally wind power generation increased 247,000 MWh and,  including curtailed wind, was up 348,000 MWh or 35% from 2015.

As surplus exports are sold at the HOEP price the revenue generated from their sale in January 2016 was well down as Ontario’s ratepayers picked up the jump of $41.11/MWh in Global Adjustment or GA costs.

In total, the January 2015 net exports, together with the cost of curtailed wind and nuclear cost Ontario ratepayers approximately $97 million. The January 2016 cost of surplus exports and wind and nuclear curtailment was $191 million — that’s a jump of $94 million or 97% year over year. Net exports amounted to 1,851,800 MWh and wind generation and curtailed wind generation amounted to 1,339,000 MWh, which equates to 72.3% of net exports. What this means: power generation from wind is surplus.

Ontario’s long suffering 4.9 million rate-paying households in only the first month of the current year have each been forced to subsidize our fire sale of surplus energy to the tune of $39.00.   If the pattern continues (February may be worse) Ontario’s ratepayers will pick up wasted costs of $470.002. each annually.

Minister Chiarelli should immediately cancel his directive to IESO for the acquisition of more intermittent and unreliable wind and/or solar generation.

©Parker Gallant,

March 2, 2016

 

  1. Hat tip to Scott Luft for his provision of the curtailment estimates.
  2. This doesn’t include the impact of the OESP (Ontario Electricity Support Program) or spilled hydro.

Former Wynne government minister on Ontario’s debt: dangerous

Former Finance and Energy Minister Dwight Duncan offers his opinion on Ontario’s debt and how it got to be so significant. He should know: a lot of it is his fault, including long-term contracts for wind power.

Dwight Duncan, former Finance Minister: Ontario debt "dangerous". He oughta know.
Dwight Duncan, former Finance Minister: Ontario debt “dangerous”. He oughta know.

Dwight Duncan, Ontario’s former Minister of Energy and Minister of Finance has found a new calling as a columnist with QP Briefing, the reputed eyes and ears at Queens Park.  QP Briefing catchwords on their website are “exclusive coverage, trusted analysis.” One might wonder how, after reading the first two columns Duncan wrote for them, truthful that claim might be.

Duncan on debt: Mr. Duncan’s first column was very critical of Ontario’s increasing debt : “A province that is dangerously ill equipped to face the next, and inevitable, economic downturn.”

Isn’t it ironic that a former Minister of Finance, who presided over several budgets that continued to increase Ontario’s debt, should now be criticizing the results of his own work, which collectively increased Ontario’s debt by well over $60 billion? He notes the fastest growing expense line coming out of the budget for 2015/16 is “interest.”   He also now claims the increasing interest expenses are “an enormous wealth transfer.”

Nowhere in the article does he accept any blame for the mess he played in creating it. Near the end of the column he compliments the Wynne government for “speaking out about an optimum net debt to GDP ration” and about linking spending to public transit spending.  He also expresses happiness for the election of the Trudeau government, but has concerns that “federal transfers” may be reduced.  Guess he didn’t see that one coming; if he had, maybe he would have stopped spending?

Duncan on the AG and the energy file: Duncan’s second column is simply a beat-up on the Ontario Auditor General for her damning report on Ontario’s management of the electricity sector.   He claims the report was out of context.  He even goes as far as to refer to Energy Minister Bob Chiarelli as one of the “most solid ministers.”

Duncan goes on to make audacious claims about diesel generators in some cities, OPG being near bankrupt, no new “significant” generation capacity added in 20 years, no renewables, no “significant” transmission investments, no conservation programs, etc. etc. when the Ontario Liberals gained power.   But he fails to remind the reader that, as Minister of Energy, he launched many of the programs that have been roundly criticized by the current Auditor General, Bonnie Lysyk and her predecessor, and that have caused electricity rates to skyrocket in Ontario.

We should be reminded of Energy Minister Duncan’s achievements: he brought us “smart meters”; he brought us long-term contracts for industrial wind turbines and solar panels at high prices (before the launch of the FIT program); he brought us conservation spending ($400 million per year for three years); he created the Ontario Power Authority; he brought us new gas plants (big and small) to back up wind and solar; and how he pushed us to reduce consumption in a time of power surplus. All these actions by Dwight Duncan, Minister of Energy, drove up electricity prices.

We should remember too that Dwight Duncan was and presumably still is a fan of “cap and trade” and he pushed for increased pension funding from the federal government. We haven’t seen the last of his effects on our electricity bills or our cost of living.

One of Duncan’s famous quotes while in office was: “We’re not going to spend $1.6 billion on technology that doesn’t help climate change. That’s just dumb.” That was about installing anti-pollution scrubbers on the province’s coal plants in 2007.  The fact is, the cost of “smart meters” alone exceeded the scrubber costs. The logic behind that kind of thinking presumably led him, as the Minister of Finance, to rack up huge deficits, increasing the province’s debt levels by over $60 billion during his time in that portfolio.

In my humble opinion QP Briefing should not have engaged Mr. Duncan as a columnist as he has, so far, demonstrated a bias. He believes what he left behind was commendable and now seeks to justify it all, despite the burden placed on Ontario’s taxpayers and ratepayers.

© Parker Gallant

February 14, 2016

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

EDITOR’S NOTE: Mr. Duncan’s gig as a QP Briefing columnist is strictly a sideline; his day job is being a “Strategic Advisor” at law firm McMillan LLP

Mr. Duncan’s comment about the coal plant scrubbers is interesting: the province has gone on to spend many more billions on wind power, which doesn’t help climate change either.

Electricity costs up 97 percent in Ontario: power surplus exports rising

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Ontario gives away $4.5 billion ratepayer dollars; persists in directive to add more wind and solar

The GA or Global Adjustment first made its appearance on IESO’s Monthly Market Report in January 2007. As noted in the chart below, that year, the GA finished 2007 at $3.95 per megawatt hour (MWh) which means it cost Ontario’s electricity ratepayers about $600 million for the full year. In, 2015 the GA was just shy of $10 billion.

To be fair, the GA includes the price of “contracted” power, less the value given to it on the hourly Ontario electricity price (HOEP) market. As a result of Ontario’s high surplus of generating capacity and the intermittent presentation of wind and solar in periods of low demand, has resulted in the HOEP showing declining values. Despite declining values the cost of a kilowatt hour (kWh) of electricity increased from an average of 5.43 cents/kWh to 10.7 cents/kWh from November 1, 2007 to November 1, 2015 — up 97%. The upsetting part, and a driving force behind the 97% increase is surplus generation sold to our neighbours. We sell excess output to New York and Michigan, etc. without inclusion of the GA. The GA lost on those sales is charged to Ontario ratepayers and has become increasingly large. The chart indicates the “intertie flows” (exports/imports netted) initially cost Ontario ratepayers $20 million for 2007, but that has increased, and representing more $1.3 billion for 2015.

It is anticipated the annual cost of subsidizing surplus exports will continue to climb.

Scott Luft notes results for January 2016 are 20% higher than January 2015 for the cost of electricity as the HOEP was lower despite what Ontario’s Liberal government says about pricing stabilizing. With plans to add 500 MW of capacity for wind and solar, the climb will continue for at least another two years. Energy Minister Bob Chiarelli recently stated: “Our government’s focus is now on preparations for the next long term energy plan and the ways in which we can continue to drive down costs for Ontarians”. (Note to the Minister: a 97% increase does not “drive down costs”!)

Further reference to the chart points out addition of more wind and solar over the past nine years has driven up the percentage of renewables exported. The “Net Intertie” (net exports) increased from 19.6% in 2007 to over 57% in 2015.

What the Energy Minister needs to accept is this: we don’t need more intermittent and unreliable power.

That message is not getting through, despite evidence presented by the Auditor General of Ontario on several occasions and by numerous critics in the media.

Costing ratepayers $4.5 billion in after-tax dollars to help our neighbours is what’s happened. Perhaps Minister Chiarelli could suggest to Finance Minister Charles Sousa, that the money extracted from ratepayers provides no benefits to Ontarians. Perhaps a tax receipt is in order — that would help cash-strapped citizens, but there is a better idea.

The Energy Minister needs to immediately recall his directive to the IESO to acquire another 500 MW of contracts for intermittent wind and solar power.

© Parker Gallant,
February 7, 2016

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

Year Net Intertie 1. Global Adjustment Cost to Ratepayers % of Renewables to Wind Solar &
TWh 2. Million of $/TWh GA X Net Intertie Net Intertie Biomass generation
(millions)
2015 16.86 TWh $77.80 $1,311 57.20%        9.65TWh
2014 15.15 TWh $54.59 $846 47.00%        7.12TWh
2013 13.40 TWh $59.22 $794 48.50%        6.50TWh
2012 9.90 TWh $49.23 $487 59.60%        5.90TWh
2011 9.00 TWh $40.48 $364 56.70%        5.10TWh
2010 8.80 TWh $27.18 $239 46.60%        4.10TWh
2009 11.30 TWh $30.56 $345 31.00%        3.50TWh
2008 10.90 TWh $6.12 $67 22.00%        2.40TWh
2007 5.10 TWh $3.95 $20 19.60%        1.00TWh
       Totals 100.40 TWh $4,473     37.00TWh

More turbines, more cost to Ontario electricity customers

Adding more power from wind at this point only benefits our U.S. neighbours, not Ontario citizens

 The ExPlace symbolic wind turbine. The reality is more turbines means more pain for Ontario consumers
The ExPlace symbolic “feel good” wind turbine. The reality is more turbines means more pain for Ontario consumers

It was a “WOW” headline for Cleantech Canada on their website: “180 megawatt Armow Wind project comes online in Kincardine, Ont.”  The article claimed Armow would power 70,000 Ontario homes each year. That’s a “stretch-goal” unless the average household in Ontario has reduced consumption from 800 kilowatts (kWh) per month to 675 kWh.  The Ontario Energy Board (OEB) maintains the average household consumes 800 kWh per month, but apparently, the anonymous author of the report did no research, and just assumed Armow would produce what he was told.

What will happen to the 475,000 megawatt hours (MWh) Armow might produce, probably in the middle of the night or in the spring and fall when Ontario’s demand for electricity is low?

If 2015 production from industrial wind turbines (IWTs) is the measuring stick, we should assume most of the generation we will pay the Samsung/Pattern partnership $135 per MWh for, will be exported!

The surplus power Ontario exported to Michigan, New York, etc. in 2015 was reported by IESO as 22,618 gigawatts (GWh). That’s enough to provide 50% (2.4 million) average Ontario households with the 9.6 MWh of annual consumption the OEB use as the basis for setting electricity rates. If Ontario was generating a profit selling surplus power we would all be happy, as it would reduce our rates. But that’s not how the Liberal government has reconfigured the system since first elected in 2003.

The average sale price of those GWh in 2015 was $23.58/MWh meaning their sale generated $533 million. Remember though, the sale price doesn’t include the Global Adjustment or GA (the price difference between the contracted rates of say, industrial wind, and actual market value1.).

The GA costs for those 22,618 GWh averaged $77.80/MWh in 2015, meaning the additional costs of generation picked up by Ontario’s ratepayers was $1,760 million. To be fair we also have to deduct the GA we saved by importing 5,763 GWh, which was about $450 million, reducing the ratepayer burden to $1.3 billion ($1,760 million less $450 million).   One would think the $265 per household subsidizing our neighbours should be treated as a tax-deductible gift, but the province instead levies a tax on the total GA for the exports via the HST. That means the province generated an additional $100 million for their portion of the HST, pushing the cost per household to $285.  And, the drop in the Canadian dollar in the past year made the purchase price for those U.S. buyers even cheaper.

Now if we look at generation from wind, solar and biofuel for 2015, you will note they were respectively 9,000, 250 and 450 GWh, representing 42.2% of all exports. If we include embedded generation, estimated at 4,500 GWh (principally solar), it would represent 62%.  If we look at the all-in costs of production with wind priced at an average of $130/MWh, solar at $500/MWh, and biofuel at $150/MWh, ratepayers are paying $2.4 billion or roughly $500 each per average household!

In short, adding more wind and solar power generation to Ontario’s mix only provides a benefit to our neighbours, but zero value to Ontario’s ratepayers.

Clearly, we don’t need more wind turbine or solar developments like Armow forced on rural Ontario, without consideration of the health and economic consequences. The province needs to back away from their plans to add another 500 MW of intermittent and unreliable wind and solar capacity now.

© Parker Gallant

February 3, 2016

 

  1. Market value is the value determined by the trading activity and the HOEP or hourly Ontario electricity price. Defined by IESO as: “The Hourly Ontario Energy Price, or HOEP, is the average of the twelve market clearing prices in each hour.”

 

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Galloping Global Adjustment charge on your Ontario electricity bill

Galloping Global Adjustment 

As noted in the previous posting, over the past eight years (2007 to 2015) Ontario electricity ratepayers have seen the charge for the basic commodity increase by $6 billion dollars every year — that’s like  the cost of moving 12 gas plants, every year.  This huge jump happened without a clear indication from our political leaders as to the cause, other than blaming neglect of the system on their predecessors and the objective to save the world from climate change.

So what is the real story?

The following estimates may provide the reader some clarity as to the source of most of those costs.   Please bear in mind that some of these are estimates as the information is not readily available from our less than transparent government entities.

  1. The provincial portion of the HST obviously added a lot to the costs and represents about $950 million of the $6 billion.
  2. The addition of over 2,000 MW of solar power generation added about $1.4 billion to the annual costs
  3. The addition of about 4,000 MW of wind power generation added around $1 billion to annual costs.
  4. Agreeing to allow previously unregulated hydro owned by Ontario Power Generation (OPG) to be regulated added $250/350 million.
  5. Granting a rate increase to cover OPG pension and benefit shortfalls added $300 million
  6. Directing the conversion of two OPG coal plants to biomass added $150 million annually
  7. Creating a surplus of generation that is exported without the GA being included added $1.7 billion in costs.
  8. Paying OPG for spilled hydro, Bruce Nuclear for steaming off nuclear, wind generators for constraining, etc. probably cost $300 to $400 million
  9. Moving two gas plants amortized over, say, 20 years would cost about $50 million.
  10. Spending $4.1 billion on Big Becky and Mattagami amortized over 50 years added about $75 million
  11. Paying idling gas plants as much as $15,000 per month per MW of capacity to back up wind turbines probably added $500 million per annum.

While this actually doesn’t include all of the actions directed by the Energy Minister and also indicates a total that exceeds the $6 billion in increased costs from 2007 to 2015, some of the costs listed above have not yet entered the billing system.

Electricity rates are forecast to increase in excess of 10% in 2016 by the end of the year, meaning the cost of the raw commodity, electricity, will reflect the galloping “Global Adjustment” going forward.

©Parker Gallant

January 2016

 

 

 

 

 

Energy Minister offers false hope on environment and citizen input

Well, there could be a little bit of truth in what I said. Maybe. OK, no.
Well, there could be a little bit of truth in what I said. Maybe. OK, no.

Could it be, from his statement yesterday, Ontario Energy Minister Bob Chiarelli has resolved his ministry’s issues in dealing with the many rural communities in Ontario declaring themselves “Not a willing host” to huge wind power projects? What he said: “all levels of government must take the time to hear from experts, community and municipal leaders, aboriginal groups, business leaders and other impacted groups to ensure that all voices can be heard during the regulatory process.”

Unfortunately, no: that press release had nothing to do with the Green Energy Act (GEA).

It was related to interprovincial pipelines, a matter in which the province has limited influence.

The Minister’s statement also rambled on about “Economic prosperity and environmental sustainability” and “our shared obligation to future generations” without mentioning the mess created in his portfolio by himself and past ministers!

The statement about our “shared obligation to future generations” is particularly galling to those affected by the GEA, as it has resulted in 12 to 13% of all households in Ontario living in “energy poverty1.”. The Ontario Energy Board (OEB), controlled by the Ministry of Energy, reported over a year ago that 570,000 households now fit into that category. Those future generations have already arrived!

On the same day Minister Chiarelli issued his statement, the OEB issued a “scam” warning about the Ontario Electricity Support Program: “The OEB has received reports that individuals, claiming to be affiliated with the Ontario Electricity Support Program (OESP), were calling to request access into consumers’ homes.”

The press release from the OEB went on to note: “OEB staff do not conduct a home audit, check furnaces or install equipment for this or any other program.” Of course, the OEB never did any of those things.

So now, the Ontario Liberal government, which is responsible for increasing electricity rates exceeding 10% annually, driving people into “energy poverty,” and creating a program to help those suffering from unaffordable electricity rates, has to warn us that we may be scammed!

Seems to this writer that the Wynne and McGuinty governments have been the cause of the scam from the start, and have refused to hear from “community and municipal leaders, aboriginal groups, business leaders and other impacted groups” on the issue of the environmental and economic impact of industrial-scale wind turbines being forced upon Ontario’s rural communities.

©Parker Gallant,

A disgruntled energy consumer

January 28, 2016

 

  1. Energy poverty is defined as spending of 10% of household income on electricity and heat.

 

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

Ontario says communities should have a voice in the Energy East pipeline project; meanwhile, 91 municipalities are now Not A Willing Host to wind power projects--still can't say 'no'
Ontario says communities should have a voice in the Energy East pipeline project; meanwhile, 91 municipalities are now Not A Willing Host to wind power projects–still can’t say ‘no’

Ontario electricity costs 4 times inflation under Liberal rule

“Provincial benefit”: is this another one of Premier Wynne’s “stretch goals”?

Parker Gallant maps power price increases under the Ontario Liberal government

Back in February 2011, IESO announced in their publication the Electricity Insider that a line item on some electricity bills would be changed.  The message was: “For all consumers that pay for electricity on market prices or who have signed a retail contract, the line item Provincial Benefit on your electricity bill will be renamed Global Adjustment starting in 2011.” 

 For those who relied on their local distribution company to bill them, the term “Provincial Benefit” or “Global Adjustment” never appeared on their bill. It was hidden in the “electricity” line! 

Presumably as a result of the change someone at IESO went back to 2007 and changed all the monthly summary reports to read Global Adjustment rather than “Provincial Benefit”. Since then the term Global Adjustment has gained a certain infamy, commencing with the 2011 Auditor General’s report, the December 9, 2014 report and again in the December 2, 2015 report.

In 2007, the first year the GA term first appears in IESO’s annual consumption reports, one notes Ontario’s consumption was 152 terawatts (TWh). The GA was $3.95 per MWh and the HOEP (Hourly Ontario Energy Price) or market price was $50.51 bringing the average cost for the raw commodity; electricity, to $54.46/MWh or 5.4 cents per kilowatt hour (kWh) for the year.  That means the cost of the raw electricity consumed was about  (152 TWh X $54,460,000/TWh = $8.27 billion) $8.3 billion.  Another $300 million was required to cover the cost of 5.1 TWh of imports and  12.3 TWh of exports (5.1 TWh X $50.51 million/TWh + 12.3 TWh X $3.95million/TWh = $$306 million) making the all-in costs of the commodity $8.6 billion.

Electricity used to be cheap

What that means is, even though the Liberal government had been in power for four years, the price of generating electricity was relatively cheap, increasing at a rate of about 3% annually from $47.82/MWh in 2003 to $54.46/MWh in 2007. While the increase came in higher than inflation, ratepayers were told repairing the system because of its reputed neglect under the previous government was the reason.

Fast forward to 2015 and see what the next eight years under the Liberal government brought ratepayers for the raw commodity’s cost, in comparison to the first four years.

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Good money after bad: mismanagement of Ontario’s power system

Environment Minister Murray will say, it's all for the environment! Problem: wind power does nothing for the environment.
Environment Minister Murray will say, it’s all for the environment! Problem: wind power does nothing for the environment.

January 23, 2016

This “Op-Ed” appears in the current edition of Ontario Farmer. It is not available online.

Good money after bad: how mismanagement of Ontario’s power system affects you

By Parker Gallant

It’s been several months now since the Auditor General of Ontario released her 2015 report, in which she levelled scathing criticism of how the Ontario government has mismanaged the electricity sector. In what will be her last report to include the management of Hydro One because the government has partially privatized the electricity distributor, Auditor General Bonnie Lysyk condemned the planning and policy implementation processes that have resulted in Ontario’s electricity consumers paying too much for power.

The report made specific mention of the fact that Ontario has a surplus of power, a situation that is likely to continue, if the government continues to give out expensive contracts for “renewable” power sources wind and solar, which provide only a small amount of Ontario’s power and then only intermittently.

The Auditor General said, “The Ministry’s attractive guaranteed prices program has been one of the main contributors to the surplus power situation Ontario has faced since 2009, in that it has procured too many renewable projects, too quickly, and at too high a cost.” The Auditor General’s office also found that Ontario paid “double the current average cost” in North America for wind power.

Her estimate was that Ontario’s electricity customers paid out $9.2 billion just for wind and solar contracts. Worst of all, perhaps, is the fact that Ontario is paying top dollar for renewables –and then selling the power at bargain bin prices—because of the power surplus.

Readers may recall that in most parts of Ontario, we had a very windy Christmas Eve. That breezy situation cost us plenty; because we are forced to buy wind power even when we don’t need it, wind power makes up a substantial portion of the surplus power we sell off. On Christmas Eve, that was about $9.4 million, which is not counting what we paid Bruce Nuclear to “steam off” power, or what we paid some wind power producers to limit or “curtail” power production.

What would your local hospital have done with even a small part of that $9.4 million?

What could Ontario have done with the $339 million the Auditor General says we paid for curtailing surplus electricity between 2009 and 2014?

What would you have done with the $360 extra you paid last year (assuming you use only 800 KwH per month of power)?

Read the full article here. Good money after bad-January7

Parker Gallant is a former vice-president with TD Bank. He resides in Prince Edward County, and is vice-president of Wind Concerns Ontario.

 

Wynne government minister not completely honest in mandate letter responses: Parker Gallant

Take another look at your energy minister's claims to have fulfilled his mandate, Parker Gallant tells Premier Wynne
Take another look at your energy minister’s claims to have fulfilled his mandate, Parker Gallant tells Premier Wynne

What follows is an excerpt of a letter sent by Parker Gallant to Ontario Premier Kathleen Wynne. We present this because of the role of wind power generation in causing Ontario’s electricity bills to rise, causing increasing hardship for Ontario’s citizens and business.

January 11, 2016

The Honourable Premier Kathleen Wynne, Queen’s Park, Toronto Ontario

Dear Premier Wynne,

I noticed your government’s press release of January 11, 2016 dealing with the “Ministers Report on How They Are Delivering on Mandate Letter Priorities”.

In particular I noted your objective to bring “Ontario closer to its goal of becoming the most open and transparent government in Canada” and felt that someone should alert you that not all of your Ministers are being completely honest with you in their reports.

I have only looked at the Energy Minister’s response but if it is indicative of some of the other reports, perhaps it is time to admonish them. They may not be doing what you told them. I will below highlight a couple of your Energy Minister’s responses to demonstrate.

Mandate: Mitigating Electricity Prices for Residential Customers

Your instruction of September 25, 2014 was: “You will continue to look for savings and efficiencies that will help keep electricity costs affordable for residential consumers.” His response was: “For a typical Ontario residential consumer, current electricity prices are below those forecast in the LTEP.”

My comment: That forecast was his and it must have been particularly bad (I think Bob has trouble with math). The reason I say that is because just 13 months (November 1, 2015) after you instructed him, the cost of the basic commodity (electricity) had increased 15.7%. He also announced late last year that he was dropping the “Ontario Clean Energy Benefit” (OCEB) which bumped the increase to 25.7% effective January 1, 2016 (just days ago). So, less than 16 months after you gave him his mandate he has caused rates to rise by that much!

Minister Chiarelli went on to note: “Beginning January 1, 2016, the Ontario Electricity Support Program is providing ongoing assistance directly on the bills of eligible low-income electricity consumers.”

My comment: he has taken action on this one by announcing a complex program for people living in what is commonly called “energy poverty.” But he has changed the rules for the agencies handling those families and individuals placed in a “heat or eat” situation and made access extremely difficult. Prior to Bob’s creation of the OESP, local social agencies like United Way, etc., dealt effectively with those families who had been threatened with electricity service cut-off. Bob changed the rules, taking away responsibilities from the Minister of Community & Social Services where the support program should rightly be!

He can’t claim he is “Mitigating Electricity Prices for Residential Customers” when he is increasing the price of electricity driving more and more people into “energy poverty”. I would bet he didn’t tell you that the Ontario Energy Board in a report released early last year indicated Ontario had 570,000 households living in “energy poverty”! That is about 12% of all Ontario households.

Another one of your mandated actions were related to removing the DRC; here is how that has worked out. Minister Chiarelli claims: “We have also removed the Debt Retirement Charge (DRC) from all residential consumers’ bills.”

My comment: Minister Chiarelli did do what you instructed on this one, but the average household will save about $67 annually, whereas dropping the OCEB increased their bill by about $240. That means the net additional cost to the average household jumped by close to $170 annually from just these two actions They came into effect January 1st of this year, along with a charge for the OESP of about $12.00 per annum.

I presume this wasn’t what you had in mind when you conveyed your mandate? In any event I think you will see that the Energy Minister is not following your full intent on these matters. He also left the DRC on small businesses which employ many of those people forced into energy poverty who work part-time or at minimum wage. Continuing to charge small businesses the DRC means many are unable to afford to give their employees raises.

Mandate: Transparency

The other issue you pressed on your ministers was related to an Ontario with an “open and transparent” government. I notice the Minister of Energy didn’t once mention the words “transparent” or “open” in this context. He also is in direct control of provincially owned entities who fail miserably to be open and transparent, not to mention in breach of the Acts that created them.

I could cite other issues where Minister Chiarelli failed to honour the presumed intent of your mandate but I won’t tight now as I am sure the competent people in the Premier’s office will be examining the reports from each Ministry for that evidence.

Yours truly,

Parker Gallant

A concerned citizen

 

 

EDITOR’S NOTE: Mr. Gallant informs us that the Premier has replied to his letter, to say she was referring it to Energy Minister Chiarelli for response.

 

Ontario’s electricity Powerball jackpot

Ontario’s electricity “Powerball” giveaway

It’s official! The cost of exporting Ontario’s surplus electricity paid for by electricity ratepayers actually exceeded the prize up for grabs in the U.S.-based “Powerball” lottery. In this case, prize winners were neighbouring states, New York and Michigan and a few other lucky Ontario neighbours.  The other big winners were the wind and solar developers in Ontario who were busy generating surplus unreliable and intermittent electricity.

The Independent Electricity System Operator (IESO) released the “2015 Ontario Electricity Data”, and buttered it up with verbiage that made it sound like everyone in the province won — but they didn’t.  Everyone who uses electricity for their daily needs actually lost a lot of money; the current year will simply make it worse.

Let’s have a look at some of the data. IESO told us Ontario demand fell by 2% to 137 terawatts (TWh)   The press release tells us the drop in demand “can be attributed to conservation initiatives, increases in embedded generation, mild weather and broader economic shifts”.  They don’t say what those “broader economic shifts” were, but they do sort of comment in respect to “embedded” generation.  They tell us that embedded generation grew by 20% last year to 3,000 megawatts (MW,) but they don’t tell us what they produced meaning we are not being told if demand actually fell by the 2% claimed.  If it didn’t fall the claim about those “conservation initiatives” would be false.   We will never know because IESO won’t disclose what embedded generation produced.   That doesn’t sound very “transparent” despite IESO first “Mission Statement” which is to operate the “electricity system and market in an effective and transparent manner.”

Other data released indicates Ontario exported 22.618 TWh (enough to power about 2.4 million1. average Ontario households for a full year) and those exported 22,618,000 MWh generated average revenue of $23.60/MWh each, meaning Minister Chiarelli would claim we made a profit of $534 million.  Well, we didn’t make a profit!  The data in the IESO release indicates the average hourly Ontario energy price (HOEP) for 2015 was $23.60/MWh (2.36 cents per kilowatt hour) and the GA or Global Adjustment added another $77.80/MWh to the costs of producing that exported surplus power bringing the all-in cost to $101.40/MWh.  Our U.S. neighbours don’t pay the GA!

The total cost of producing those 22,618,000 exported MWh was therefore $2,293 million. Now, if we deduct Minister Chiarelli’s “profit” of $534 million, the “Powerball” number picked up by Ontario’s benevolent ratepayers was $1.759 billion.

The press release also told us that power generation from wind reached a record 9.0 TWh in 2015 (without accounting for constrained generation).   The average cost of those 9 TWh was approximately $125/MWh or $125 million per TWh, so if we had had no wind turbines in the province producing electricity intermittently and out of phase with demand, we could have reduced the “Powerball” number by $1.1 billion. That would have saved the average ratepayer $223.

To many Ontario ratepayers, saving $223 in electricity costs would have been a “win” but instead, we all lose.

©Parker Gallant,

January 13, 2016

  1. Ontario has approximately 4.8 million households so our exports were sufficient to power 50% of them using 800 kWh per month or 9.6 MWh annually.
  2. Calculations are $125. X 9 million = $1.125 billion or about the cost of moving two gas plants.