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.

Energy Minister claims power bill increases “flatlined”

flatline

Something is moribund, Parker Gallant says, but it’s the Minister’s handling of this portfolio that isn’t too healthy.

 

OEB rate increases are flatlined?

The Windsor Star on June 23, 2015 interviewed Ontario Energy Minister Bob Chiarelli; some of the comments from the article were very interesting.

Chiarelli said consumers have seen the last of sharp increases that averaged about six per cent annually over the last eight years. Starting next year, hydro rates for industrial users are expected to rise by 1.7 per cent — about the rate of inflation. Increases in rates for residential users will be “slightly higher,” he added and went on to note:  “There was a blip in rate pressures because of the investments that we made, but starting in 2016 that will be flatlined very significantly.”

Here we are in 2016 and the Ontario Energy Board (OEB) just announced rate increases for the “electricity” line on our bills for the next six months commencing May 1, 2016.   Just prior to the announcement the OEB issued a release stating they had “redefined” what a “typical” residential customer uses and dropped it from 800 kWh per month to 750 kWh.  The effect of that “redefined” typical ratepayer reduces the monthly increase quoted in the press release.

Was intentional to support Energy Minister Chiarelli’s “flatlined” comment?

What the press release didn’t tell us was what “electricity” rates will actually increase.   As an example Off-peak rates will increase from 8.3 cents to 8.7 cents; a 4.8% increase for 6 months and a 9.6% increase annually.  Most households consume 67% of their electricity during the Off-peak hours so the rate increase for 67% of the “typical” bill increased by 9.6% not the 2.5% the press release pretended!  For Mid-peak the rate increase was 3.1% for the 6 months and for On-peak the increase of 0.5 cents was 2.9% for six months.

So, in Energy Minister Chiarelli’s math—the “blip” he referenced, and his apparent misunderstanding of the English language term “flatlined” has a connotation bordering on death as Merriam Webster defines it:  “to register on an electronic monitor as having no brain waves or heartbeat”.

There is a lot unsaid in the “flatlined” definition that ratepayers will no doubt consider as applicable to the mismanagement of the Energy portfolio, and the constant and incessant increases in their electricity bills every six months.

Minister Chiarelli recently announced he is seeking another 600 megawatts of industrial wind turbines that will no doubt continue the “flatlined” rate increases and add to the killing, harming and harassment of birds and bats and also result in more rural residents suffering from health effects caused by those industrial wind turbines.

Time for the Minister to stop the madness.

© Parker Gallant,

April 14, 2016

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

Out of sync: power demand and wind power in Ontario

…and Ontario electricity ratepayers pick up the tab, as last weekend’s $17-million demonstrates, says Parker Gallant

Wind trumps Darlington and ratepayers pick up the bill

The love affair the current Ontario government has for industrial wind turbines (IWTs) took a turn for the worse recently. Because wind power from turbines appears at high level in the Spring and Fall seasons (when demand for power is low), Ontario was forced to shut down a Darlington nuclear reactor with a rated capacity of 880 MW.

The Independent Electricity System Operator (IESO) claims that “wind curtailment” (or preventing wind power from reaching the grid when it’s not needed) helps to avoid nuclear shutdowns, the past weekend dispelled that notion. The shutdown of Darlington G 4 and the frequent steaming off at Bruce Nuclear is due to wind forecasts combined with low demand, and “first to the grid” rights given to IWTs via the Green Energy Act.

On April 9 and 10 wind turbines could have generated over 81,000 megawatt hours (MWh) of power, but IESO curtailed over 29,000 MWh on that typical “shoulder season” weekend in Ontario. Demand was low and averaged about 350,000 MWh over the two days.  As a result, export of power to Michigan, New York and elsewhere was about 77,000 MWh, or almost the full amount that wind would have generated without curtailment, and about half of what the Darlington unit could have provided.

Those surplus exported MWh generated revenue of $3.65/MWh on April 9 and a miserly 6.5 cents/MWh on the 10th producing revenue of about $144,000. That was for electricity billed to ratepayers at close to $120/MWh for a cost of about $9 million.  At the same time Ontario ratepayers were picking up the costs of that shut down Darlington unit, which added about $3 million to the weekend’s costs.

$12 million price tag for Ontario electricity customers

In short, Ontario ratepayers had their pockets picked for $12 million for power they didn’t need or demand.

Additionally ratepayers were paying gas plant generators over $5 million just to idle in case the wind stopped blowing or the sun disappeared behind the clouds. That’s a price tag of $17 million for power that wasn’t needed.

To sum up the weekend Ontario ratepayers were:

  • Subsidizing the sale of surplus electricity to our neighbours
  • Paying for the curtailment of wind generated electricity
  • Paying for power that a nuclear plant might have produced, and
  • Paying for gas plants to idle.

Ontario ratepayers’ energy demand and wind’s inability to deliver at the right time are becoming more and more out of sync. The cost to ratepayers keeps going up, without any visible benefit. Time for Minister Bob Chiarelli to stop hobnobbing with Big Wind lobbyist CanWEA and pay attention to his abysmal management of the Energy portfolio.

© Parker Gallant,

April 12, 2016

hornung-chiarelli-campbell

Left to right: CanWEA President Robert Hornung, The Honourable Bob Chiarelli, Ontario’s Minister of Energy and Bruce Campbell, the President and CEO of Ontario’s Independent System Operator (IESO) at the CanWEA Spring Forum in Gatineau, QC, on April 5, 2016. Photo by Teckles Photo Inc.

False promises of electricity bill relief from Ontario energy minister

Time the Energy Minister looked beyond the fund-raising dinner parties.
Parker Gallant: Time the Energy Minister looked beyond the fund-raising dinner parties.

In an effort to determine what track Energy Minister Chiarelli’s electric train is on I took a brief look at his ministerial forecast, “Achieving Balance”.  My interest was piqued by a recent article suggesting China has put a chill on new wind power projects.  As it turns out, China is having trouble because industrial wind turbines are “churning out power that’s being wasted” and they are being forced to curtail wind to ensure stability in some of the country’s grids.

Having recently noted the costs to Ontario ratepayers for just one day when power from wind was being curtailed, I decided to examine costs on a longer term. Thanks to Scott Luft, who does an incredible job of logging estimated curtailments of industrial wind turbines (IWT), I was able to determine the results for the final quarter of 2015.  Total estimated curtailments for the Quarter ended December 31, 2015 were 434,750 megawatt hours (MWh).

An Independent Electricity System Operator (IESO) report released a couple of weeks age claimed IWT-generated 3.0 terawatts (TWh) in the last quarter of 2015, so, if one includes curtailed wind, ratepayers were obliged to pay for 3,434,750 MWh. That represents  93.9% of net exports (exports of 5.401 TWh less imports of 1.742 TWh) or 63.6% of gross exports.

What this means is that in the fourth quarter of 2015, wind-generated electricity was all surplus to our needs, without including steamed off nuclear, or spilled hydro!

The 3,434,750 MWh is estimated to have cost ratepayers approximately $460 million. The 3 TWh of electricity IWT delivered to the grid cost about $405 million and the curtailed cost was almost $55 million.  During the quarter, the HOEP1. averaged $1.50/MWh, meaning if all of generated and curtailed wind was a part of the 5.4 TWh exported, it would have generated only a shade over $5 million —that would have reduced the cost to ratepayers to $455 million.   With 92 days in the last quarter of 2015, the money paid by Ontario ratepayers averaged daily was almost $5 million.

Back to Energy Minister Chiarelli’s “Achieving Balance” long-term energy plan, we should be captivated by the promise made: “Significant ratepayer savings will be realized as a result of reduced Feed-in Tariff (FIT) prices, the ability to dispatch wind generation, the amended Green Energy Investment Agreement, and the decision to defer new nuclear.”

Clearly the “significant ratepayer savings” promised by Minister Chiarelli was for the benefit of our neighbours who purchase our surplus electricity at a fraction of the costs to Ontario ratepayers.

It is well past the time for Minister Chiarelli to look at China’s position and to cease any further procurement of IWT generation, or is the Ontario Liberal Party too dependent on party donations from the IWT developers as suggested in a recent article emanating from Queen’s Park?

©Parker Gallant,

April 5, 2016

  1. The Global Adjustment is not levied for exported electricity.

The views expressed are those of the author.

Green energy done badly: stories from around the world

WEEKEND READING

April 2, 2016

We present a collection of stories that review the manner in which strategies that are supposedly positive for the environment have been enacted (usually without any sort of cost-benefit or full impact analysis), and what the results are to date.

From Terence Corcoran’s review in The Financial Post, to a review of German energy policy (this is a sad, sad story worthy of Dickens), an article in Prince Edward County’s Wellington Times (one of the last independent newspapers in Canada) on a wind power developer’s arrogance, and last, an opinion on what the real effect on the local environment green energy policies are in reality, the collection deserves a read … and consideration by the Ontario government.

Will they? In the words of the team of academics lead by the University of Ottawa’s Stewart Fast, writing recently about the disastrous implementation of the Green Energy Act on Ontario communities, “Our recommendations will unfortunately remain unaddressed, without further consideration or assessment of the lessons that could be learned.” [Fast et al. Lessons learned from Ontario wind energy disputes, January, 2016]

Terence Corcoran, The Financial Post, “Clean, green, and catastrophic.” (Note: our Parker Gallant provided some figures for this article.)

Handelsblatt (Global edition) “How to kill an industry”. (Thanks to energy economist Robert Lyman in Ottawa for sending this in.)

Rick Conroy, The Wellington Times, “There’s always a catch.” (“The wolf has been sent to find out what’s killing all the lambs …” Conroy writes.)

Last, this letter to the editor of Ontario Farmer, excerpted here.

“Off-grid will make a bad situation worse for reluctant grid payees”

A farming friend recently took me on a “crop tour” of rural businesses that are partially or fully off-grid. We saw a sawmill, a pressed-steel manufacturer, a maker of wood-burning stoves, a cabinet-maker and an ethanol plant. Finding it progressively more difficult to remain profitable in the agricultural business with skyrocketing electrical costs, my friend is seriously looking at more cost-effective alternatives. If going off-grid works for others, perhaps it will work for him.

“Off-grid” means that these business owners are no longer victims of usurious hydro rates the Ontario Green Energy Act (GEA) has imposed on the vast majority who obtain electricity from Hydro One and other such utility companies. Are these enterprises trailblazers illuminating a path to greater energy independence for other beleaguered hydro ratepayers?

Or are they creating an even greater financial burden for those who remain on the grid?

And what may be the environmental impact if a great many businesses follow suit?

Operating the Ontario power grid has become exorbitantly expensive under the GEA. It is becoming ever more expensive as greater numbers of windmills spring up to further sully our rural landscapes. … Operating costs of a centralized generation and distribution system are borne by all users. The more users there are, the less share of fixed costs each user pays. Businesses fleeing to off-grid energy alternatives leave fewer users on-grid bearing fixed costs; thus, each user pays more. While going off-grid may financially benefit those who do it, greater economic burden falls on those remaining on-grid, and most have no choice.

Fossil fuels are the primary energy source for off-grid users. Electricity to run their businesses must be generated by some sort of power plant, typically an internal combustion engine driving and electrical generator. It’s far removed from the most cost-effective or environmentally friendly way to generate and distribute electricity —the way we used to do it — but the GEA has made grid power so prohibitively expensive off-grid generation has become economically viable for major energy users.

Dave Plumb

Belmont, Ontario

 

 

 

Ontario power demand down, prices up—what gives?

2016 off to a great start as ratepayers pay hundreds of millions for surplus power (mostly wind)

tallturbine

March 27,m 2016

By Parker Gallant

The Independent Electricity System Operator (IESO) released the February 2016 Monthly Market Report and it is full of more bad news for Ontario’s beleaguered ratepayers.

Combined with the bad news in the January 2016 report, the average commodity price for the first two months of the current year jumped from $85.37 per megawatt hour (MWh) in 2015 to $108.17 per/MWh.   This could translate to an average household increase of as much as 27% in electricity rates levied, when we get the news from the Ontario Energy Board (OEB) mid-April about effective rates for the ensuing six months.  If “commodity” cost jumps $22.80/MWh, the average Ontario household (consuming 800 kilowatts (kWh) per month) would pay an additional $220 annually and $28.00 more in HST.

So, what caused the 27% jump in the first two months compared to a year ago?

Wind 63 % of wasted power

First, the weather in 2016 was milder meaning demand dropped 6.5%, and many generators were paid to not generate.   My friend Scott Luft does a great job at estimating the power we steam off (nuclear), spill (hydro), curtail (wind), etc.; he estimates the first two months of 2016 saw that class of surplus power was 675,000 MWh versus 332,000 MWh in 2015. Wind was 63% (425,000MWh) of 2016’s wasted power and 28.5% (95,000 MWh) in 2015.  Ratepayers pick up the full cost of that power!

Additionally Ontario’s exports were significant both years; the price achieved excludes the Global Adjustment (GA) or $95.02/MWh for 2016 versus $45.34/MWh in 2015. The GA cost is paid for by Ontario ratepayers and was more than double 2015. Also, a large chunk of the GA  for “Class A” ratepayers (large industrial clients) is paid for by “average” ratepayers who also picked up the costs of the newly launched Ontario Electricity Support Program for ratepayers living in “energy poverty.”  The OEB estimated the annual cost would be $175/$225 million.

If this continues, electricity costs will jump $2.5B … in one year

In all the first two months of 2016 extracted an additional $410 million dollars out of Ontario ratepayers’ pockets, compared to the same 2015 time frame — despite reduced demand.  If this pattern continues, electricity costs will jump $2.5 billion in just one year.

This is despite the promise made by Minister Chiarelli in an article in the Windsor Star June 24, 2015:  “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.”

Minister Chiarelli seems unable to comprehend the cause and effect of adding unreliable, intermittent wind and solar generation to the grid when they are not needed. In just the first two months of the current year, the costs of decisions by ministers of Energy (past and present) appear to have added billions to ratepayers’ bills without any perceptible environmental or economic benefit.

©Parker Gallant,

March 25, 2016

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

NB:  From the just released IESO 18 Month Outlook

“About 1,400 MW of new supply – 950 MW of wind, 300 MW of gas and 140 MW of solar generation – will be added to the province’s transmission grid over the Outlook period. By the end of the period, the amount of grid-connected wind and solar generation is expected to increase to about 4,550 MW and 380 MW, respectively. The embedded wind generation over the same period is expected to increase to about 700 MW. Meanwhile, embedded solar generation is expected to increase to about 2,180 MW. “

Florida drops electricity rates again, Ontario’s continue to rise

Florida: plenty of natural gas-fired power. No wind
Florida: plenty of natural gas-fired power. No wind

A Canadian snowbird tells me that Florida Power & Light Company (FPL) announced they once again reduced their rates and now brag their electricity rates are lower than 10 years ago.  This is quite a feat when measured against other basic needs in Florida, such as the cost of food — up 26%; housing —  up 20%; and healthcare, up 40%.   According to the US Energy Information Administration  (EIA) the all-in Florida rate (including delivery costs) was 11.49 cents/kWh as of December 31, 2015.

Contrast that news with Ontario and a look back at the prescribed Ontario Energy Board (OEB) November 1, 2005 rate (electricity only); it was 5.32 cents/kWh.  The OEB site notes at November 1, 2015 it had climbed to an average of 10.7 cents/kWh. The change from 2005 represents an increase of 101% . And that doesn’t include delivery, regulatory and HST, which have had the effect of doubling our rates.

FPL has more residential customers (4.8 million) than Ontario (4.5 million) and those FPL customers consume more electricity per capita than all other states (1,000 kWh per month) except Texas, yet the average annual bill is only $1,900.   It should be noted FPL’s parent company is Nextera Energy Inc. which has a subsidiary in Ontario (Nextera Energy Canada) with more than 600 megawatts (MW) of industrial wind turbines (IWT) capacity, and a contract guaranteeing them in the neighbourhood of $135.00 per MW hour for their generation.  If one calculates the potential revenue of those 613.8 MW at a generation level of 30% of capacity, it can be expected to represent annual revenue of almost $220 million and, over the 20-year span of the contract, would generate about $4.4 billion.

Presently Nextera’s Florida subsidiary FPL has zero MW of wind power in Florida and a limited amount of solar-based power, but claim “its highly fuel-efficient power plant fleet is one of the cleanest among all utilities nationwide.” Also :  “FPL’s fossil fuel fleet set a new record for its fuel efficiency in 2013, bringing its system-wide heat rate down to 7,657 British thermal units (BTU) per kilowatt hour”.

Clearly, the reason Ontario’s electricity rates for residential households climbed 101% while FPL’s has declined, is linked to our politicians who are determined to add 10,700 MW of renewable energy in the form of wind, solar and biomass at contracted rates, well in excess of competing jurisdictions.  Add to that the need to back up wind and solar with gas plants and it is easy to see why the lack of a cost/benefit analysis has driven so many Ontarians into energy poverty.

If the next several years of Liberal rule, provincially and federally, bring Ontario more costly intermittent and unreliable generation sources; consumers will be further driven to make the choice between “heat or eat” and our industrial base will continue to lose good jobs.

Let’s pull the plug on costly energy sources until Florida and the rest of the world catches up!

© Parker Gallant

March 15, 2016

 

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

Ontario’s hidden taxes: Parker Gallant

This past weekend, Wind Concerns Ontario held its Annual General Meeting and a strategy session for members in Wellington, Ontario.

Among the presentations was this from Parker Gallant, on the Wynne government’s hidden taxes.

Premier Wynne: I have to get the money from someone! That means YOU
Premier Wynne: I have to get the money from someone! That means YOU

Ratepayers and Hidden Taxes

 The “Water” Tax:                                                                                        Annual Costs

Fuel charges for Hydroelectric Generating Stations:                                       $345 million for 2015

From OPG’s Annual Report:

“Hydroelectric generating stations in Ontario are subject to taxes and charges as prescribed by Ontario Regulation 124/02 under the Electricity Act, 1998 (Ontario Electricity Act). All OPG hydroelectric generating stations are subject to GRC Property Tax, which is determined by applying graduated tax rates, ranging from 2.5 percent to 26.5 percent through four levels of production, to the station gross revenue. GRC Property Tax payments are made to either the OEFC or to the Ontario Ministry of Finance.”

 

The “Social Assistance” Tax                                                                         $175/225 million estimated

The Ontario Electricity Support Program or OESP to support low income households commenced January 1, 2016 should rightly be a budget item of the Ontario Ministry of Community and Social Services but the Ontario Liberal Party made it a part of the Energy Ministry. The OEB estimated support for the 570,000 households (2014) living in “energy poverty” in the province would require a budget of $200 million. It is not clear if the OESP will replace the LEAP program of about $10 million annually.

 

The “Net Zero” Tax                                                                                      $2/300 million estimated 

Settlement with both the Power Workers Union and the Society of Energy Professionals was claimed to be a “Net Zero” wage settlement but disclosure in both the Hydro One and the OPG Annual Reports indicate that both will receive lump sum payments for the first two years of the respective contracts and starting in the third year those employees will receive annual awards of Hydro One shares equal to 2.7% of their wages. Those annual awards of Hydro One shares will extract the value from their sale that would have gone to the province for “infrastructure” spending. It is worth noting that the share sale committed Hydro One to dividend out 75% of Hydro One’s annual earnings.

The “Realty Tax” subsidy                                                                            $200 million (?) estimated 

Dwight Duncan when Minister of Finance decreed industrial wind turbines should be taxed at only $40,000 per megawatt of capacity or approximately 1.5% of their capital cost and only about 1/10th of their annual revenue base meaning all other industrial/commercial/residential taxpayers are forced to pay extra for the services they might cost the various townships including road repairs and possibly decommissioning.

 

The Electric Vehicle subsidy                                                             $4/5 million estimated

While the EV subsidy is not absorbed by ratepayers it is a taxpayer cost. It is ironic that if you can afford to purchase a high end Tesla automobile at a cost of $100,000 plus you are able to obtain a grant of up to $10,000 from the Province. Why are people earning minimum wage supplementing people who can afford these vehicles?

Read the full presentation here: AGM2016ParkerGallant

 

 

 

 

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