Wind Concerns Ontario is a province-wide advocacy organization whose mission is to provide information on the potential impact of industrial-scale wind power generation on the economy, human health, and the natural environment.
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.
The provincial portion of the HST obviously added a lot to the costs and represents about $950 million of the $6 billion.
The addition of over 2,000 MW of solar power generation added about $1.4 billion to the annual costs
The addition of about 4,000 MW of wind power generation added around $1 billion to annual costs.
Agreeing to allow previously unregulated hydro owned by Ontario Power Generation (OPG) to be regulated added $250/350 million.
Granting a rate increase to cover OPG pension and benefit shortfalls added $300 million
Directing the conversion of two OPG coal plants to biomass added $150 million annually
Creating a surplus of generation that is exported without the GA being included added $1.7 billion in costs.
Paying OPG for spilled hydro, Bruce Nuclear for steaming off nuclear, wind generators for constraining, etc. probably cost $300 to $400 million
Moving two gas plants amortized over, say, 20 years would cost about $50 million.
Spending $4.1 billion on Big Becky and Mattagami amortized over 50 years added about $75 million
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.
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.
“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!
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.
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)?
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.
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.
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.
Omitted data means Ontario government and IESO, not transparent
A Government of Ontario website, updated January 11, 2016, is all about the promise of “Open Government”. Premier Kathleen Wynne is quoted: “Our Open Government initiative will help create the transparent, accessible government the people of Ontario deserve. This is part of our vision for One Ontario, where every voice counts.”
That looks like an empty promise in respect to the Energy Ministry anyway: the IESO (Independent Electricity System Operator) just released its “2015 Ontario Electricity Data” and it’s full of missing data. Perhaps that would have been considered too open and too transparent.
What IESO didn’t tell us:
Exporting 22,618,000 megawatts (MWh) of surplus power in 2015 cost Ontario ratepayers $1.759 billion.
Those 22,618,000 MWh would have powered about 50% (2.4 million) average Ontario households that consume 800 kWh monthly and 9.6 MWh annually.
Those 22,618,000 MWh represented 16.5% of total Ontario Demand in 2015 and 14.8% of total Ontario generation from all sources (except imbedded).
Embedded (referred to as Dx) capacity in Ontario at the end of the third quarter of 2015 totaled 3,579.2 MW of capacity and included 2,103 MW of solar and 669 MW of wind; the amount of energy those two sources alone probably generated (estimated as IESO don’t provide this data) was in the order of 4,500,000 MWh.
Estimated cost of Dx solar, $1.4 billion and of Dx wind $220 million additional to the reported wind production cost of $1,125 million and the $125 million cost of reported solar bringing total costs of those two sources to almost $2.9 billion. That’s without factoring in other related costs!
Wind and solar generation are given “first to the grid” rights meaning they often create SBG (surplus baseload generation) which requires Bruce Power to “steam off” nuclear production for which they are paid, but that potential generation and its cost to ratepayers was not reported by IESO. In fact, there were 588 incidences in 2014 when nuclear was “steamed off,” but IESO don’t report the incidences for 2015.
IESO don’t disclose how much wind or solar was curtailed or constrained, so we are unable to determine how much additional surplus generation may have been produced without grid constraints, and what that may have cost ratepayers.
The spilling of clean hydro is also part of the maneuvers to prevent SBG often caused by power generation from wind, produced out-of-phase with demand, but IESO don’t disclose either the generation spilled, or the cost to ratepayers for that lost carbon-free power production.
IESO claim Ontario Demand fell by 2% in 2015 thanks to “conservation,” etc., but the reader isn’t told the cost of the conservation program, nor is it explained what IESO meant by “broader economic shifts.” Does this mean Ontario is losing (more) manufacturing jobs, or households and businesses are simply going off-grid?
IESO doesn’t disclose costs of generation by source so the reader is completely uninformed; for example, what did the 15.4 terawatts (TWh) of gas generation cost us in 2015? Would it be asking too much for IESO to, at the very least, disclose in their press release what the capacity of each generation source was at the year-end right above where they disclose its production?
IESO casually include the Global Adjustment as a per kilowatt hour cost but don’t disclose that average households pick up a large part ($500/600 million annually) of the total costs to allow Class A (large industrial customers) lower rates.
IESO fail to note the cost of a kilowatt of electricity (exclusive of distribution, etc. costs) increased from an average of 9.06 cents/kWh to 10.8 cents/kWh, an 11.9% increase from 2014 to 2015.
IESO don’t disclose the total value of the GA except to note it was 7.78 cents/kWh. If one extrapolates the per/kWh GA, against total generation (total Ontario consumption of 137 TWh plus net import/exports of 16.885 TWh plus Dx of 4.5 TWh = 158.355 TWh), the Global Adjustment becomes $12.3 billion!
With this amount of important data missing, should we consider IESO to be open and transparent?
Surely the current provincial government can’t seriously believe Ontario’s ratepayers are so simple minded as to be satisfied by empty promises of an “open” and “transparent” government when they view the incomplete utterances from an entity directly under the purview and control of the Minister of Energy, Bob Chiarelli.
It’s time for the current Premier to stop pretending “every voice counts”!
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.
The Canadian Wind Energy Association (CanWEA) had this greeting on their website over the holidays: “The industry reached a milestone of over 10,000 megawatts of installed capacity this year, and during the holiday season more than ever, our thoughts turn gratefully to all of you who have made our progress possible.”
Ontario is home to almost 50% of those 10,000 megawatts (MW) of industrial wind turbines (IWT) and CanWEA is right: they should be grateful. They should be grateful to the ratepayers of the province who have no choice but to pay for intermittent and unreliable wind power as it gets “first to the grid” rights, ahead of reliable power sources like hydro, nuclear and gas.
The source of the problem
The reason for CanWEA’s gratitude is evident when one reviews the Independent Electricity System Operator’s (IESO) 18-month Outlook for January 2016 to June 2017. Due to low demand for electricity in Ontario, particularly during the spring and fall, IESO frequently experiences “surplus baseload generation” or SBG. They note this as follows: “Ontario will continue to experience surplus baseload generation (SBG) conditions during this Outlook period. The magnitude of SBG is trending higher with the addition of new renewable generation and decline in grid demand due to conservation and distribution-connected generation. SBG is expected to be effectively managed through existing market mechanisms, which include inter-tie scheduling, nuclear maneuvering or shutdown and the dispatch of grid-connected renewable resources.”
So, an official admission: Ontario’s power surplus “is trending higher” due to renewables!
In 2014 6.8 terawatts1. (TWh) of power was generated from wind turbines, and during 2014 OPG was forced to “spill” 3.2 TWh of clean hydro, while Bruce Nuclear was forced to “steam-off” 1.3 TWh of clean CO2-free nuclear (September 2014 to October 2015). At the same time, the turbines were curtailed from producing about 500,000 megawatt hours. All of the generated, spilled, steamed-off and curtailed generation was paid for by Ontario’s ratepayers along with the losses on our exports of surplus generation.
The costs of the 6.8 TWh and the curtailed 500,000 MWh was approximately $930 million (7.3 TWh at an average price of $125/MWh); spilled hydro’s costs were $179 million (3.2 TWh at an average price of $56/MWh), and the 1.3 TWh of steamed-off nuclear added another $87 million to the bills of Ontario’s ratepayers. That brought the cost of those 6.8 TWh of production from IWTs to almost $1.3 billion. That alone translates to a cost per kilowatt hour (kWh) of over 19 cents — before charges for transmission, delivery, the Debt Retirement Charge2. etc. and before picking up the losses for surplus export generation. In 2014 that cost ratepayers $1.2 billion, and will end up at close to $2 billion in 2015.
The poor get poorer in Ontario
By November 2015 end, wind had already exceeded 2014 generation, at 7.9 TWh. Add its costs to constrained, curtailed, spilled and steamed-off power and the cost of electricity will continue its climb despite the false claim made by Ontario’s Energy Minister reported in Maclean’s in December 2013: “Looking to the future, we expect that rates will continue to increase, but we have taken very significant steps to mitigate those rate increases.”
Mitigation of rate increases is not in the immediate or near future: we just got hit with an increase effective January 1st, 2016 of 10% with the removal of the Clean Energy Benefit and a new charge to support the almost 600,000 Ontario households living in “energy poverty.” We can also expect a further increase May 1, 2016 to pay for the costs associated with more renewable energy coming on stream (700 MW of wind and 300 MW of solar) in the next 18 months, exacerbating SBG and the cost of dealing with it.
CanWEA’s members certainly had a merry Christmas, but all the Dom Perignon was on you.
Math lesson # 2 for Bob Chiarelli—Calculating the cost per megawatt hour of Ontario’s power
January 5, 2016
Open “Tongue in cheek” letter to:
The Honourable Bob Chiarelli, Minister of Energy, Queen’s Park, Toronto
Dear Minister Chiarelli:
First, I hope you and your family had a Merry Christmas and a Happy New Year.
Second, I hope you found the time to make it through the exercises I described in my recent letter so you now understand the difference between “profit” and “loss” in respect to the energy portfolio.
With that behind you, I believe it’s time for a second math lesson. We will again use the chart for November 12th, 2015 prepared by my friend Scott Luft. See below.
This lesson is focused on allowing you to understand how the cost per megawatt hour (MWh) by generating source can be calculated using the chart Scott prepared versus the IESO daily summary which is not at all as transparent as Scott’s.
Let’s start! Note the second portion of the chart with the subject line “IESO Transmission (Tx)”. The first heading “Nuclear” is a reflection of the generation source and on this day it provided 58.1% of all generation. How to get that calculation is simple. Look at the first line; add the “Ontario” column of the generation of 429,668 MWh to the 2nd line “est. Distribution (Dx)1.” giving you 447,177 MWh. Divide it into Nuclear total of 259,444 MWh and you get 58%! Including curtailed it becomes 61.8%.
Now let’s calculate the cost of each megawatt hour of Nuclear generation. We will include “est. Curtailed” in our calculations as it is generation that could have been delivered, but because IESO was concerned with the grid crashing it was “curtailed” i.e., not produced. Bruce Nuclear has the ability to “steam off” and that is what they were told to do, because wind/solar was generating too much power at a particular point in the day. Now the total of nuclear generation plus the curtailed (steamed off) nuclear is 276,301 MWh and that should be divided into the last line “Cost ($000s)” of $18.062 million —which demonstrates each MWh of nuclear cost $65.37/MWh. Still with me, I hope!
OK, so let’s calculate the cost per MWh for hydro: that was 86,965 MWh + est. Distribution (Dx) of 1,867 MWh and curtailed (spilled) of 208 MWh for a total of 89,040 MWh. Divide that into the “Cost” of $4.671 million and you will see the cost per MWh was $52.46. Hydro contributed 20.2% of Ontario’s total generation (ignoring curtailed generation) this day, so combined with nuclear those two sources generated or curtailed/steamed off 78.2% (365,341 MWh) of all electricity generated in the province, and 100.4% of total Ontario demand (refer IESO daily summary) of 363,960 MWh.
Hope you are paying attention Bob. Here’s why: our exercise up to now doesn’t include generation from wind, solar, gas, biomass or biofuel sources, yet they were were completely CO 2 free! Worth pondering, eh?
Now, time to look at costs of those other sources of generation. Let’s start with gas and its role in providing “peaking power”! On this day, gas provided 5.5% of Ontario generation (including “est. Distribution (Dx).” The calculation: 24,511 MWh divided by 447,177 MWh = 5.5%. The cost of those megawatt hours is simply: divide the “Cost” of $5.360 million by 24,511 MWh, giving a shocking total of $218.68/MWh!
Contracting for gas plants is to back up wind and solar generation when the wind doesn’t blow and the sun doesn’t shine!
Here is an example that requires some math calculation so read this carefully before trying the calculations. Specifically let’s review the TransCanada 900-MW gas plant (planned but canceled) for Oakville (most of the $1.1 billion cost) and moved to Bath! The OPA contract (negotiated by the OPA) will pay them $15,000 per MW per month to be “at the ready.” The annual cost of the 900 MW is $162 million (900 MW X $15,000 X 12 = $162 million).
Bob, what the foregoing means is that if that plant produced just one (1) megawatt hour of electricity in a year, the cost would be $162 million.
Now let’s do a “what if” exercise: assume it will operate at 10% of rated capacity of 900 MW which means it will produce 788,400 MWh (10% X 900 MW X 8760 [hours in a year] = 788,400 MWh). Actual generation costs from the gas peaking plants are based on the cost of the natural gas fuel plus a small mark-up but we will ignore those latter two costs in the next calculation just to keep it simple. Here we go: if you divide the annual cost of $162 million by 788,400 MWh, your answer should be $205.50/MWh. Pretty expensive, eh?
The requirement to back up industrial wind turbines is old news as noted in a Memorandum submitted to the U.K. Parliament which stated: “Dr Paul Golby CEO of E.On UK, says 90% whilst Mr Rupert Steele of Scottish Power says, “Thirty Gigawatts of wind maybe requires twenty-five GW of backup.” In other words, that means, if you contract for 1,000 MW of industrial wind generation you need a 900 MW gas plant to “back-up” its capacity!
So, doing math is important: you can see that you are almost doubling up on the cost of producing a single MWh of electricity.
That brings us to the actual cost of wind generation on the chosen day in November.
On November 12, 2015 (refer to Scott Luft’s chart) wind produced 63,203 MWh, i.e., the lines “IESO Transmission (Tx)” + “est. Distribution (Dx)” equals 63,203 MWh. On this day wind produced 14.1% of Ontario’s generation at a cost of $153.55/MWh (based on the calculations applied above) —or at least this is what one would assume. That is an assumption you shouldn’t make though, Bob, and I will try to explain why. Adding curtailed wind production (13,500 MWh) to the 63,203 MWh produced would reduce the per MWh cost to $126.52/MWh, but, and it’s a big but—it doesn’t include gas back-up costs. Now pay attention!
The outstanding contracts for gas generation total about 9,000 MW of capacity and the contracts guarantee them (including the 2,100 MW of Lennox owned by OPG) a monthly price similar to the TransCanada contract mentioned above. So, knowing that, let’s assume the “average” contracted price is only $10,000 per MW per month. Bearing that in mind the backup for wind (solar to a lessor extent) is costing Ontario ratepayers $1.080 billion annually to be on “standby”! In other words, if they produced one (1) MWh in a year the cost would be $1,080,000,000. Shocking eh? If operated at 100% of rated capacity (which they can’t) they would produce almost 79 TWh (terawatts2.) or over 50% (9,000 MW X 8760 hours in a year) of Ontario’s annual consumption.
OK, now back to Scott’s chart of November 12 and let’s figure out the full cost. On November 12, gas generators operated at around 11.3% of capacity (79 TWh divided by 365 days in a year = 216,438 MWh and 24,511 MWh divided by 216,438 MWh = 11.3%). The cost of that day’s gas generation combined with wind generation would be $171.75/MWh, i.e., combined cost of $15,065,000 divided by combined generation of 87,714 MWh (ignore the curtailed generation) = $171.75/MWh. Now that cost coupled with the losses of $7.9 million from our exports of 74,352 MWh (cost of $108 per/MWh3.) Nov. 12th, produces a combined cost of $279.75/MWh or 4.3 times the cost of nuclear generation.
At this point, Bob, I hope you have grasped the math so I won’t go through the exercise for Scott’s other headings of biofuel, solar etc. I will leave you to work those out on your own.
I certainly hope this exercise gives you sufficient math skills to at least understand the basic steps you should go through before making either rash remarks or issuing directives to IESO telling them what to do. Instead perhaps you could instruct them to produce information similar to what Scott Luft produces. The latter would also back up your leader’s wishes or intent to be “transparent” for the taxpayers and voters in Ontario.
Good luck with the math exercises and with demonstrating your Ministry’s intention to become more transparent.
Figures on exports of surplus power show wind isn’t needed, yet the government plans on adding more
November once again had Ontario ratepayers picking up the bill for subsidized electricity exports to our neighbours in New York, Michigan, etc. With the Canadian dollar in a depressed state the costs to our U.S. neighbours was considerably less than the $230 million CAD subsidy1. provided, but nevertheless, it removed about $45 after-tax dollars from the average Ontario ratepayer’s pocket.
Total generation from Ontario’s various sources was 12.4 terawatts (TWh) for November, but Ontario’s demand was only 10.6 TWh, so the surplus was exported. That brought exports for the 11 months ended November 30, 2015 to a record 19.6 TWh, and that power was sold at an average of $24.72 million/TWh (based on the IESO November year-to-date Monthly Summary). Total revenue (or “profit” according to Energy Minister Bob Chiarelli) to Ontario ratepayers for those 19.6 TWh was about $483 million. According to the IESO summary those exported TWh cost on average $115.16 million/TWh, another record (net of the DRC)—gross revenues for their sale was $485 million while the cost to ratepayers was $2.257 billion.
Ontario’s energy policy cost you about $360 for 11 months in 2015
So the cost for the average Ontario ratepayer, assuming 800 kilowatt hours monthly, is about $360 each for the first 11 months of 2015.
The Global Adjustment (GA) of $1.119 billion was also a record,as was the allocated costs of the GA to Class A shareholders at $136.7 million, a record and to Class B shareholders at $982.6 million setting another record!
Wind power was 40% of exports—clearly, we don’t need it
Up to this date in 2015, wind has produced intermittent record power of 7.933 TWh and represents over 40% of total exports; it is clearly power we didn’t need. IESO exports our surplus production to ensure the electricity grid doesn’t crash and excess generation from wind, in particular, is noted for its unruly fluctuations. Without the excess wind production the hourly Ontario energy price (HOEP) would clearly have been “bid higher” meaning costs to Ontario’s ratepayers would be less for the remaining exports.
Despite the obvious, our Energy Minister Bob Chiarelli has plans to add additional wind capacity to Ontario’s grid. A further 300 megawatts in contracts will be announced early in 2016. The continued flagellation of Ontario’s ratepayers should be recognized by the Minister as something that he has the power to stop.
Minister Chiarelli, we the ratepayers of Ontario appeal to you to cancel the acquisition of more unreliable, intermittent and expensive industrial wind generation capacity! Do the right thing!
The sale price (HOEP) for November averaged just $10.34 million/TWh so revenue was about $20 million whereas the costs of generation for the exported 1.9 TWh was $250 million ($129.53 million/TWh net of the DRC).
The views expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy.
EDITOR’S NOTE: The standard response from the Minister of Energy is that wind power is needed for when Ontario’s nuclear units go offline for refurbishment; the truth is, wind cannot replace nuclear, which supplies baseload power.