Conserving power in Ontario: who’s really saving?

Energy Minister Chiarelli: spending and saving
Energy Minister Chiarelli: spending and saving

Conservation is a MUSH[y] subject in Ontario

My recent article about “conservation” provided some detail on the presumed consumption of electricity in 2013 by the 4.6 million residential ratepayers in the province.  The estimate was that this rate class consumed 45.5 terawatts (TWh) or 32.3% of total Ontario demand, which IESO reported was 140.7 TWH.  While that is an estimate it at least can be compared to estimates from previous years as in the Yearbook of Electricity Distributors on the Ontario Energy Board’s (OEB) website back to 2005.   All the other data on the Yearbook site is grouped by “consumption” i.e., “General Service: 50 kWh to 4,999 kWh per month, Large: over 5,000 kWh per month”.  Presumably all the government entities from Ministries to Crown Corporations are included in those two groups, so comparing the success or failure of the public sector versus the private sector on “conservation” is impossible.

I set about trying to determine what each sector consumed recognizing the principal ones were:  large industrial clients (referred to as Class A ratepayers), small and mid-sized commercial enterprises (manufacturers, food processors, retail outlets, service companies, etc.), Municipalities, Universities (and colleges), Schools and Hospitals (referred to as the MUSH group), large government crown corps, (OPG, Hydro One, LCBO, OLG, IO, etc.), the Ministry of Justice (court houses, etc.), the OPP and the Ministry offices of Public Health, Transportation (GO Transit, Metrolinx, etc.),  Environment, Natural Resources, etc.

The objective was to determine how effective those groups have been at “conservation” compared to the 4.6 residential ratepayers, but finding information on them proved a hopeless endeavour.  The information  is scattered.  For example, a report in January 2008 prepared for IESO indicated  “Municipalities” consumed 6.6 TWh or 4.3% of Ontario’s consumption, but no other data is available to determine current or past consumption.  Likewise, data is missing for all of the other sectors except for the occasional snippet!  For example, a testimonial on OPA’s saveonenergy website claims Bradford High School reduced consumption by 84,000 kWh (19% of annual usage) through a lighting retrofit, meaning they consumed about 450 MWh.  If one extrapolates the Bradford example to the reported 913 secondary schools in Ontario this group consumed 4.1 TWh but again there is no way to measure that against prior consumption or to determine whether the estimate is even close to actual consumption.

No information on electricity usage in the 3,978 elementary schools could be found.   As for universities, a 17-page report entitled Ontario Universities: Going Greener Report 2011, authored by the Council of Ontario Universities, is a disgrace to higher learning and would be marked by every professor as a fail!  For example, contracting with Bullfrog Power by some universities is seen as a “conservation” initiative.

The search failed to turn up any meaningful data on electricity consumption by hospitals, the OPP, the Ministry of Justice or the big Crown Corporations.

Perhaps the OEB should enlist those “smart meters” and the “smart grid” to generate data that show the public how well government entities are doing on their “conservation” targets.

Reports a rehash

In desperation, I felt a read of the December 5, 2013 OEB’s Conservation and Demand Management Report-2012 Results might provide answers, but that turned out to be a rehash of CDM reports submitted by the 73 local distribution companies who either brag about exceeding conservation targets or make excuses for why they missed them.  It does have claims about Annual Savings such as 2012 “Net Peak Demand Savings” (KW) which totaled 253,086 KW.  It also has a section on “2012 CDM Spending” ($136,211,152) so you can determine the cost of saving a KW of capacity by category.

One example is the “Industrial Program” which produced Net Peak Demand Savings of 75,144 KW at a cost of $10,726,749.  Cost per peak KW saved was $142.75 ($10,726,749/75,144KW = $142.75).  To put that savings per KW in perspective, the U.S. EIA on a chart claims the full capital cost of a KW of on-shore wind capacity is $2,213/KW so the money spent per KW on the “Industrial Program” is equal to the wind turbine operating for 16 years reputedly providing a 16:1 payback.  If discounted for how many kWh wind produced at the wrong time of the day/year (80%) at 29% of capacity, however, that ratio would reduce to less than a 1:1 ratio.  Another example is the Business Program: spending was $89 million to save 98,217 KW of Net Peak Demand Savings at a cost of $907.43/KW.  This is a much higher cost to us ratepayers; it is equivalent to the full capital costs per KW to erect a combined cycle gas plant which would produce power for a minimum of two decades.  That ratio would prove to be about 1:1/20th or, for every dollar spent on conservation, the capital cost savings would be a nickel!

The worst example

The worst example however is related to the Home Assistance Program which cost $6,963.15/KW—more than it would cost to build a nuclear plant ($5,530/KW) that would operate for up to 60 years at an all-in annual cost of $93.28/KW, producing about 8,000 kWh (just over a penny per kWh) every year for those 60 years.

Didn’t Energy Minister Bob Chiarelli and others like Environmental Defence tell us “Conservation provides significant economic and environmental benefits; for every $1 invested in energy efficiency, Ontario has avoided about $2 in costs to the electricity system.”   If they were actually spending the money on “energy efficiency” instead of schemes that avoid a cost/benefit equation, I might be sold but they’re not. Instead the bureaucracy simply throws money at every hair-brained idea crossing their path.

Time for Minister Chiarelli to take a refresher math course and for the Auditor General to have a serious look at our “Conservation” spending, which is scheduled to cost us $483 million in 2014 alone, and has cost Ontario’s ratepayers in excess of $4 billion since 2004.

©Parker Gallant,

September 25, 2014

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

 

Comments

Pat Cusack
Reply

google and read “Green Energy Bust in Germany”
Bernie Cusack

Bob Lyman
Reply

Well done, Parker. There is another dimension that is even more difficult to calculate, but was well illustrated in the case of federal government programs over the years to promote energy “conservation”. The incremental effect of these various programs, which usually involved some combination of subsidies, tax incentives and public information programs, had to be measured against the level of energy consumption that would have occurred in their absence. Most of the time (as is the case now in Ontario), demand was already dropping because of steadily higher energy prices. When one used standard tests of the “elasticity” of energy demand (i.e. the extent to which an increase in the price would induce a decrease in the demand), program evaluators often found that most of the demand reduction would have occurred without the programs. In effect, the extra expenditures were not needed and the incremental cost of the demand reduced by the program was immense. I have no doubt that exactly the same thing is happening in the cases you cite. Expressed differently, the capital cost savings actually achieved from Ontario “conservation” programs are probably much lower than your estimates.

Parker Gallant
Reply

Perhaps I have just discovered one of the reasons that US Steel’s acquisition of Stelco didn’t work so well. I found this in the Lobbyist Registry list today in QP today. Note the two problems they want to lobby the government about: Energy Pricing is # 1.

Client — U.S. Steel Canada
Consultant — Lindsay Maskell
Firm — Enterprise Canada
Name or Description of Policy, Program or Decision:
Providing strategic counsel and advocating on behalf of client issues with
respect to energy pricing and pension regulations.

Barbara
Reply

Usually consumers react to rising prices of anything by switching to alternatives. Switching to natural gas is one way consumers lowered their energy bills. They can also go off-grid or use less electricity.

Questionable if spending money on conservation programs even works but price does.

Same thing with the cost of vehicle fuels. Consumers just have to use less fuel unless they are wealthy.

Greg Latiak
Reply

As a survivor of the post-Oil Embargo energy conservation issues in the US, the approach Ontario has chosen is most curious. We have time of day prices to be sure (hitting the working families hardest) but the differential seems to be diminishing. More curiously we continue to hear that the one of the power agencies is quietly trying to get municipalities interested in signing onto futures contracts to protect their power costs. It all seems very much like a parody of Enron orchestrated by Mad magazine. Really with they would fess up as to their real objectives. Or is it really just trying to cut open the golden goose to get all the eggs at once?

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