Ontario electricity customers: in pain with more to come

Anybody watching as Ontario circles the drain?
Anybody watching as Ontario circles the drain?

Ratepayers to Queen’s Park: we have a problem 

Wind power costs plenty for only 4% of generation

In the past six months, reports from the Canadian Manufacturers and Exporters, the C.D. Howe Institute, the Association of Major Power Consumers of Ontario, the Canadian Federation of Independent Business and the Ontario Chamber of Commerce have all called for “competitive” electricity prices.

A few of the members of some of those associations already benefit from absorption of some costs by residential and small business ratepayers, but still complain their electricity bills are too high and not competitive with competing jurisdictions in Canada and the U.S.!

Ontario is cursed with probably the most complex electricity system in the world even though 80% of our electricity is generated by nuclear and hydro.  Both of those generation sources produce power at an average of about 6-7 cents per kilowatt hour (kWh), yet Ontario’s delivered electricity prices are among the highest in North America.   Why? Most of the reasons relate to the Global Adjustment Mechanism (GA)NB 1: which has increased every year since its creation in 2005. The GA absorbs a plethora of ratepayer costs that are billed out via the “electricity” line on our bill. In the first six months of the current year, the GA accumulation is $4.6 billion versus only $2.2 billion in the comparable six month-period of 2014.

Here are some of the reasons for the increasing cost of electricity to Ontario’s ratepayers.  Note that many have nothing to do with generating electricity.

Some current ratepayer costs:

  1. Moving two gas plants (Oakville and Mississauga) at a cost of $1.1 billion
  2. Smart meters costing $2 billion to enable time of use (TOU) billing with no benefit
  3. The shift in costs (estimated at $422 million for 2012 by the C.D. Howe Institute) from Class A ratepayers to residential and small commercial enterprises
  4. Cost overruns on the Niagara tunnel (“Big Becky”) of $500 million
  5. Supporting the employee pensions of Hydro One and OPG pensions by contributing $4. for every $1 contributed by the employeesNB 2:
  6. The $200 million cost of Hydro One’s messed up billing system
  7. The costs for the 1.2 million letters and postage ($600K) for the CEO of Hydro One to apologize to their ratepaying customers for messing up their billing system
  8. The $120 million annual cost of the Northern Industrial Electricity Rate Program to reduce electricity rates by 2 cents/kWh for industry in Northern Ontario
  9. The $35-40 million annual cost of the Northern Ontario Energy Credit to assist single and family households with their electricity bills
  10. The $2.6 billion it cost for the Lower Mattagami run of river project to principally produce expensive hydro electric power in the Spring when Ontario’s demand is at its lowest level
  11. The Low-income Energy Assistance Program with an annual cost of $4 million to assist households living in Energy PovertyNB: 2
  12. The annual costs (currently estimated at $40 million annually) associated with the development of a “smart grid” (smart grid entity charge) estimated in 2010 to cost $1.5 billion
  13. The costs of the Net Revenue Requirement (NRR) for gas plants estimated to be a minimum of $650 million annually for them to sit idling so they can back up wind and solar generation
  14. The annual costs of $30 million for the recovery of OPG’s expenses related to the conversion of one unit of Thunder Bay to biomass from coal
  15. The $170 million costs of converting Atitokan from a coal generation unit to biomass together with the annual operating costs (operation, maintenance and administration) to sit idle for most of the time
  16. Annual Conservation spending of $400 million that provides grants for people to purchase high efficiency air conditioners, LED bulbs,  etc., and for businesses to retrofit their lighting system, purchase high efficiency refrigeration units, etc. and for municipalities to switch their street lighting systems and municipally owned arenas to LED, etc. etc.
  17. The costs (unknown) of the “Lost Revenue Adjustment Charge” to allow your LDC to recover revenues (via the “delivery” charges) lost because your community has used less electricity
  18. The costs of spilling clean hydro (3.7 terawatts in 2014 for OPG), constraining wind and solar generation, steaming off Bruce Nuclear, all at an estimated annual cost of $400-500 million.
  19. The costs of subsidizing utility-scale wind power generation, which represented about 9% ($700 million + unknown amount for constrained wind generation) of the GA costs but only 4% (6.8 TWh) of total electricity generated
  20. The costs of erecting and maintaining meteorological station for IESO to measure constrained wind at every wind development with a capacity rating of 10 Megawatts or more
  21. The actual generation and costs of (an average of $500. per MWh) of solar panels NB: 3 to generate electricity usually when not needed.  With 2,000 MW of capacity IESO doesn’t disclose what they produce yet claim they are transparent.  An estimate of costs to ratepayers at 15% of rated capacity suggests ratepayers absorb in excess of $1 billion annually or 15% of the total GA costs but they produce less than 2% of total generated electricity
  22. The costs associated with exporting Ontario’s surplus electricity production which was about $1.2 billion in 2014 and appears headed to $2 billion in 2015

Some future ratepayer costs:

  • The Ontario Energy Support Program, estimated to cost $200 million annually commences January 1, 2016 and will support 570,000 household’s currently living in “energy poverty”
  • Also effective January 1, 2016 the Ontario Clean Energy Benefit will no longer exist raising electricity bills 10%
  • Another 500 MW of capacity from wind (300 MW) and solar (200 MW) is to be added to the grid raising annual costs by about $200 million
  • The further shift of smaller industrials from Class B to Class A ratepayers will effectively transfer costs (estimated) of $300/400 million from clients with peak energy needs of 3MW under the “High 5” system
  • Lump sum payments and free Hydro One shares (after privatization) to Hydro One and OPG employees.  Cost to ratepayers is an unknown at this time
  • The costs to convert the Toronto Zoo’s “zoo poo” to electricity
  • The costs of research and grants related to “energy storage.”  The Energy Storage Association‘s members appear to be the beneficiaries of the grants but haven’t registered as lobbyists with the Ontario Registry.   Costs are unknown!  Members of the Association include:  NextEra, Northland Power, MaRS Discovery District and even Ontario Sustainable Energy Association.
  • Another 1,500 MW of wind capacity scheduled to be in place by December 31, 2016 that will add a further $500 million annual cost to the system.

Future Ratepayer Savings:

As of January 1, 2016 the Debt Retirement Charge will no longer be levied saving an average ratepayer (residential) about $70 annually.  The DRC will continue to be charged to businesses!

Net Ratepayer Increase:

The additional future costs coupled with the demise of the Ontario Clean Energy Benefit will see residential rates increase by a minimum of $400 annually, based on a quick estimate, and raise overall rates to rival those of Alaska and Hawaii. 

Taxpayer-related costs:                                                                                                                                   

  • The Ministry of the Environment and Climate Change will continue to incur costs associated with the legal fees to defend the issuance of their approvals of industrial wind developments via the Environmental Review Tribunal! Costs are unknown.
  • The Ontario Ministry of Transportation (MTO) will continue to experience costs associated with grants of $8,500 to individuals, etc. purchasing electric vehicles for those who can afford luxury Tesla automobiles, etc! Overall costs are unknown.
  • The MTO will continue to incur costs associated with the installation of charging station for electric vehicles!  Costs are unknown.
  • Various municipalities will eventually experience declining property value assessments from their residential taxpayers associated with industrial wind turbines driving down property values and municipal tax revenue and require additional funding from the Ministry of Municipal Affairs and Housing or higher municipal taxes.  Costs are presently unknown!

Taxpayer related benefit:

The one and only taxpayer benefit relates to the end of the Ontario Clean Energy Benefit on January 1, 2016, saving taxpayers about $1 billion annually.  The taxpayer savings will however increase ratepayer bills by a like amount and will also generate about $130 million via the cost of the HST for the additional cost of electricity.

Premier Wynne and her Minister of Energy, Bob Chiarelli seem to believe we can continue on this path of destruction of the province in an effort to have Ontario save the world from “climate change” as she noted when her Environment Minister Glen Murray announced their “cap and trade” plans back on April 13, 2015 by stating:  “The action we are taking today will help secure a healthier environment, a more competitive economy and a better future for our children and grandchildren.”

The Liberal government may feel it has created a “healthier environment” but that has come at the expense of what was once a thriving economy and the envy of the developed world.  The debt they have created coupled with the highest electricity rates of competing economies will continue to undermine the future for our children and grandchildren.  There goes “the better future for our children and grandchildren” that Premier Wynne claims.

©Parker Gallant

July 23, 2015

NB 1:  The GA was originally established to capture the difference between the contracted rates for power and the actual market value given via the hourly Ontario electricity price (HOEP) but has become the dumping ground for anything that doesn’t fit elsewhere.

NB 2: Energy poverty reflects itself when energy costs are 10%, or more of a household’s total income.

NB 3: Solar panels on your neighbour’s roof, the farmer’s barn, your municipally owned arena, IKEA, Loblaws, Toronto District Public Schools, etc., etc.

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

Comments

Bob Lyman
Reply

The term “a death of a thousand cuts” comes to mind.

Typo
Reply

You made a big type in item #1:
“Moving two gas plants (Oakville and Mississauga) at a cost of $1.1 million”
It should be 1.1 billion!!

Jjoe
Reply

We love TOU pricing. Nights and weekends see us do our laundry and run our dishwasher. Saves us some money.

John Vincent
Reply

Of course you’ve checked your Hydro One billing charts available to you on line, and by now realize the actual cost of electricty used is mere pennies between high and low periods. Its all the Global Adjustment fees that make the difference.

Jjoe
Reply

Yes, the spread between the highest and lowest rate should be greater. That said, using hydro in off peak times saves you money. If people are concerned about their bill, and they should be, it is one way to save some money.

Jjoe
Reply

The gas plants being shuttered was an idea all three major parties supported.

Bruce Miller
Reply

Fantastic non-engineering based trampling of all that is good! Here’s more fuel for your fire:
Ontario Power Corp takes its advice from political bull crap and entirely misses the fact that Wind Turbine efficiency INCREASES as air temperature DECREASES. Yes! like in Northern Ontario where winter winds last 8 months of the year and reach lows of – 40 C or more, adding up to 30 % efficiency! Wind Turbines, ideal for distant hamlets, and posed on rocky outcrops not prime farmland, will provide transmission loss, transmission cost free, power directly to local grids. Transmission losses, transmission costs, are entirely eliminated for this electric boost and must also be entered into the calculus of making a Wind Turbine installation decision? Ontario Power Corp rather play politics, and places Turbines in “Photo Op” positions, destroying near north tourism areas, close to CN Tower, close to Darlington and other reactors, and on fertile farmlands near residential locations in Southern Ontario and within sight of reactors? I call [deletion] engineering, and wish Wynne could see the damage this is doing to Wind Power potential here in Ontario . . .

Norway stores Wind Power surges for Europe! Ontario’s [language removed] Engineers missed this at engineering school? Not found in their U.S. published texts? Selling off excess power at cut rates to whom? Why?
http://spectrum.ieee.org/green-tech/wind/norway-wants-to-be-europes-battery
http://spectrum.ieee.org/green-tech/wind/norway-wants-to-be-europes-battery

30 MW Storage Battery To Be Built In Germany
http://cleantechnica.com/2014/10/27/30-mw-storage-battery-built-germany/?utm_source=dlvr.it&utm_medium=facebook&utm_campaign=Feed%3A+IM-cleantechnica+%28CleanTechnica%29&utm_content=FaceBook

Wind argument from Australia
http://cleantechnica.com/2014/10/28/wind-power-cheaper-reliable-natural-gas/?utm_source=dlvr.it&utm_medium=facebook&utm_campaign=Feed%3A+IM-cleantechnica+%28CleanTechnica%29&utm_content=FaceBook

China Wind!
http://inspiredeconomist.com/2014/11/05/china-wind-farm-maintenance-3bn-2022/?utm_source=dlvr.it&utm_medium=facebook&utm_campaign=Feed%3A+IM-inspiredeconomist+%28The+Inspired+Economist%29&utm_content=FaceBook

The Scottish renewable energy sector is one of the world’s best performing, and new data from WeatherEnergy has shown that October was a “bumper month” for the country, generating more than enough electricity from renewable sources to power the country.
http://cleantechnica.com/2014/11/05/scotlands-renewable-sector-saw-bumper-month-october/

A Health Canada study has found no link between exposure to wind turbine noise and negative health effects in people.
http://www.cbc.ca/news/technology/wind-turbine-noise-not-linked-to-health-problems-health-canada-finds-1.2826206?cmp=fbtl&utm_content=bufferf611b&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer
Also:
Ontario is in transition from Armpit Labour car assembly jobs to an intelligence based economy – save for computers, where they still insist $microsoft pablum serves better than Open Source would (due to kick-backs? free software to the right folks?)

John Vincent
Reply

Well Bruce, its painfully obvious you’re a staunch wind baker and promoter. If wind is so good, why do you need massive subsidies to make them viable? Wind machines may be increasing in efficiency, but that doesn’t make them run when there’s no wind, which is frequently, no matter how dense the air. You of course current agreements don’t let us dispatch wind, or solar to meet our needs. We have to take all whether we ned it or not. I’m also sure the countries you’ve mentioned above are fighting to get rid of wind, solar will follow.
So, enough of the bull fecies and face reality, no matter how much icing you paint on the issue they are a very ba plan. Oh, do you have one or more of these 500+ foot behemouths in your back yard. You probably wouldn’t tell us the truth anyway.

Jjoe
Reply

Wind turbines produce much of their power at night. Right when we don’t need it.

Nancy Moisan
Reply

Jjoe, I’m kinda wondering how old you are. No one should have to juggle household chores around determined times. The savings isn’t all that great and try comparing to other provinces and states. We had relative here from QC and they are presently paying 0.045 kwh at any time, this is archaic as far as I’m concerned and if they hadn’t mismanaged our $, we wouldn’t be in this mess, there is no justification for any of their drummed up charges, we are paying to feed their greed, pure and simple.

Jjoe
Reply

My age has nothing to do with it. I like TOU. It spreads out the load and should require less new generation capacity in the future. Hopefully that means less wind turbines. The savings should be greater, no doubt about it.

Garythegreat
Reply

Parker has touched on the ‘root cause’ of these policies in his last paragraph. Our elected politician believe they are doing the right thing for the environment and our kids. They believe that Ontario can afford a ‘holier than thou’ attitude. No coal (tell Ohio), more wind (maybe offshore N. Sea), leading edge solar (compare to Arizona desert). The problem is we are not the same province we were a generation ago. A ‘have not’ province in a global environment must be able to compete. High energy prices are key to this for both business and people’s lifestyle.

An example of the latter is parts of rural Ontario where electric heating remains the only option. This has become unaffordable and people and businesses are giving up.

So,what to do? First stop the bleeding, then look to cure the underlying sickness.

[…] a more competitive economy and a better future for our children and grandchildren.” (Source: Ontario electricity customers: in pain with more to come) Ontario’s competitive electricity rates…and other fairy […]

Leave a comment

name*

email* (not published)

website