Ontario’s expensive electricity week: what could $44M have bought?

What the lost $44 million could have bought: 293 family docs, 580 nurse practitioners
What the lost $44 million could have bought: 293 family docs, 580 nurse practitioners

Blowing Ontario’s ratepayer dollars

Money lost in just one week could have paid for 580 nurses

So far this October, Ontario’s electricity sector has been blowing our money away at an awesome pace.

Scott Luft, whom I admire for his ability to assimilate comprehensible data, posted on Tumblr some disturbing information about the first 10 days of electricity production (and curtailed production) in Ontario.  Because the fall means low demand for electricity, our current surplus energy supply (principally, wind, solar and gas) was curtailed to the extent that it cost ratepayers $20 million, while the HOEP (hourly Ontario energy price) generated only $8.2 million.  That $20 million of curtailment cost will find its way to the Global Adjustment (GA) pot and onto ratepayers’ bills.

I took a different route and looked at the cost of Ontario’s exports for the week of October 3rd to October 9th —those numbers are also disturbing.  During those seven days, Ontario exported 399,048 MWh (megawatt hours) which was 15.7% of total Ontario demand.   Wind turbines generated and delivered 184,204 MWh, which was surplus to our needs and probably exported.  The money generated via the HOEP from all of the export sales was $56,300 or 14 cents a MWh.  Wind turbines produced just $15,164 and we sold that production for just 8 cents a MWh.

To put this in perspective, the exported production’s cost all-in (contract value per MWh + regulatory + transmission + debt retirement charge) averaged $110/MWh, according to the latest monthly IESO Market Summary August 2014 report’s findings.  Using $110/MWh the 399,000 MWh exported in those seven days hit Ontario’s ratepayers with about $44 million (less the $56,300) via allocation to the GA—that will show up on the electricity line on our bills.

Wind generation alone at the contracted rate of $135/MWh cost ratepayers $24,900,000 plus another $5 to $6 million for their curtailed production, according to Scott Luft.  That $30 to $31 million plus the cost of steaming off Bruce Nuclear, paying idling gas plants, etc., and the additional cost of solar generation, would confirm the $44 million is a reasonable estimate.

What has Ontario missed out on by having ratepayers subsidizing those exports by $44 million for those seven days?

  •  the annual salary of 293 family physicians, or
  • 580 nurse practitioners, or
  • repairing all the Toronto District School Board’s school roofs, or
  • one and a half days of interest on Ontario’s public debt, or
  •  all of Ontario’s 301 MPP salaries for a full year, or
  • 40 MRI machines, or
  • 100 months of mortgage payments on the empty MaRS Phase 2 building, or
  • increasing funding for autistic children by 30% over current levels.

Just a few examples of how the wasted subsidy money that cost each Ontario ratepayer $10 for just one week could have been used!

© Parker Gallant

October 13, 2014

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

Comments

David Littlejohn
Reply

Ban or bomb the windmills and McGuinty.

ScepticalGord
Reply

Parker’s laundry list of blown ratepayer dollars is exactly the kind of summation the brain dead Hudak Conservative election team should have used to explain to the brain dead urban Liberal voters just how much money ($1.1 billion) was pissed away by the scandalous cancellation of the two gas plants.

Note to the brain dead: $1.1 billion = $44 million X 25 (twenty-five).

R Budd
Reply

Super piece Parker. Looking at the generation numbers this fall is a real head shaking experience. Can even the Toronto Star manage to ignore the insanity going on in On. now?

SAVETHE BALAFALLS
Reply

So,”we’ get it and talk and comment about it but what is ever going to be done about this insanity? When and where should a mass movement of fed up Ontario Taxpayers unite? Call Rick Mercer!

Wind Concerns Ontario
Reply

Rick Mercer did a comedy routine last year, based on the fact that people complaining about turbine noise were whiners and NIMBYs. Rick is a downtown Toronto-ite…couldn’t care less.

SAVETHE BALAFALLS
Reply

Any other suggestions? Swift River Energy Ltd. Is about to ruin Bala the Bala Falls and increase my Hydro bills for this insanity.

Bob Lyman
Reply

As usual, Parker is making an extremely important point about the unwise electricity policies of the current Ontario government. Alas, the story is so complicated in its details that it is difficult to explain to the average person. The mixture of factors includes an export price, a HOEP, a quantity of electricity exports whose generation source is unclear,and a set of costs that include curtailment of different generation sources (amounts unspecified and unclear), the above-market contracted price of “green” generation sources, and regulatory, transmission and debt retirement charges. In short, it is very difficult to understand the composition of the $44 million based on a short article like this.I am not criticizing; I am just wondering how to simplify (or further explain) the story so that the average voter would understand. Further, one wonders what the accumulated cost of producing expensive electricity and then dumping it on the export market will be for the whole of 2014. $44 million is, one hopes, an unusual week, but would it be reasonable to say that we are on a path to losing close to $1 billion in this way this year?

Greg Latiak
Reply

Perhaps the story would make more sense if cash flows into the hands of the private firms who own these facilities were included. Sometimes it seems the Ontario energy plan is a masterful strategy to bleed the economic life of the province into private hands (although perhaps not unrelated to the governing powers) as quickly as possible. What else could explain the continued enthusiasm by the government for wind when the record so far shows an inability to productively absorb its output. A discrepancy that was noted a very long time ago.

Barbara
Reply

Right, how much cash flows into the hands of the private firms but information that the public can’t get.
And difficult to explain a complex set of calculations in a few paragraphs too.

Perhaps time to look at IESO itself as this is where production figures are supposed to be available. Production figures on each project would reveal a lot of information which also includes who owns each project.

Barbara
Reply

Which agency or Ministry “cuts” the cheques to pay each of these owners?

There should be records of how much money each project and/or owner receive from there.

IESO supposed to have the production numbers.

So either one or both records could be used to determine the costs.

David Boothman
Reply

From wisdom to intellectual deficiency in one generation. Sir Adam Beck must be turning in his grave. Perhaps the BS will soon begin to cease baffling at least a few Ontario brains. I would then suggest turning over the entire operation to Hydro-Québec, or better yet, The Southern Company.

Scott Luft
Reply

Greg wrote: “Perhaps the story would make more sense if cash flows into the hands of the private firms who own these facilities were included.”

Well, one can only estimate, and since I do just that, I figured I’d share. Before I do, let me state I think there are some distinct circumstances differentiating generators. Bruce Power modified units to allow for curtailment, presumably under contract to get paid for curtailed production. We don’t know the precise agreement but Bruce B (4 units) was probably getting more for curtailment than they do for production – which is in the low $50’s per mega-watt hour ($50/MWh). Bruce A may get normal rates as they are higher (I think around $70/MWh), and the contracting newer. Bruce B has ~1 million MWh of “deemed” generation (how they refer to it) in 2012 and 2013 – so more that $50 million. Bruce A would not have had as significant curtailments until late 2013 – and I don’t have those estimates with me.
Wind generators are 2 distinct groups: Feed-in tariff (FIT) contracts did specify curtailment policies, but the renewable energy standards (RES) offers preceeding FIT did not. The RES contract holders, primarily very powerful companies in Canada, protested to the OEB as the IESO prepared the policies to curtail wind, but before that body could rule a new Premier, Kathleen Wynne, agreed to pay them for curtailment too (early in 2013).
Curtailment started in September 2013 so I had pulled estimates for the first full 12 months (October 2013 through September 2014). I’ve highlighted in green the $23 million gift, as I perceive it, from Kathleen to influential corporations including Enbridge, Brookfield, TransAlta, IPC/GDF Suez and a couple of smaller players.

Note my estimates of curtailment were hourly forecast less hourly production, and for much of the year the IESO would not show a forecast above production, so the figures aren’t solid. However, the IESO now does show forecasts above production and I’m still seeing lots and lots of obvious curtailment (yesteday, the 14th, feature many).
http://goo.gl/UMFYT3

Jim C
Reply

All of the above…..
The confusing state of our electricity generating/revenue assignment process can with some justification be placed squarely in the laps of the Ontario Liberals in general and Dalton McGuinty in particular. When I read that the population of the state of Ohio in the US voted Republican twice (for G W Bush) despite having one of the highest unemployment rates and not surprisingly, widespread poverty among its voters my faith in democracy was shaken to the core. Now we have voters in Ontario who have just reelected what is arguably the most incompetent, intellectually challenged and boondoggle ridden party in our history. McGuinty (remember the comments levelled at him by Ernie Eves when he ran first time?) He apologised for his comment later, but history has proven him not only right but his label a little too generous; “He says whatever comes into his pointy little head” Go for wind, can the gas plants, rural districts do not have to be “willing hosts” for industrial wind turbines, he has enough communities begging him to locate them there. His pointy little head did not comment on the millions of dollars of taxpayers money his idiocy would cost all Ontarians. (All!) Many will realise my boondoggle focus is narrow. I am now concerned with Wind and waste, Wynne was justifiably amazed when she was reelected with a majority. My faith in democracy is at an all time low.
We can yell and scream ad infinitum about these incompetent liberals, but we must stop this destruction of Ontario’s population, infrastructure and readiness to do business with any and all manufacturers and business organisations. We must recall the the idiots. Replace them with another party willing to run on this most pressing issue facing Ontarians to-day. Is there no one capable of leading the Conservatives with leadership skills, a speaker, with a smidgen of charisma. No one??
We have four more years of institutionalised incompetence governing Ontario. Can we do something about it?? Can we change it?? Are we headed toward being the only subsidised Canadian province besides Quebec??

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