The Ontario Energy Board: Transparently Opaque!

Parker Gallant takes on the OEB over their jargon in presenting of rate hikes.

The Ontario Energy Board has an impressive Mandate which states; “The Ontario Energy Board oversees the province’s electricity and natural gas sectors through effective, fair and transparent regulation and in accordance with the objectives set out in the governing statutory framework.”

The foregoing evokes a warm and fuzzy feeling particularly where the OEB speak to “fair and transparent regulation” however the OEB’s current view of “fair and transparent” is not quite fair or transparent. A recent example of that is their announcement that time-of-use (TOU) rate increases would be “approximately $3.99 on the “Electricity” line, or about 3.3% on the total monthly bill, for a residential consumer with a typical consumption pattern who uses 800 kWh per month.”

If that “typical” residential consumer understands his bill he will discern that the “electricity line” typically represents about 45% of his bill with the balance (55%) made up of the “regulatory”, “delivery” and “stranded debt charges” That 3.3% increase is in reality a 7% increase in the electricity line and with the TOU rates reset every 6 months the 7% increase is a 14% annualized increase. The “trickle down” effect is also not dealt with in the OEB’s announcement as an increase in the “electricity price” increases the HST payment.

For the OEB to cite transparency in their “Mandate” then put out an announcement that seeks to trivialize or hide the actual increase indicates they are either being directed to do so or, their reputed transparency is Orwellian.

The OEB by citing the overall effects on a ratepayers bill, effectively allows “rate creep”. One recent example is the OEB’s approval to Grimsby Power issued February 12th where their “news release” states: “The delivery line of electricity bills will increase by approximately $3.06 for Grimsby’s residential customers using 800 kWh per month. The total bill impact is an increase of 2.8%.” As the “delivery line” represents about 35% of a “typical” electricity bill the increase is actually an 8% annual increase to the “delivery line” not the 2.8% that the OEB obliquely hide through reference to the “total bill”. Bundle the TOU increase together with the delivery increase and the Grimsby ratepayer is facing a 22% annual increase on 80% of their bill. Still to come in the current year are; rate increases for IESO’s smart grid spending (part of the “regulatory” line), Hydro One’s transmission spending (part of the “delivery” line) and conservation spending (part of the delivery and regulatory lines) by the OPA so the Grimsby ratepayer could be facing an annual increase of 25% or more.

Taken together the “typical” ratepayers bill is increasing much faster than forecast in the Long Term Energy Plan (3.5% over 20 years) and will increase further as more expensive renewable energy is added to the grid at a time when demand is falling. The current contracted supply surplus is sold by IESO at wholesale prices that are also falling. The result of the latter two circumstances is that the Global Adjustment (the pot where the subsidies temporarily reside before the OEB sets the TOU and RPP rates) is rising at an incredible rate and for March 2012 was $666 million (a 21% increase from February 2012) which, if it continues at the March level, will become a pot of $8 billion in the next 12 months or 60% more then the $5 billion that accumulated for 2011.

It is time for the OEB to have a long hard look at their mandate and recognize that their view of “transparent regulation” is opaque. Perhaps its time for the OEB to either “man up” or rewrite that “Mandate!

Parker Gallant,
April 21, 2012

The OPA: Gone without the Plan

The OPA: Gone without the Plan

Today the Minister of Energy, Chris Bentley announced the merger of the OPA with IESO that will somehow save the ratepayers and taxpayers $25 million dollars in the electricity sector. To put that in perspective that would be about 10 days of gross revenue we will pay to Samsung when they have installed their 2500 MW of wind and solar generation and approximately .2 % of the approximately $15 billion gross revenue ratepayers make annually to ensure they can turn on their lights in the Province.

The demise of the OPA should not be a surprise to anyone as they were originally established as a temporary agencyto produce a long term Integrated Power System Plan (IPSP). The OPA did produce one but when George Smitherman was the Energy Minister he ordered it tossed in the garbage as he created the Green Energy and Economy Act (Act) in its place; at the bidding of the green energy sustainable crowd. So this temporary agency created by the Liberals spent 8 years and have nothing to show for it except for a stack of renewable wind and solar contracts that have driven up Ontario’s ratepayers bills by over 100% with more increases to follow. Another Smitherman/Liberal legacy that will burden the Province for decades. For a quick look at where we were and where we are today the following chart highlights the lack of progress and increasing costs of the OPA and IESO.
As further evidence it is worth noting that the 2003 sunshine list had only 168 IESO employees on the list but the merged entity will have over 400 for a growth of 140%. The fact that IESO is a union shop (the OPA wasn’t) will no doubt serve to push the incoming OPA salaries to higher levels as the extraction of money from ratepayers pockets continues. That touted $25 million savings will disappear before ratepayers experience any benefit.
So eight years have gone by and Ontario is still waiting for the Liberal promise of a IPSP that will produce a plan for the electricity sector.
Some plan, some legacy for our children!
Parker Gallant,
April 18, 2012

Sole Source Contracts- The Green & the Stealthy Kind

Parker Gallant compares two ‘sole source’ contracts:  One with the Korean Consortium, the other for F-35 stealth jets.

Parker Gallant: Sole Source Contracts- The Green & the Stealthy Kind | Energy Probe:

When you compare the two sole sourced contracts, the F-35 stealth jets at a cost of about $725 per person look like a bargain and we will have 10 extra years to pay the debt off. The F-35 jets also won’t kill nearly as many birds and bats as those wind turbines or spoil some of Ontario’s beautiful vistas.

Read the full article at the Energy Probe website

Mr Premier; Who Wants Turbines?

This blog noted the article in the Belleville Intilligencer, yesterday – and Parker Gallant followed up with this letter

To: The Honourable Dalton McGuinty:

I read the interview that you recently had with the Belleville Intellegencer http://www.intelligencer.ca/ArticleDisplay.aspx?e=3533375 and noted your comments in respect to the placement of wind turbines in communities. To refresh your memory here is the preamble:

“The new wind turbine program will be key to circumventing the angst of factions in areas like Prince Edward County who have vehemently opposed the implementation of wind turbines in their community, Premier Dalton McGuinty said, during an exclusive visit to the Intelligencer Friday.” which you followed up with as follows:

““I’ve got all kinds of communities that want them,” he said. “I don’t need the headaches that are associated with them going into communities that don’t want them.”

On the latter note could you (or Minister Bentley whom I have copied on this) please supply me with the list of the communities/municipalities who “want them” to determine if the list dovetails with the list of communities that have rejected them.

Your early attention to the above question would be greatly appreciated and (assuming the two lists are compatable), greatly relieve many of our members who may be causing some of the angst and headaches you refer to.

Yours truly,

Parker Gallant, VP
Wind Concerns Ontario

Yes Minister, its been an interesting 6 months

Parker Gallant’s latest – A portable document format is posted here

Yes Minister, its been an interesting 6 months

It has been 6 months since the Liberals were returned to power in Ontario with a “major minority” and almost 6 months on the job for Minister of Energy, Chris Bentley. Since his appointment a lot has happened in the energy sector that may not have received the attention it deserved, having been overshadowed by the ORNGE scandal which, in terms of costs to Ontarians will look like a rounding error when compared to the Energy Ministry. In no particular order here are some of the events that Minister Bentley has faced:

Pay Freeze for some, Frozen Daiquiris for Others:

The Executive Pay freeze that Premier McGuinty announced back in March 2010 apparently doesn’t apply to several of the Crown Corporations such as OPG nor does it apply to the Municipally owned local distribution companies such as Toronto Hydro despite McGuinty’s appeal back then when he said, “I would invite the municipalities to take a long hard look at what we are doing here.” When the 2011 sunshine list came out the five top executives at OPG collectively received 21% more ($846,000) then they were paid in 2010. This huge raise came despite OPG’s revenue decline of 5.7%, profit decline of 36% ($233 million) and market share drop of 2.5%. In the case of Toronto Hydro’s CEO he had to contend with only a 12.4% ($94,000) increase bringing his compensation to $851,983 which means he earns 5 times Mayor Ford’s salary and $330,000 more then the CEO of Hydro Quebec. Raises at the other crown corporations like Hydro One were much more modest and generally less then 2%. The Ontario Power Authority CEO, Colin Andersen, received no increase.

Auditor General’s Report:

The Auditor General’s Report was a scathing rebuttal of the Energy Ministry when it was released in December 2011. Under a barrage of questions from the opposition parties in the Legislature Minister Bentley had little outward respect for the report except for; “I very much thank the Auditor General for his report and for his good advice. We’re already acting on the recommendations to improve the approach.” and the other responses were generally as follows: “We made the choice to get out of coal. They disagree with that. There’s a cost to stay in coal: $4 billion-plus a year, human suffering, illnesses. At the height of the recession, we made a choice to create jobs for Ontarians and accelerate the cleanup of the air. The 20,000 jobs, billions in investment—it’s all about the choices you make. We stand for clean air, good health, jobs for Ontarians and a brighter future for this province.”

Bentley clearly ignored the elephant in the room!

Fit Review:

Minister Bentley was the recipient of the two year FIT review mid March that was prepared by Fareed Amin, Deputy Minister of Agriculture and took only three days to bless the recommendations. The review called for minor adjustments to the pricing offered for wind (15% reduction) and solar generators (20% reduction). This has left Ontario with subsidized prices for these two sources well above all countries in the G20 including Germany, the poster child of the existing and prior Ontario Ministers of Energy. Germany recently announced significant cutbacks on their solar tariffs which will reduce payments for solar generators to as low as 18 cents a kWh versus Ontario’s lowest at 35 cents a kWh. The bankruptcy of the largest German solar company, Solar Millennium also impacted the US as their US subsidiary filed for Chapter 11 financing despite being the beneficiary of a US$2.1 billion guarantee provided by the US Energy Department. China has become the solar king and Ontario has no hope of ever becoming a force in the manufacture of solar panels. The same applies to any major inroads in producing wind turbines. Any hope is faint hope, if the Liberals believe they can replace some of those good manufacturing jobs lost in Ontario because of high energy prices.

Law Suits:

That gas plant in Mississauga that was cancelled during the election campaign, to ensure the re-election of the Liberal MPP, also returned to haunt Mr. Bentley as a $300 million law suit was launched against the Province. Bentley had this to say: “ A statement issued Friday by Energy Minister Chris Bentley said the province would vigorously defend against the claims, but declined further comment because the case is before the courts.” Another $1 billion law suit was also launched against the Province for the Province’s imposition of a moratorium on offshore wind farms and Minister Bentley had this to say:

“Energy Minister Chris Bentley says SouthPoint did not have a contract with the province, and the government intends to defend the lawsuit.” Mr. Bentley also has to deal with an earlier law suit of $2.25 billion launched by Trillium Wind Power. So far no lawsuit has been launched by TransCanada Corporation in respect to the cancelled gas plant in Oakville, a 1000 MW capacity plant for which TransCanada had a firm contract. No details of settlement on this cancellation have been released but with the plant expected to contribute 10 cents a share to TransCanada’s annual income we should expect that an agreement is being negotiated for the lost revenue. The Liberals treatment of the Energy Ministry has clearly placed the ratepayers and taxpayers of Ontario in the position of having to pay for their mistakes.

Domestic Content:

The Green Energy Act when passed in 2009 carried provisions that require OPA contracted parties to ensure Ontario content in their projects. That provision was quickly challenged by Japan and the EU via the World Trade Organization (WTO) and their arguments were recently put forward to the WTO’s dispute panel. The principal arguments were: “The FiT programme and its related contracts confer a benefit to the FiT generators since the OPA guarantees above-market rates for the supply of electricity,” the EU argued before the panel and “That excess is best confirmed by examining the difference between the FIT rates and HOEP [Hourly Ontario Energy Price], as HOEP represents the entire rate that these generators would have received” under normal market conditions, Japan added. While a negative ruling won’t directly affect the Ministry, if Canada loses, it will impact all Canadian taxpayers via any penalties imposed by the WTO. It surely must be of concern to Minister Bentley as he will be saddled with the results and that could impact any thoughts he might have of running for the leadership of the Liberal Party when Dalton McGuinty steps down.

Integrated Power System Plan II:

When the Liberals were first elected in 2003 their war of words in respect to the Ontario electricity sector incessantly blamed the previous governments for not creating a long term energy plan. They created the Ontario Power Authority as a temporary agency to fulfil that gap. Eight years have passed and they still haven’t produced what they apparently noted both the NDP and the PC party failed to do during their time as the ruling parties. The second version (Smitherman killed the first one) of the IPSP was presented to Minister Bentley pre-Christmas and has been with him for that period but nothing has emerged from his office for review by the OEB. Bentley managed to turn the 2 year FIT review around in three days but he has been sitting on the IPSP for over three months. One can only assume that the recommendations in the IPSP II fail to dovetail with the Liberal beliefs as expounded in the Long Term Energy Plan that Minister Bentley’s predecessor, Brad Duguid, released back in November 2010.

Ontario Power Authority Annual Report:

The “sunshine list” disclosed that the CEO of the OPA did not receive any increase in 2011 and perhaps the several law suits (see above) launched against the Province have something to do with that. One telling KPMG auditors note is this one: “Negotiations related to this matter are ongoing. A

reasonable estimate of any settlement amount cannot be determined at this time.” and it applies to both the cancelled Oakville and Mississauga gas plants. OPA’s 2011 annual report makes no mention of the Trillium Wind Power law suit for some reason despite the fact that Trillium claims it holds a contract (see above “Law Suits”) with the OPA. The annual report also discloses that the OPA has signed contracts for 8,030 MW of wind, solar and biomass as of December 31, 2011 versus signed contracts as at December 31, 2010 of 4,873 MW. If one assumes the target for renewables is 10,700 MW as laid out in the LTEP then the OPA is only 1,770 MW short of what Minister Duguid had planned.

IESO Data Collection Rate Increase:

The Environment Commissioner of Ontario released his report on conservation in the energy sector in December and had this to say; “The ECO is disappointed that data collection and analysis to track the actual reduction in peak demand due to TOU pricing is just beginning now.” By next year the Environment Commissioner, Gordon Miller should be happy as the IESO has just asked the OEB for a rate increase to cover the cost of a “meter data management repository to collect, manage, store and retrieve information” and that will cost the ratepayers $252 million and add annual costs of $9.62 to the bills of 4.7 million ratepayers. In a review of the application submitted to the OEB by IESO the following stands out; “42. The total costs presented in the table above differ from the Ministry-approved budget of $89 million.” So the Ministry of Energy budgeted $89 million for what will cost ratepayers $252 million for a cost overrun of $163 million or 183%. For this expenditure the ratepayers will get no benefits, only higher delivery costs and IESO will gain no additional benefits that will enable them to manage the grid. The Environment Commissioner will presumably be able to garner information that will allow him (and the associated Liberal Ministers) to claim credit that TOU pricing is actually working and Ontario’s ratepayers are shifting their usage. With a forecast cost overrun of $163 million Mr. Bentley may have a difficult time convincing voters that this is a good thing.

Electricity Exports:

The Auditor General’s report had this to say about our exports of electricity; “we estimated that from 2005 to the end of our audit in 2011, Ontario received $1.8 billion less for its electricity exports than what it actually cost electricity ratepayers of Ontario.” Despite the scolding from the AG the Ministry of Energy under Mr. Bentley brag about the fact that they sell electricity at a loss to our neighbours. For the first two months of 2012 Ontario exported 2.1 TWh (210,000 MWh) at a price of $25/MWh (2.5 cents per kWh) generating $52.7 million but those 2.1 TWh cost Ontario ratepayers $97.8 million. How Ontario ratepayers paying almost $100 million, in just two months, so our neighbours can purchase cheap electricity provides any benefit is unexplainable yet the Minister of Energy continues to issue press releases bragging about that, while our surplus of electricity continues to grow. How Mr. Bentley explains away this disdain for proper planning is an affront to the ratepayers and the qualified people at the various public entities that must execute their blind ambition to green Ontario.

Losing Supporters:

Former supporters such as Ontario Nature on February 15, 2012 and the Ontario Federation of Agriculture on January 20, 2012 have both reversed their previous full support of industrial wind turbines. The former has called on the government to protect important bird areas (IBA) and OFA President Mark Wales said; “The onus is on our provincial government to ensure the interests of rural Ontarians are protected. OFA is speaking up to clearly outline the issues that must be addressed right now.” Those “issues” included the price paid, the inefficiencies of wind power, setback and noise issues related to health and the removal of municipal input. None of those issues were dealt with in the FIT Review (see above).

Rate Increases:

The OEB is set to announce the revised time-of use (TOU) prices later this month and they will be up again as more and more renewable energy enters the grid even as demand continues to fall. IESO has put a forecast out for the April 2012 Global Adjustment (GA) anticipating it will be in excess of $74/MWh (7.4 cents a kWh) while the hourly Ontario electricity price (HOEP) continues to decline (2.1 cents per kWh) generating bigger subsidies for exports, constrained power and causing OPG to lose revenue through spilled hydro. If the overall price of electricity is forecast to remain at the April 2012 level, the 9.5 cents per kWh (GA + HOEP) may generate a rate increase approaching 20% per annum for the next 6 months. That will result in additional conservation, meaning local distribution companies will rush in with rate applications for their lost revenue along with their applications for refurbishment. On the latter, Toronto Hydro sought a huge increase that was recently rejected by the OEB so are now in the process of challenging the OEB. For more on the latter a visit to Tom Adams website is suggested. Mr. Bentley had better brace himself for a plethora of negative feedback if the cost of electricity and its associated delivery costs soar as anticipated. He presumably is already feeling the heat from farmers and small and medium sized businesses as the Ontario budget brought in by his colleague on the Liberal benches, Minister of Finance Dwight Duncan, reduced the Ontario Clean Energy Benefit (OCEB) to those consuming over 3,000 kWh per month. While hoping to catch rich electricity consumers the reduction has instead caught businesses that are already struggling to operate.

Protests:
Rural Ontario has demonstrated that they are basically against Industrial Wind Turbines (IWT) by protesting actively in their communities, generating local council interest (79 municipalities have passed bylaws requesting a moratorium on IWT installations), and by turfing out 10 Liberals from their riding’s in the last election. A major protest in Toronto April 3, 2012 brought together an estimated 700/1,000 protestors from across the province to challenge the economic, health, environmental and other costs of the FIT and MicroFIT programs and to bring the message to Toronto’s residents. Minister Bentley should expect these protests to gain momentum as the negative fallout from the flawed energy policies starts to be noticed on the electricity bills of the urban communities that put the Liberals back in power.

Looking Forward:

The Minister of Energy should brace himself for another 6 months of considerable turbulence unless the NDP join forces with the Ontario PC Party and either force an election or get the Liberals to rescind the Green Energy and Economy Act.

The time for action has passed and if allowed to continue will doom Ontario to the status of a “have-not” province for decades.

Parker Gallant,
April 9, 2012

Small Hydro and Co-incidental Smells

On May 19, 2011 Northern Ontario Business announced that Xeneca Power Development Inc. was awarded 19 small (under 10 MW) hydro-electric projects under the Ontario Power Authority’s (OPA) Feed-in Tariff (FIT) program. Under the FIT program for small hydro projects Xeneca were guaranteed 13.1 cents per kWh for any power delivered to the grid. Small hydro-electric power is clean, its variable; meaning it can be used for peak needs or shut down (spilled water or damned) when not needed, so it is much more desirable and useful then wind or solar generation.

The article also indicated that Xeneca was in the running for an additional 14 small hydro-electric projects and that the 19 contracts awarded represented about half (72 MW) of all (small) hydro generation in the province. The spokesperson for Xeneca was Mark Holmes, VP, Corporate Affairs, who is also named as the lobbyist for the company in the Ontario Lobbyist Registry,

Reviewing the information Mr. Holmes submitted when registering as the lobbyist one notes under; “Section G.1. Government Funding”, the response to the question; “Is your client funded in whole or in part by any government?” that Xeneca declared that the “Northern Ontario Heritage Fund” provided $732,000.

One would presume those funds would go a long way to determine the feasibility of these projects providing Xeneca with a distinct advantage over any competing bidders who would perhaps be reluctant to spend the cash necessary to qualify. Why was Xeneca provided with that funding by another arm of the Provincial government when we would presume other potential developers would have interests in the attractive rates being offered by the OPA for these small projects? Was the playing field slanted to favour Xeneca and were there any competitive bids?

Looking further into Xeneca their management list includes Arnold Chan, VP, Legal Affairs. Mr. Chan prior to joining Xeneca in 2010 was aligned with the Ontario Liberal Party and served as Chief of Staff in the Ministry of Revenue under Minister Michael Chan. During Chan’s tenure as Chief of Staff, Colin Andersen was the Deputy Minister as disclosed in the Ministry of Revenue’s March 2007 Organization Structure. Mr. Andersen was on the Ontario “Sunshine List” and showed earnings of $307,729 for 2007. In September 2008 he was appointed the CEO of the OPA and his earnings for that year when reported in the Spring of 2009 had jumped to $458,153. Mr. Andersen got a 49% increase in earnings for leaving his Deputy Minister’s post to become the CEO of the OPA. The OPA was set up by Energy Minister Dwight Duncan as a “temporary” agency of the province to develop an Integrated Power System Plan (IPSP) in 2004 which we are still waiting for.

Arnold Chan, left his Provincial employment position in 2010 to join Xeneca. His prior connections with the ruling Liberal Party, in my humble opinion, may have assisted Xeneca in gaining access to that Government Funding of $732,000 from the Northern Ontario Heritage Fund, and along with his indirect responsibility as the Revenue Minister’s Chief of Staff overseeing Colin Andersen may have provided some leverage in the awarding of the contracts. Mr. Chan appears to have contributed funds to the Liberal Party in 2011 as did Xeneca ($10,000) prior to the run-up for the election in October 2011. Needless to say I have personal suspicions but that is for others to pontificate about!

One of the concerns I had was related to an earlier article about the Town of Bancroft who were chasing a dream only to have the OPA haul out their rule book and deny them the right to obtain the 13.1 cents per kWh for their little 600 kWh run of river hydro-electric project placing their local town owned company in jeopardy. At present the Town’s, wholly owned subsidiary is forced to sell their hydro generation at the hourly Ontario energy price (HOEP) which has averaged 2.16 cents a kWh since the start of the current year. It seems bizarrely strange that a town owned generating unit is producing power for the Ontario grid but earns 11 cents a kWh less then a for profit company that has a former Ontario ministerial Chief of Staff on their payroll. At the same time the Town of Markham has installed 250 kilowatts of solar panels on the roof of their offices and will be paid 70.3 cents a kWh. The Province also kindly provided Markham with $2.4 million to finance the installation of those solar panels.

I am sure it is purely co-incidental that Michael Chan is the MPP for Markham-Unionville; that Xeneca obtained $732,000 from the Northern Ontario Heritage Fund; that Arnold Chan wound up as the VP, Legal Affairs for Xeneca and they received those 19 contracts, and that Colin Andersen became the CEO of the OPA in September 2008 and then received a 49% year over year increase in his remuneration for that year–the year of the financial crisis!

One must assume the smell emanating from the Northern Ontario Business article must come from the dead fish caught in the turbines and not the co-incidences highlighted!

Parker Gallant,
March 27, 2012

Ontario’s Power Trip: Not a FIT review

Ontario’s Power Trip: Not a FIT review | FP Comment | Financial Post:

By Parker Gallant

The long anticipated Ontario Feed-in Tariff (FIT) two-year review report was sent to the current Minister of Energy, Chris Bentley, this week. The ministry released its position on the “report” only three days later and basically endorsed the recommendations found in it.

The FIT review avoids discussion of the impact on electricity ratepayers. To the Minister`s doubtless embarrassment, a submission Wednesday to the Ontario Energy Board by Aegent Energy Advisors reveals what the review report does not. The Aegent report, produced on behalf of five parties, including diverse groups such as the Canadian Manufacturers and Exporters and the Vulnerable Energy Consumers Coalition, forecasts double-digit increases through to 2016. At the low end affecting large direct consumers, the submission estimates rate increases of a minimum of 36% and as much as 48%. Residential consumers face rate hikes up to 58%. The Aegent report is consistent with other forecasts of similar rate increases over the next few years.

In contrast to the Aegent report, which shows soaring power prices, the FIT review pretends that the province runs a tight ship that will become tighter still. It recommends, for example, reducing prices paid to wind and solar developers nominally by 15% and 20% respectively. Yet the new prices will still leave Ontario leading the way in respect to subsidizing those two unreliable and intermittent sources of electricity generation compared to most G20 countries.

The FIT review, prepared by Fareed Amin, deputy minister of agriculture, isn’t much to look at. It could have been pieced together by simply referencing past press releases issued by the former and current energy ministers. It contained no surprises. It’s a Liberal “stay the course” report.
Read Parker Gallant’s full article at the Financial Post site

WCO: BUSINESS AS USUAL FOR CORPORATE WIND DEVELOPERS UNDER NEW SUBSIDY

March 22, 2012
It’s business as usual for huge corporate wind power developers in Ontario, in light of recommendations in the two-year review of Ontario’s Feed In Tariff subsidy program, released today by the Ontario government.
Subsidies for industrial-scale wind power projects have been reduced by only 15 per cent–that’s still too expensive and for power that’s not needed, says Wind Concerns Ontario (WCO).
The coalition of community groups had called for a complete cancellation of the FIT subsidy program.
“The extra power that was produced and exported in January and February cost Ontario millions,” says vice-president Parker Gallant, a former banker.  “Why do we need FIT when the truth is we’re wasting cheap, clean hydro power and spending millions on new transmission capacity for wind power?”
The renewed FIT program will continue to cause electricity rates to rise, which will be bad for consumers including Ontario businesses.
“In Europe, the countries that used this type of subsidy for renewable power sources saw job losses due to the high cost of power. We’re already seeing Ontario businesses say they may have to close or move away,” Gallant explains.
Gallant also noted that rural communities are being turned into electrical power factories, with falling property values and other negative effects. “People are being made ill because of the environmental noise. This government doesn’t care about the misery it’s causing.”
“FIT is a failure,” he concludes. “It is not the path to a solid financial future for Ontario.”
________________

 Contact Wind Concerns Ontario at windconcerns@gmail.com

Ontario’s Power Trip: Wind wastes water — and your dollars

Ontario’s Power Trip: Wind wastes water — and your dollars | FP Comment | Financial Post:

Hydro generation gives way to costly wind
By Parker Gallant and Scott Luft

Ontario Power Generation (OPG) is the province’s premier electricity power generating firm, a government-owned utility whose future has long been hooked to government policy. Today, in the green hands of the Dalton McGuinty’s Liberal government, OPG appears to be in decline. That decline was confirmed a few days ago when the company issued its 2011 annual financial results. It’s a decline that is likely to continue even if, as expected, the government changes its green-energy regime next week.

First, the company reported declining revenue, down 5.7% to $5-billion. Profits fell 35.9% to $416-million. The company produced less electricity: 84.7 terawatt hours (Twh), down 3.9 Twh or 4.4%. OPG’s share of the province’s electricity market is now less than 60%, off from 72% in 2003.

The decline in the company’s output and share of market since 2003, when it produced 109.1 Twh of electricity, tells the story.  Under government directive, the company has been forced to shut down its coal plants. Fossil fuel production was 3.7 TWh versus the 39 TWh produced in 2003 for a 95% reduction. The reduction in coal was offset by increased nuclear and natural gas-fired generation and a drop in overall demand.

Annual Wind and Unregulated Hydro (graphic added on WCO)

If OPG is producing less electricity, somebody else is producing more. That would be wind power, produced by scores of wind operators that have popped up around the province under the McGuinty government’s green-energy plan. In fact, OPG’s production decline of 3.9 Twh for 2011 was offset by 3.9 Twh of wind production.

If OPG had lost that market share in a competitive market, so much the better. It would have been a sign that it did not deserve to be producing electricity if it could not match the prices and supply levels of alternative sources of power. But that is not the case.

  Read the full article at the Financial Post site

Wind’s cost to ratepayers is $135-million per Twh, or about $526-million for the 3.9 Twh wind delivered to Ontario in 2011. According to OPG’s annual statement, it sells nuclear power into the market at $55-million per Twh and unregulated hydro power from places like Niagara Falls for $32-million per Twh. The math is simple: Had OPG used its hydro facilities to deliver the same amount of power supplied by wind, the cost savings to Ontario’s ratepayers would have been the difference between the $32-million per TWh hydro price and the $135-million paid for wind. The 3.9 Twh of wind power that cost Ontario ratepayers $526-million last year could have been bought from OPG for $125-million — a potential saving of $400-million and delivered $125 million in additional revenue for OPG.

What’s going on here should be obvious. Under government regulation, expensive wind power is being forced down the system, displacing inexpensive hydro power. As a result, unregulated hydro power is operating at ever lower levels below capacity. Since the advent of wind power, hydro’s operating rate has declined from about 45% of capacity to 36% in 2010.

Graphic added on WCO

Since wind first presented itself in Ontario it has generated in excess of $1.3-billion dollars for wind developers (principally out-of-province corporations) while costing ratepayers approximately $900-million more than they would have paid for unregulated hydro. At the same time it has had the undesired effect of reducing OPG’s revenues by $400-million. That money could have either reduced the stranded debt or gone to reduce taxpayers’ liabilities.

As wind’s capacity levels increase (beyond the current 1,800 megawatts) to the 8,400 MW contemplated in the Long Term Energy Plan, the cost to ratepayers will climb and revenue and profit at the taxpayer-owned OPG will fall further, reducing its value and extending repayment of the stranded debt. All this will be happening while OPG absorbs the costs of its $1.6-billion Big Becky expansion at Niagara Falls, its $2.6-billion Mattagami hydro project and the yet unknown costs of the Darlington refurbishment. Those costs will find their way to ratepayers’ bills.

Wind has other costs. Wind power is now being exported out of Ontario at below-cost prices, which means that Ontario ratepayers are paying U.S. states to take surplus wind — which blows when no power is needed — out of Ontario.

Some costs are non-financial. Many people claim significant health effects of these industrial wind behemoths. Some people have been forced to abandon their homes and farms. The effects have been felt throughout rural Ontario, causing a myriad of other problems. Wildlife impacts certainly exist, as 40- to 50-storey turbines have been placed in the path of migratory birds.

The McGuinty government is expected to alter some elements of its green energy program, primarily by reducing the high price it forces consumers to pay for wind and solar power. But how much of the program will be grandfathered to become a permanent feature of a power system that is undermining the government-owned OPG at the cost of billions of dollars to taxpayers and ratepayers?

  View the article, and related comments, at the Financial Post site

Wind Turbines Displace Hydro

Wind Turbines Displace Hydro: how OPG is spending $4.2 billion to avoid Blackouts

OPG was directed by the Liberal Ministry of Energy to spend billions on hydro projects as evidenced by both Big Becky ($1.6 billion) and the Lower Mattagami projects ($2.6 billion). Big Becky adds no new capacity it will simply make existing production at Niagara more efficient whereas the Lower Mattagami project will supposedly add 440 megawatts (MW) of new capacity to OPG’s hydro fleet. These projects are still some way from completion so it is likely those budgeted estimates will be exceeded. Only a few years ago the estimate for Big Becky was $1 billion and for Mattagami $1.5 billion. The other issue surrounding those two engineering miracles is that they are being built at a time when Ontario has a huge surplus of power. With Bruce Power expected to hook up refurbished nuclear plants this year our surplus will increase further.

These two hydro projects will be available to back up wind and solar which by 2018 are expected to have a capacity of about 10,000 MW. At the same time demand in Ontario continues to drop as industries leave and high prices are having the desired effect of curtailing demand. The intermittent delivery of electricity to the grid by wind and solar generators will create problems for IESO in managing the grid and they will use hydro to balance it. Unregulated hydro from OPG will bear the brunt of their management efforts as wind and solar cycle up and down. While Ontario only has about 1800 MW of wind installed at present, IESO’s use of unregulated hydro has already presented itself and is costing ratepayers dearly.
The following chart shows the production and sale of unregulated hydro power by OPG in terawatts (TWh) since 2004 and where available shows prices received for that power. So far in 2012 the wholesale price has dropped a further 1 cent a kWh and if that holds OPG will receive even less for unregulated hydro in 2012 then they did in 2011.

Production of Unregulated Hydro by OPG 2004 – 2011
Year 2004 2005 2006 2007 2008 2009 2010 2011 (9 mths)
Unregulated Sold (TWh) 16.8 14.1 15 13.8 17.6 16.8 11.7 8.1
Price per kWh received N/A N/A N/A N/A N/A 3.2 3.7 3.3
Income before interest and income taxes ($M’s)
732 736 329 508 209 129
Total hydro capacity (MW) 6835 6982 6956 6972 6963 6944 6996 6996
Total hydro sold (TWh) 35.7 32.6 33.3 31.9 36.4 36.2 30.6 22.3
Unregulated (%) 47.1 43.2 45 40.2 48.3 46.4 39.6 36.3
NB: All information came from OPG’s “Fact Sheets” and Annual Reports!

Should OPG’s production and sale of unregulated hydro continue at the same rate for the last quarter of 2011 the TWh sold will be 10.8 TWh or 6.8 TWh lower then 2008. The value of that lost production based on the average received (9 months) for 2011 translates to $224 million in lost revenue to OPG and a further loss to the Provincial coffers for the payment of “water rental”. According to the Ministry of Natural Resources “Conditions Report”, 2011 was a relatively good year for water flow compared to 2007 which was considered a low water level year. Despite that; production and sale of unregulated hydro by OPG will likely come in at 3 TWh less for 2011 then 2007 when wind contributed 1 TWh. Co-incidentally wind reportedly contributed 3.9 TWh in 2011 which would indicate it is displacing hydro, not coal, as promised by the Ministry of Energy.

Wind and solar power has displaced cheap, clean hydroelectricity at a cost to the ratepayers of a minimum of $300 million in 2011 for the 3 plus TWh it took away from OPG’s unregulated hydro production-more if the costs of transmission lines built to hook up those wind turbines are included. That $300 million alone will add about $70.00 to each ratepayers bill for the year and also extend repayment of the “stranded debt”. The Drummond Commission highlighted the fact that the Government controls OPG and it’s direction to OPG influences the payments in lieu (PIL) of taxes which are directed to pay the “stranded debt”. The spilling of clean green hydroelectric power therefore flies in the face of his recommendation to maximize profits in that entity.
The $4.2 billion that OPG is spending represents almost $1,000 per ratepayer household and will be paid back through rate increases. The amortization period will be long (40/50 years) but it will still drive up bills significantly. The other 6/7,000 MW of wind slated to come on stream by 2018 will further exacerbate those increases causing OPG to spill clean hydro meaning the value for the billions spent will be even less. Worth noting is that Mattagami will likely produce most of its available power in the Spring and Fall when wind also tends to produce at higher levels. Those two seasons are traditionally Ontario’s lowest demand periods so we are simply doubling up production when we need it least. Ontario electricity prices will be the highest in North America by the middle of this decade making the province a very unattractive place for any type of industry.
Ontarians should accept the fact that we will remain a “have not” province for years to come even if McGuinty and the other parties agree to enact all of the Drummond Commission’s recommendations. The hidden debt burden on Ontario’s future generations created with those long term wind and solar contracts will increase our social costs by creating energy poverty and will keep employment levels lower then the rest of Canada.
Parker Gallant,
February 29, 2012