The Real Cost of Electricity and Who gets the BIG Money!

The Ontario Energy Board (OEB) recently released the 2011 Yearbook of Distributors, an annual report prepared by the current 75 local distribution companies (LDC) that deliver electricity to the residents and businesses throughout Ontario. This edition of the “yearbook” contains information for the year ended December 31, 2011.
The information contained in this report is extensive providing a plethora of data including; financial, demographics, consumption, etc. etc., on an individual and a consolidated basis. What was of initial interest was on the Consolidated Income Statement (page 8) and the line; “Cost of Power and Related Costs” which carries a total of $10,361 million. Embedded in this cost is all of the generation costs from OPG, Bruce, Brookfield, TransAlta, NextEra, TransCanada, etc. plus the other FIT, MicroFIT, and non utility generators (NUGs) that have signed contracts with the OPA. It also includes conservation spending and the budgets required to run the OPA and IESO.
Total consumption of electricity was reported in the OEB yearbook as 126,237,381,000 kilowatts (kWh) or 126.2 terawatts (TWh) which is approximately 15.3 TWh less then the 141.5 TWh the Independent Electricity System Operator reported we consumed in 2011. The difference relates to differing billing dates amongst the various LDCs and it doesn’t include the consumption of the “Class A” (over 5 MW) consumers who pay less for their electricity. The 126.2 TWh does include billings to the Class “B” customers for about 5.2 TWh of electricity caused by line losses from the generator site to the LDCs.
In 2011 the biggest supplier of electricity to the grid was Ontario Power Generation (OPG) who sold 84.7 TWh or 59.8% of the IESO reported total consumption of 141.5 TWh. OPG reported their average sale price was 5.3 cents a kWh during 2011. If OPG supplied 59.8% of the total consumption reported in the OEB yearbook they would have provided 75,487 million kWh (75.5 TWh) and cost $4,001 million of the $10,361 million cost of electricity reported in the yearbook.
The foregoing would mean that the other 50,478 million kWh (50.5 TWh) was supplied by all of the other power generators (wind, solar, gas, etc) at a cost of $6,360 million or an average price of 12.5 cents a kWh.
The difference between the two supply sources means that Ontario ratepayers are paying 138% more for the power they consume to satisfy the McGuinty Liberals to green an already green power system. OPG reported that 96% of the power they produced in 2011 was emission free. By paying wind and solar producers to generate electricity the Liberals are effectively increasing emissions if they factor in the emissions generated from the production, transportation and construction of those wind and solar generators.
The additional cost burden on Ontario’s ratepayers and small businesses has caused; job losses, economic hardship (energy poverty), health problems in rural communities, the killing of birds and bats and the loss of property values.
The only green that seems to matter to the Liberals is the amount they extract from the ratepayers to line the pockets of their private sector wind, solar and gas developer friends and campaign contributors.
Parker Gallant,
September 17, 2012


Scott Luft

Parker, your article cites some numbers from the 2011 Yearbook of Distributors that surprised, and troubled, me.

$10,361 million is an interesting number for “Cost of Power and Related Costs.” It’s interesting as the Independent Electricity System Operator (IESO) reported an average Hourly Ontario Energy Price (weighted) of $31.47/MWh on a total market of 154.3 million MWh, plus a total Global Adjustment of $5,309.6 million, which constitutes a total market value of only $10,149 million. I am of the impression the global adjustment contains all payments for conservation and supply, so it’s a little disconcerting that the figure you note in the OEB Yearbook is over $200 million higher than the IESO figures would indicate.

You reference the yearbook total of 126.2 TWh, and that is close to what the IESO 18-month outlook shows for LDC (local distribution company) consumption for 2011 (table 3.3.3 tab of this spreadsheet). That figure does include line losses and “generator consumption”, but not ~16TWh of ‘wholesale’ customer consumption, or the 12.8TWh of exports. The OEB Yearbook and IESO statistics don’t totally agree (due to billing cycles), but they are close and the total market (all generation plus all imports, or all consumption, line losses and exports) is ~28-29TWh greater than the LDC totals.

So the LDC figures you cite collect more than the value of the entire market ($10.36 billion of $10.15 billion), but the LDC’s are only about 82% of the total market.

I am confused.
Adding to the confusion are the export and import statistics that the Ministry of Energy uses in claiming exporting benefits Ontario. They show $418.9 million in revenue from exports. This would indicate that either we are paying wholesale customers (the only other group) over $600 million a year to consume electricity, or that the OEB yearbook’s “Power and Related Costs” includes significant charges that are either not for the electricity, or constitute a healthy mark-up on the commodity costs, indicating the cost of generation is not being treated as a flow-through charge.

Because I don’t think the starting point makes much sense, I won’t spend too much time investigating your methods in concluding non-OPG supply averaged 12.5 cents/kWh ($125/MWh), but I will note my calculations don’t yield drastically different figures. I estimate Bruce Power received ~$58.65/MWh for 36.6TWh of generation, and all other non-OPG generators received about $107.07/MWh for 28.9TWh of generation, or slightly more than double OPG’s rate. The difference between this $107 and your $125 figure would, I think, come from the transfer of cost of purchased powers from export, and wholesale, customers to those serviced by LDC’s (us).

While I am confused that the figures in the 2011 Yearbook of Distributors provide a “cost of power” for the LDC’s that exceeds the entire market value, I share your conclusions that payments were extracted from ratepayers to line the pockets of selected groups, I think those groups include LDC’s, who seem to be collecting a handler’s fee on the commodity.

Reference workbook with IESO Table 3.3.3, Global Adjustment, 2011 totals and generation estimates is here

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