Making your head spin or, how Ontario’s energy sector is regulated

Enbridge Gas Distribution recently received the blessing of the Ontario Energy Board (OEB) for a 40% hike in what they charge Ontario’s consumers for distributing natural gas, claiming, because of the high demand during a cold winter they were forced to purchase it at a high market price.  The OEB granted the approval despite many objections by various interested parties who pointed out that Union Gas had requested a smaller increase.
This note was in the OEB’s approval:  “This means that Enbridge plans for lower storage deliverability requirements and transportation capacity” requiring gas purchases at higher spot prices on the open market.  One wonders why Enbridge is not required to maintain a larger storage capacity, which would have allowed them more prudence in purchasing the supply of gas, but that is presumably a question for the OEB to ask!
While the OEB was weighing their decision, another arm of Enbridge was constraining their production of wind-generated electricity.  That was to allow the Independent Electricity System Operator (IESO) to protect the grid and prevent blackouts or brownouts by requesting constraint.
Constraining wind power—and paying for it—started September 11, 2013. Since then Enbridge has been paid for not producing about 83,500 megawatt hours (MWh), which should have generated close to $9 million.
Enbridge was not alone: Brookfield didn’t produce over 29,000 MWh and IPC/GDF Suez (where the CEO is Mike Crawley) didn’t produce 12,800 MWh, and TransAlta didn’t produce 17,100 MWh.  In total about 161,000 MWh were constrained since IESO started paying wind developers—that means  ratepayers picked up the $16 million cost.  And that cost doesn’t include what ratepayers pay for remote meteorological stations to ensure wind developers don’t lie about what they may have produced.
Interestingly enough if one checks out Elections Ontario to determine what those wind developers contributed to the three major political parties in 2010, 2011 and 2012, you find that the NDP received nothing, the Ontario PC party received $1,080 from Enbridge and the Ontario Liberal Party or OLP received $8,000 from Enbridge, $14,840 from Brookfield and nothing from the rest.  The CEO of IPC did donate a total of $555 to the OLP.
The wind power lobby organization Canadian Wind Energy Association (CanWEA) contributed $16,620 to the OLP over the last three years and zero to the NDP or the Ontario PC party.  I wonder why?
This situation is a win-win for some of the parties involved, but a hit to the pocketbook of the average ratepayer.
©Parker Gallant,
May 22, 2014
The views expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy.