Ontario: cheap power exports make us everybody’s friend

Buffalo NY: keeping the lights on and luring business thanks to cheap power from Ontario (Photo: The Herd Report)
Buffalo NY: keeping the lights on and luring business thanks to cheap power from Ontario (Photo: The Herd Report)

Buffalo’s Pal: Ontario’s ratepayers
The September 2015 summary report from IESO demonstrates that once again, Ontario ratepayers picked up additional costs for exporting surplus power. The September results, gleaned from examination of the “monthly summary” indicates it cost $100 million to subsidize Ontario-generated electricity exports to New York, Michigan, etc., in September.
That totals $1.5 billion for the first nine months of 2015. The 16.2 terawatts exported in those nine months could have supplied power to 1.7 million average Ontario households for the full year.
What’s really annoying is finding out that our neighbours in Buffalo are engaged in an industry attraction effort that is meeting with some success. A recent article about the NY government subsidized building ($750 million) of SolarCity’s “gigafactory” in Buffalo to manufacture solar panels indicates they are on the comeback trail and attracting investments.  One of the reasons is because they are able to offer a “huge benefit: the electricity rate for manufacturers averages just 4.79 cents per kilowatt-hour, which is possible because of cheap hydroelectric power generated from Niagara Falls.”
Because some of our power generated from Niagara Falls1. and other sources in September was sold as surplus power for just 3.19 cents per kilowatt-hour (kWh), we’re actually helping Buffalo offer those attractive electricity rates.
This fact should remind all Ontarians of the promises made to us by the Ontario Liberal government when it enacted Bill 150, the Green Energy and Green Economy Act (GEA).  The April 8, 2009 Standing Committee on General Government transcript on Bill 150, with the then Ontario Energy Minister George Smitherman on the stand, elicited this response to a question posed about the effects of the GEA on electricity prices:
“We anticipate about 1% per year of additional rate increase associated with the bill’s implementation over the next 15 years. Our estimate of cost increases is based upon the way that we actually amortize costs in the energy sector.”
Let’s look back to September 2009, the year the Legislature passed the GEA, when Ontario demand for electricity was 10,932,000 megawatt hours (MWh) and compare to September 2015 when Ontario demand was slightly higher (+3.8%), reaching 11,362,000 MWh. IESO’s monthly summary for September 2009 indicates the “average weighted cost” (all-in) to consumers was $82.73/MWh whereas the “average weighted cost” for September 2015 was $125.35/MWh.
That translates to an increase of $42.62/MWh or 4.26 cents per kilowatt-hour (kWh), and cost ratepayers $453 million extra for just one month.  Looking at this in a slightly different way, the extra MWh we consumed for September 2015 versus 2009 came at a cost of $1,196 each or $11.96 per kWh, had generation and delivery costs remained the same through those six years.
It is clear costs to ratepayers have already become a multiple of the Smitherman promise … and we still have nine years left in his forecast.
The Auditor General pointed out the Energy Ministry failed to complete a cost/benefit study before implementing the GEA. There was never any acknowledgement or accounting for the intermittent nature of renewable energy, the fact power is produced when it’s not needed, and the need for renewables to be backed up with other generation (along with transmission line costs to bring it to where it’s needed) was apparently never considered.
And now, in spite of the evidence of the past six years, the march continues to add more wind and solar to the Ontario grid, whichmeans Buffalo and other jurisdictions will reap the rewards.
As Buffalo adds manufacturing jobs, Ontario is shedding them. Ontario’s electricity ratepayers are wondering, what will the next nine years bring?
© Parker Gallant, November 10, 2015
1.  Thanks to Scott Luft for his analysis on the Niagara Falls waste.

What's your reaction?


  • Bob Lyman
    Posted November 11, 2015 11:11 am 0Likes

    At $453 million per month, the increased cost for Ontario ratepayers is $5.44 billion per year! Makes the gas plant scandal look pretty small by comparison. If Ontario residents like this, they are going to love the effect of adding a carbon tax to all energy sources. Reportedly, those heading to the Climate Change conference in Paris next month are talking cheerfully about the prospect of imposing a carbon tax of up to $80 per tonne, which equates to an 18 cent per litre gasoline or diesel fuel tax, but applied on oil, natural gas and coal. Of course, a substantial portion of the revenues will be used to further subsidize the wind, solar and biomass industries.

    • Barbara
      Posted November 11, 2015 1:24 pm 0Likes

      Inflationary as well !!!
      Businesses that can’t pass these extra added costs on to customers will close down or leave.

  • Prof Ted Spicer
    Posted November 11, 2015 12:45 pm 0Likes

    Watch our new federal Environment Minister also blow it. She has no background, and never does the Math. Canada contributes One and a Half percent to global carbon, yet she will support our stupid Ont gov’t in a Carbon Tax.

  • Greg Latiak
    Posted November 11, 2015 9:38 pm 0Likes

    The tipoff will be to see how evenhanded the ‘carbon tax’ is applied and where the revenues go — do they vanish into ‘general revenues’? Or will there be some sweetheart deal to have them traded on an exchange conveniently setup by some well-connected parties? Once they start to gerrimander around favored industries all pretence at GHG moderation will be abandoned. Like the wind farms, where future implementations greatly exceed the ability to either absorb or dump, this exercise will likely be one of appearances over substance. But we will be expected to pay, and pay, and pay for this ‘cap’ charade.

  • Barbara
    Posted November 12, 2015 12:06 am 0Likes

    Another wind storm approaching Thursday across southwestern Ontario with 15′ waves expected on Lake Huron.
    Much more un-needed wind power to pay for!

  • Tracy
    Posted November 12, 2015 3:38 pm 0Likes

    Time to back up the bus Ontario.

  • Mal
    Posted November 12, 2015 11:02 pm 0Likes

    Unfortunately, from what I’ve read when winds are this strong, they can’t run the bird blending windmills!!!! Too much risk of them getting damaged. Heaven forbid their precious cash grab of Ontarians get damaged before the full wallet sucking has completed.

  • Gs
    Posted November 15, 2015 12:30 pm 0Likes

    Whatever happened to the north American free- trade agreement? we are not allowed to dump (electricity) on other partners, especially if any subsidies are involved.

  • Roland Ethier
    Posted November 17, 2015 1:32 pm 0Likes

    One of the creators of the Green Energy fiasco was Gerald Butts, who was rewarded by getting the job as Trudeau’s closest advisor. That’s how cockeyed Canadian politics has developed into.
    Roland Ethier

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