Electricity costs up 97 percent in Ontario: power surplus exports rising

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Ontario gives away $4.5 billion ratepayer dollars; persists in directive to add more wind and solar
The GA or Global Adjustment first made its appearance on IESO’s Monthly Market Report in January 2007. As noted in the chart below, that year, the GA finished 2007 at $3.95 per megawatt hour (MWh) which means it cost Ontario’s electricity ratepayers about $600 million for the full year. In, 2015 the GA was just shy of $10 billion.
To be fair, the GA includes the price of “contracted” power, less the value given to it on the hourly Ontario electricity price (HOEP) market. As a result of Ontario’s high surplus of generating capacity and the intermittent presentation of wind and solar in periods of low demand, has resulted in the HOEP showing declining values. Despite declining values the cost of a kilowatt hour (kWh) of electricity increased from an average of 5.43 cents/kWh to 10.7 cents/kWh from November 1, 2007 to November 1, 2015 — up 97%. The upsetting part, and a driving force behind the 97% increase is surplus generation sold to our neighbours. We sell excess output to New York and Michigan, etc. without inclusion of the GA. The GA lost on those sales is charged to Ontario ratepayers and has become increasingly large. The chart indicates the “intertie flows” (exports/imports netted) initially cost Ontario ratepayers $20 million for 2007, but that has increased, and representing more $1.3 billion for 2015.
It is anticipated the annual cost of subsidizing surplus exports will continue to climb.
Scott Luft notes results for January 2016 are 20% higher than January 2015 for the cost of electricity as the HOEP was lower despite what Ontario’s Liberal government says about pricing stabilizing. With plans to add 500 MW of capacity for wind and solar, the climb will continue for at least another two years. Energy Minister Bob Chiarelli recently stated: “Our government’s focus is now on preparations for the next long term energy plan and the ways in which we can continue to drive down costs for Ontarians”. (Note to the Minister: a 97% increase does not “drive down costs”!)
Further reference to the chart points out addition of more wind and solar over the past nine years has driven up the percentage of renewables exported. The “Net Intertie” (net exports) increased from 19.6% in 2007 to over 57% in 2015.
What the Energy Minister needs to accept is this: we don’t need more intermittent and unreliable power.
That message is not getting through, despite evidence presented by the Auditor General of Ontario on several occasions and by numerous critics in the media.
Costing ratepayers $4.5 billion in after-tax dollars to help our neighbours is what’s happened. Perhaps Minister Chiarelli could suggest to Finance Minister Charles Sousa, that the money extracted from ratepayers provides no benefits to Ontarians. Perhaps a tax receipt is in order — that would help cash-strapped citizens, but there is a better idea.
The Energy Minister needs to immediately recall his directive to the IESO to acquire another 500 MW of contracts for intermittent wind and solar power.
© Parker Gallant,
February 7, 2016
The opinions expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy.

Year Net Intertie 1. Global Adjustment Cost to Ratepayers % of Renewables to Wind Solar &
TWh 2. Million of $/TWh GA X Net Intertie Net Intertie Biomass generation
2015 16.86 TWh $77.80 $1,311 57.20%        9.65TWh
2014 15.15 TWh $54.59 $846 47.00%        7.12TWh
2013 13.40 TWh $59.22 $794 48.50%        6.50TWh
2012 9.90 TWh $49.23 $487 59.60%        5.90TWh
2011 9.00 TWh $40.48 $364 56.70%        5.10TWh
2010 8.80 TWh $27.18 $239 46.60%        4.10TWh
2009 11.30 TWh $30.56 $345 31.00%        3.50TWh
2008 10.90 TWh $6.12 $67 22.00%        2.40TWh
2007 5.10 TWh $3.95 $20 19.60%        1.00TWh
       Totals 100.40 TWh $4,473     37.00TWh
What's your reaction?


  • Sommer
    Posted February 8, 2016 9:46 am 0Likes

    This situation is downright frightening. When our energy minister is refusing to listen to reason and continues to make the lives of people in this province more and more difficult. When despite, pleas from residents whose homes have been inundated with noise and infrasound from turbines, he does nothing to immediately make the necessary changes and take precautions, it feels to me like we’re dealing with psychopaths.

  • Tom Adams
    Posted February 8, 2016 9:47 am 0Likes

    Charging Global Adjustment on exports would make all consumers in Ontario except for the largest industrial users benefitting from the Class A rate even worse off than we are today.

    • Parker Gallant
      Posted February 8, 2016 10:17 am 0Likes

      Hey Tom, I wasn’t suggesting that. The addition of more intermittent wind and solar added to our grid creating more surplus generation drives down the HOEP while increasing the GA laying more burden on Ontario’s ratepayers.
      This from the McCarter Auditor General report in 2011:
      “In 2010, 86% of wind power was produced on days when Ontario was already in a net export position.”
      I suspect it would be closer to 99% in 2015.

  • Bert Zegers
    Posted February 8, 2016 9:56 am 0Likes

    In the Netherlands the electricity price went up 7% over the last 10 years, less than inflation!
    Compare this with 97% increase in Ontario.
    Cathleen Wynne should sent Chiarelli over to learn from the Dutch how to handle energy.
    Something very wrong here!

  • Ed
    Posted February 8, 2016 10:21 am 0Likes

    Psychopaths or unchecked corruption. What is the difference?
    Who is the biggest contributor to the Liberal campaign fund?
    If this increase keeps up we will ………

  • Tom Adams
    Posted February 8, 2016 11:54 am 0Likes

    I should have been more careful in my comment, clarifying that Parker had not recommended charging GA to exports. I just want to warn anyone off who thinks charging GA to exports will help. The NDP often make this argument, not understanding the boomerang impact that would come back to bleed ratepayers even worse.

  • Grant Church
    Posted February 8, 2016 12:06 pm 0Likes

    The bleeding on Sun. Feb. 7 was horrendous. The price was negative for 11 hours and zero for 9 hours, leaving only 4 hours in the positive, but that was only for a fraction of a cent. It was complete with the usual of paying lots of capacity to sit idle.

  • Debbie
    Posted February 8, 2016 12:07 pm 0Likes

    Tom, I’m not following the logic of how charging GA to American jurisdictions who buy our excess energy would further worsen our economic plight here in Ontario. Wouldn’t that just mean that we are recouping more of the monies that we as residents have paid out to produce it?

  • Barbara
    Posted February 8, 2016 3:29 pm 0Likes

    Boston (AP), Feb.7, 2016
    ‘Massachusetts plan could spur hydro imports to New England’
    Tapping into Canadian hydro-power as a new energy source for energy starved New England.
    San Diego County, California is already getting some IWT power supply from a wind project located near the border in Baja California, Mexico as of the summer of 2015.

  • Tom Adams
    Posted February 8, 2016 5:08 pm 0Likes

    Attempting to charge GA to US customers would be a double whammy for ordinary Ontario customers. The US customers are buying in a truly competitive market. Prices are transparent. If Ontario prices are higher than the prevailing market price, the customers buy elsewhere. When we have surplus power, Ontario customers will be paying for it come what may. Ordinary customers in Ontario are better off getting a fraction of our cost back as opposed to nothing, which would be the case if GA was added. Large industrial customers in Ontario would shift even more of their cost to ordinary Ontario consumers if GA was added to exports because doing so would drive the internal market prices in Ontario — so-called HOEP — even lower than it is today. The upshot of lower HOEP would be a disproportionate increase in GA (which the big industrials hardly contribute to at all).

  • Theresa
    Posted February 8, 2016 9:14 pm 0Likes

    “Unchecked corruption” why would that be?
    Could it be that the “corruption checkers” are the actual corruptors?

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