Rising costs of electricity generation not stopping in Ontario

Ontario’s six-month electricity summary shows that the new government’s promise of cutting costs is going to be tough to achieve. Is it impossible?

IESO finally released their June “Monthly Summary Report” allowing one to determine if Ontario ratepayers consumed more or less electricity in the first six months of 2019 compared to 2018.  As it turns out, grid-connected (TX) consumption was down by 270,000 megawatt hours (MWh), dropping from 66,847 GWh (gigawatt hours) to 66,577 GWh.

Ontario’s gross exports also dropped nominally from 9,791 GWh to 9,718 GWh, but the cost to Ontario ratepayers (due to a higher GA [global adjustment])* in 2019 is approximately $1 billion, and in 2018 up to the end of June, the cost was less at approximately $920 million. The combined average as at June 30th of the HOEP and the GA jumped by $7.14 per MWh for Class B ratepayers from 2018, meaning it added about $346 million in additional costs in the six months.  While most of those increased costs won’t suddenly show up in November when rates are reset by the OEB, it will accumulate in the “Global Adjustment Modifier”** and will hit ratepayers and taxpayers in the future.

Hydro One’s six-month results:                                                                            Comparing the consumption drop IESO reported to Hydro One’s six-month report is interesting: they noted “Electricity distributed to Hydro One customers” actually increased by 294 GWh from 13,517 GWh to 13,811 GWh or 2.2%.  Revenue (net of purchased power) from Hydro One’s local distribution customers however was up by $134 million*** or an impressive 17.7% mainly due to rate increases granted by the OEB.  Transmission revenue was down $49 million (5.8%) as Hydro One stated: “due to cooler weather in the 2nd Quarter” and “lower peak demand”. Despite the overall $85 million revenue jump, Hydro One’s net income was down $96 million as they took the hit for the aborted Avista acquisition along with increases in financing charges and higher OMA costs.

The net income drop meant Hydro One paid out 84.2% ($282 million) of their net income via dividends to shareholders. This was in excess of their targeted payout rate of 70% – 80%. Ratepayers should hope the OEB takes this into account during present and future rate application reviews as, to the best of my knowledge, municipally owned LDC (local distribution companies) payout ratios are in the 50%-60% range! Toronto Hydro, as one example earned $167.3 million in 2018 and paid out $93.9 million in dividends to the City of Toronto for a 56.1% dividend rate. Retaining equity helps keep rates down!

OPG’s six-month results:

Ontario Power Generation just released their financial results for the first six months of 2019 and it looks like they are back in business, generating more electricity and big profits.  For the first six months of the current year they generated 39.3 TWh versus 36 TWh in 2018 increasing their percentage of TX generation consumed by Ontario ratepayers from 53.9% to 59%.  As well, “Income before interest and income taxes” for the “Electricity generating business segments” was up by 44.4%  to $715 million from $496 million.  While some of the increase was due to increased generation, most of it was due to the fact that the OEB granted substantial increases for both nuclear (increased to 8.1 cents/kWh from 7.5 cents/kWh [+8%]) and hydro (increased to 4.5 cents/kWh from 4.2 cents/kWh [+7.1%]) having sat on the rate application approvals**** for a considerable time.  Additionally, OPG were paid for 2.2 TWh of spilled hydro in 2019 versus 2 TWh in 2018 adding $15 million to revenue; however, the real shocker in the reported results was the fact they show OMA costs dropped $35 million.

Industrial wind turbines six-month results:   Thanks to Scott Luft’s data, wind power’s contribution (if one can call it that) for the six months for 2019 was up all-in (TX and DX [distribution connected] plus curtailed) slightly to 7.3 TWh versus 6.9 TWh in 2018. The overall cost however, was higher jumping from approximately $955 million to $1.079 billion.  Coincidently, the 7.3 TWh of 2019 is 83% of gross exports versus 80.9% of 2018’s gross exports.  That simply demonstrates the fact that wind turbines do nothing more than add to the costs of generating electricity in Ontario.  We could have easily done without their generation and their added costs!  Many people who have experienced health problems caused by the audible and inaudible noises produced by the turbines would also welcome their demise.

Conclusion:                                                                                                                                     One can determine from all this that the rising cost of electricity generation in Ontario has not slowed or stopped despite the change of government just over one year ago.

The damage caused through implementation of the Green Energy and Green Economy Act in 2009 continues and it is difficult to see how the current government will reverse the harm the GEA caused.

PARKER GALLANT        

*The GA pot only affects Ontario ratepayers as the market price (HOEP) is the price surplus electricity is sold at in the export market.                                                                                                                                                **The Ontario Minister of Energy announced future rate increases would be held to the rate of inflation.                                                                                                                                             ***In the 6-month comparison Hydro One’s average “Delivery” charge increased from 5.59 cents/kWh to 6.44 cents/kWh or 15.3% for their 1.3 million customers.                                                                                                                                        ****This was noted by the Energy Minister when passing the “Fixing the Hydro Mess Act”.

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Ontario electricity records smashed in June

And no, that didn’t make your life better

The month of June came and went and while several records were set, the media paid no attention.

Let’s start with why it took IESO until early August to release their Monthly Market Summary for June with the rest to follow!

IESO reporting: The IESO webpage where one accesses the daily and monthly summaries states the following: “The monthly report follows the Settlement Calendar for the release of Preliminary statements, generally in the middle of the following month.” While this may not be a record for late reporting it certainly doesn’t live up to their claim. They might want to edit that statement.

Ontario ratepayers’ consumption: The IESO Monthly Market Summary disclosed Ontario’s consumption was less than 10.6 TWh (terawatt hours) and, looking back over the past ten years (since passage of the GEA) June 2019’s TX (transmission-connected), consumption was the lowest. Possibly a record low.

 Curtailed wind: While the amount of curtailed wind (paid for but not generated) wasn’t the highest ever, the percentage of curtailed wind was a new record according to my friend Scott Luft who does an excellent job every month at estimating it, and provides data well before it is made available by IESO.  In June, Scott estimated 390,567 MWh of DX connected wind was curtailed versus 381,946 MWh grid-accepted. The curtailed wind represented 50.6% of what they could have generated and cost ratepayers $46.868 million via the Global Adjustment (GA) pot.

Grid-accepted wind power’s value: Scott also keeps track of the HOEP rate when wind is added to the grid and for June, he noted the HOEP valued wind at 0.17 cents/MWh.  We ratepayers pay wind generation companies an average of $135.00/MWH while the electricity trading market, i.e., HOEP valued their generation for pennies.  This is a record since Scott commenced tracking IESO data. Grid-accepted wind was HOEP valued at $65,000.

Global Adjustment sets a record: On Page 22 of IESO’s Monthly Market Summary they provide the Arithmetic and Weighted Average of both the GA and the HOEP and as it turned out, the GA hit a new record high for both at $140.96/MWh and $142.11MWh respectively.  This record high GA signals a high transfer to the Fair Hydro Plan (FHP) instituted by the Wynne government to reduce residential ratepayer’s electricity bills.

Monthly transfer to the FHP sets a record: The FHP transfer is referred to as the “GA Modifier” and it set a record for June coming in at $329.8 million, or 32.3% of the June GA cost ($1,018.2 million) for Class B ratepayers. Both the amount of the transfer and the percentage established new records.

HOEP sets a new record low: IESO’s “Monthly Market Summary” page 22 also contains the monthly Arithmetic and Weighted Average of the month’s HOEP value and they were respectively $3.68/MWh and $4.83/MWh and both were new lows.

Contribution by ratepayers to net exports sets a record:  As sales of surplus electricity to our neighbours doesn’t include the GA costs our net exports (surplus grid generation) for the month were adversely affected by the low HOEP.  Net exports for the month were 1.7 TWh (enough to power 2.2 million average residential households for the month) and generated approximately $8.2 million at $4.83/MWh but cost ratepayers about $241.6 million at $137.28/MWh meaning the loss for the month of $233.4 million was added to the GA pot.

Conclusion                                                                                                                                      What all this demonstrates is that there is something severely wrong with our electricity system in Ontario.

While wind and solar clearly played a significant role in driving up our electricity costs as it turns out, for June, a large portion of the record costs came about as OEB approved rate riders for OPG. Some of those are related to OPG’s nuclear refurbishment whereas other increases are due to OPG rate applications that were before the OEB for several years.  The latter are related to variance accounts including pension and other post-employment benefits in the hundreds of millions of dollars.  The OEB said no to the original applications but legal action by OPG took the issue all the way to the Supreme Court of Canada and the OEB lost!  As a result, those rate applications were allowed and their effect is to add hundreds of millions annually to OPG’s revenue base at a cost to ratepayers.  Scott Luft lays out the impacts of the foregoing in a recent posting on his site.

The revenue spurt OPG is now experiencing may well be the reason they suddenly announced the planned acquisition of 1,808 MW of gas plants from TransCanada and its affiliates for $2.87 billion. OPG suggested it was to replace the Pickering Nuclear generation capacity that will be winding down over the next several years, but it adds nothing to the province’s electricity capacity.

Ratepayers and taxpayers will continue to pay the price for political directions/interference and their exercise of control over the electricity sector.

The Green Energy Act passed by the McGuinty government is simply one example. It remains to be seen if the current government can untangle the mess.

PARKER GALLANT

 

Blame It on Mother Nature (3)

In the first article in this series, I looked at the 2017 flooding in Ontario, the implementation of Plan 2014, and its cost to Lake Ontario shorelines. Next, I outlined details on the plan and how it came into being within the confines of the IJC in a secretive way.  I also described the 2019 flooding and the rising costs that may have elicited future law suits against the IJC (International Joint Commission) with one possibly coming from the State of New York.

Today, I will try to capture some of the impacts to communities on the shores of Lake Ontario.

The flooding occurring in the community of PEC (Prince Edward County) in 2017 resulted in the local council declaring a “state of emergency” but in 2019 they didn’t!  Council’s reasoning in 2019 was that because tourism is a major economic benefit to the county, declaring an emergency could have a detrimental economic effect.  Additionally, any flood-related compensation from the province would require significant expenditures by the county before becoming accessible.

PEC’s not declaring an “emergency” brought about an interesting event. A local paper, The Picton Gazette, received a letter from the Co-chairs of the ILOSTRB (International Lake Ontario-St. Lawrence River Board).  The letter noted the fact that the county didn’t declare an emergency. The letter placed the blame for 2019 flood on good old “Mother Nature” and claimed Plan 2014 was not at fault.  The letter said nothing about reducing water levels during the fall of 2018 or the winter of 2019 to free reservoir space for the record snowfalls, but did admit to constraint (lower out flow at the Moses- Saunders Dam) in the spring run-off, blaming it on the Ottawa River flow being at record volumes.

New York State, unlike PEC, declared a state of emergency in mid-May along the 326-mile Lake Ontario shoreline for all eight counties. It was called by Governor Cuomo. As noted in my first article, it is ironic that support for Plan 2014 came from some of the same communities now caught up in the “state of emergency”.

Back in Ontario, United Shoreline Ontario did an impressive presentation for Cobourg’s council in June 2019 which highlights what they view as some of the causes of flooding in 2017 and 2019 and strongly suggest Plan 2014 played a role. They point to how “Plan 2014 allows for “higher highs and lower lows” in the human-managed water levels of Lake Ontario.” They also note those “higher highs put Ontarians at greater risk of severe and violent flooding.” A little bit further east on the northern Lake Ontario shoreline the City of Belleville city council on June 25, 2019 “agreed to align with Prince Edward County, the City of Quinte West and Brighton in asking both governments to suspend Plan 2014.”

Belleville’s position was similar to that expressed by US politicians. As one example: In a June 18, 2019 article “Senate Minority Leader Chuck Schumer is the latest elected official who says Plan 2014, a water regulatory plan for Lake Ontario and the St. Lawrence River, isn’t working. He wants the International Joint Commission, a bi-national panel consisting of members from the U.S. and Canada, to reexamine the plan.” Apparently, Schumer isn’t alone as the article goes on to state: “Not only are there elected officials who agree, but business owners and residents echo calls to do something with Plan 2014.” That article also noted: “Any talk of repealing Plan 2014 has been rejected by current and former Canadian commissioners who support the plan.”

It also appears that because the flood effects are lingering, that resentment against the IJC and Plan 2014 are growing. As an example, an article on Buffalo’s NPR News Station noted: “Ask many homeowners along the southern shore of Lake Ontario and they will point to the new lake level management plan — called Plan 2014 — as the cause behind these high levels. But it’s not just residents who blame the plan. I think it’s detrimental,” said Greece Town Supervisor Bill Reilich. “All you gotta do is look at the shoreline and I can say that since this new plan’s put in — two out of three years, we got flooding.”

Another article on July 17, 2019 said NY Governor Cuomo has pledged US $300 million in aid that must be matched by 15% from the local community. This amount is three times state funding after the 2017 flooding. This time the money is focused on resiliency!   This article was about flooding issues in Clayton, NY, a tourist area and notes in particular that “Marinas are closed, restaurants are having trouble opening up. It’s still a great place to visit, but there are still some problems.“ These are the same issues facing much of Ontario’s shorelines.

In Chapter 1 the Canadian Section Chair Gordon Walker was quoted after Plan 2014 was endorsed by outgoing US President Obama and Canadian Prime Minister Trudeau stating: “We are pleased that Plan 2014 will bring system-wide improvements, with consideration of ecosystem health and recreational boating along with shoreline communities, commercial navigation and hydropower production”.

While this writer won’t opine on how the “consideration” helped “commercial navigation and hydropower production,” it is obvious that recreational boating, ecosystem health and shoreline communities have failed to see any benefits from Plan 2014. The tourism industry in both NY and Ontario has suffered badly from the two flood years and the damage to shoreline properties has cost hundreds of millions of dollars in damages to residential, businesses and municipalities-yet the IJC continue to defend it! They do so despite the flooding.

To be clear, the International Lake Ontario St. Lawrence River Board* must execute the directions they receive from IJC and they in turn can order OPG and the New York Power Authority to alter water flows.

They do as they are told no matter the consequences and shoreline residents, businesses and municipalities pay the price!

PARKER GALLANT

*”The duties of the Board shall be to ensure that the provisions of the Order relating to water levels and the regulation of the discharge of water from Lake Ontario and the flow of water through the International Rapids Section as herein set out are complied with, and Ontario Power Generation and the New York Power Authority shall duly observe any direction given them by the Board for the purpose of ensuring such compliance.”

 

 

Blame it on Mother Nature — 2

A small slice of the wetlands Plan 2014 has created in and around Lake Ontario

In the first part of this series I dealt with the implementation of Plan 2014 and its claimed non-causation by the IJC (International Joint Commission) and others as the genesis of the 2017 flooding on the shorelines of Lake Ontario costing residents, businesses and municipalities hundreds of millions of dollars.

Mother Nature was clearly the cause, was the message doled out!

Those with some knowledge of Plan 2014 or curiosity about its potential effects however wanted more information. Some of those seeking more information emanated in New York State and resulted in a “New York Senate Hearing” on October 10, 2017. It is a bit disconcerting when examining some of the testimony from those who played a role in developing the plan. As one example; Bill Werick, a member of the Great Lakes-St. Lawrence River Adaptive Management Committee was asked: “Do you believe the trigger level* is set too high, given what’s happened this past year?” His response included the following: “the fact is, is that, as Mr. Durrett said, our forecasts for one month out are really not very skilful.”

The real damning testimony in respect to Plan 2014 came from Frank Sciremammano, Jr., Ph.D., P.E. Professor (retired) of Engineering, Rochester Institute of Technology and International Lake Ontario-St. Lawrence River Board. Mr. Sciremammano after describing his involvement in the development of three alternate plans stated: “Plan 2014 is not one of the recommended plans from the IJC study, and, in fact, it violates three of the principal guidelines of that study.”

 

Later in his testimony he stated: “the IJC withdrew its proposal, and formed a new secret working group of representatives only. They worked in secret. Nobody knew who was on the committee. Nobody knew when they met. No minutes. No freedom of information. After a while they came out with a new version of Plan B+, which they recommended, which was termed “Bv7” for Plan B, ** Version 7.”

 

And he further testified: “After some further secret negotiations, the working group came up with Plan 2014, which is just Plan Bv7, but with a slight modification to add trigger levels.”

 

As noted in my first instalment, Plan 2014 was supposedly aimed at reversing “some of the harm” to shoreline wetlands by allowing higher water levels that would flood them and reverse the “harm”! Interestingly enough, the IISD (International Institute for Sustainable Development), self-described as an independent think tank championing sustainable solution to 21st century problems and funded via grants from the Federal Government ($7.8 million in 2018), UN agencies, etc. conducted a study to determine how flooding affected emissions of carbon dioxide and methane. Their conclusion: “We found that both carbon dioxide and methane, an especially potent greenhouse gas, were produced in higher levels after flooding, suggesting that reservoirs can be sources of GHGs.”

 

Their review also found “reservoirs should be designed to maximize flooding in areas with thin soils and little vegetation and to minimize flooding in areas with large stores of carbon, such as wetlands. “***

 

What the foregoing suggests is the issues and harm causing “climate change” are far from being settled despite the billions of tax dollars directed to and spent by those who profess to be experts. The question arising out of the conflict raised by the IISD report and Plan 2014 should be worrying as the latter has cost shoreline residents, businesses and municipalities of Lake Ontario shorelines hundreds of millions of dollars. It was done in an effort to reverse “harm” as defined by those who developed Plan “Bv7” identified by Mr. Sciremammano in his testimony to the Senate Hearing.

 

The flooding that occurred in 2017 and its repeat in 2019 raised the ire of city, town and community politicians in many shoreline communities in both New York and Ontario. They are demanding abandonment of Plan 2014 and compensation for costs incurred by their residents, businesses and communities. New York State Governor Cuomo wrote a June 8 2019 letter to the IJC and in it he states: “The IJC was put on notice in 2017 when the Lake set high-water level records and should have been aware of the present danger from the massive snowpack and likelihood of continued rains into the spring of this year. Yet, rather than acting, the IJC continued the status quo, resulting in more flooding and more property damage in New York. We demand that the IJC make New York whole for its millions in unreimbursed expenditures, and that the IJC modify its water management and planning to reduce the flooding and damage being done to New York’s shoreline communities.”

 

One wonders if Governor Cuomo was aware of Bill Werick’s answer to a question about the “trigger level” and his response was: “the fact is, is that, as Mr. Durrett said, our forecasts for one month out are really not very skilful.“

 

Perhaps it’s time to become more skilful and that applies to those appointed to manage the system. Governor Cuomo’s letter in the case of Canada was directed to our recently appointed Canadian Chair of the IJC, The Honorable Merrell-Ann Phare.   Ms. Phare holds a Master of Laws (LL.M.) Aboriginal Water Rights and International Trade Law and appears to reside in Winnipeg. While I am sure she is competent it seems strange that her skill sets don’t align with what one would expect as the Co-Chair of the IJC.

 

On the issue of the IJC and the 2019 floods, their Public Interest Advisory Group (PIAG) now have a survey available on their website (not in an obvious place) which asks questions about high and low water levels, damage to shorelines, recreational boating and the environment and wetlands. Personal encounters by the author with shoreline businesses, residential property owners and local politicians indicated (to the writer) they were unaware of the survey.

 

One has to wonder, was posting of the survey’s intent to seek feedback or to suggest they were actually concerned about the two 1-in-100-year flood events in the three years since “Plan 2014” was enacted?

 

Next in the series I will look at shoreline harm and expressions of dissent by those affected.

PARKER GALLANT

 

 

*The “trigger level” refers to when water should be allowed to flow or be retained.                                

**Plan B was the environmental plan aimed at maximizing the environmental benefits.

***A flavor of the IISD study? The 2017 floods killed 7 trees on our property–former carbon sinks.

 

Blame it on Mother Nature

Plan 2014 and flooding: first in a series

The flooding that occurred in Ontario and New York State in 2017 was claimed to be a “1-in-100-year event” by most conservation and government authorities. That message was carried by the media.  In many cases, environmental organizations blamed it on “climate change” as did Prime Minister Trudeau and Environment Minister Catherine McKenna stating: “This is something that is real. … We are seeing the impacts of climate change.”

Those directly involved however displayed saner thoughts as noted in a report about the event by the Ottawa River Regulation Planning Board* stating: “The main cause of the exceptional 2017 spring flooding can be described easily in just a few words: rain, rain and even more rain. Unusually heavy rainfall, coinciding with melting snow that had already saturated the ground and swollen waterways, generated exceptional volumes of water in the Ottawa River basin.”

What was principally ignored in the rhetoric emanating from so many was “Plan 2014” and the fact that 2017 was the very first year the plan was implemented. Those responsible for executing the plan in the form of the International Lake Ontario-St. Lawrence River Board (ILOSLRB) released a report June 21, 2018 stating:  “extreme weather and water supply conditions were the primary factors that caused Lake Ontario and St. Lawrence River water levels to rise to record breaking levels last year.”

The ILOSLRB however did make reference to the “plan” by claiming: “Plan 2014 did not cause or exacerbate the devastating floods and associated damages that occurred in 2017.”

So, what is Plan 2014?                                                                                                                                                          When the IJC (International Joint Commission) submitted “Plan 2014” to the Canadian and US governments in June 2014 it stated: “The International Joint Commission, after 14 years of scientific study and public engagement, advances Plan 2014 as the preferred option for regulating Lake Ontario-St. Lawrence River water levels and flows. Scientific studies reveal that the Commission’s 1956 Orders of Approval and regulation of the flows through the power project following Plan 1958D with deviations, have harmed ecosystem health primarily by substantially degrading 26,000 hectares (64,000 acres) of shoreline wetlands. After exhaustive consideration of alternative plans, the Commission concludes that Plan 2014 offers the best opportunity to reverse some of the harm while balancing upstream and downstream uses and minimizing possible increased damage to shoreline protection structures.”

Plan 2014 was blessed by US President Obama and Canadian Prime Minister Trudeau December 5, 2016 and the IJC announced they would move on the “Plan” on December 8, 2016!

Needless to say, the rhetoric started flowing soon after the announcement as both the U.S. and Canadian IJC officials issued statements. This from the US Section Chair, Lana Pollack: “Plan 2014 is a modern plan for managing water levels and flows that will restore the health and diversity of coastal wetlands, perform better under changing climate conditions and continue to protect against extreme high and low water levels”.

And this from Canadian Section Chair Gordon Walker: “We are pleased that Plan 2014 will bring system-wide improvements, with consideration of ecosystem health and recreational boating along with shoreline communities, commercial navigation and hydropower production”. In particular, this from the IJC announcement is noteworthy, now that we have experienced two out of three years of 1-in-one hundred year floods since Plan 2014 was implemented: “Allowing for more natural variations of water levels, the plan will foster the conditions needed to restore 26,000 hectares (64,000 acres) of coastal wetlands and improve habitat for fish and wildlife. The plan will also frequently extend the recreational boating season, better maintain system-wide levels for navigation and increase hydropower production.”

Sounds like Utopia!

Needless to say, the many environmental groups and townships that had supported Plan 2014 via a letter to President Obama and Prime Minister Trudeau were quick to exclaim their excitement after the IJC announcement, but presumably, politicians in places like Ogdensburg, Clayton and Alexandria in NY State must be upset as their support of Plan 2014 has resulted in major flooding in 2017 and again in 2019.

Other supporters of Plan 2014 included WWF-Canada (World Wildlife Fund) and CELA (Canadian Environmental Law Association).   David Miller, (former Mayor of Toronto) and then President of WWF-Canada was ecstatic and basically echoed the claims of the IJC announcement and included this observation; “restoring more than 260 sq. km of wetlands, boosting hydropower production, and increasing the resilience of hundreds of kilometres of shoreline in Canada and the United States.“

Prior to the December 8, 2016 IJC announcement the first Great Lakes and St. Lawrence Parliament Hill Days were held in Ottawa with many parliamentarians taking part including Canadian Environment Minister, Catherine McKenna as well as IJC officials and environmental groups that included WWF-Canada, CELA and Environmental Defence Canada. The event took place in late October 2016.

The “second” Great Lakes and St. Lawrence Parliament Hill Days gala in November 2017 didn’t celebrate “Plan 2014” or speak to the 1-in-100 year flood that had occurred earlier in the year. Instead it was about the Great Lakes restoration funding and Catherine McKenna, Minister of Environment and Climate Change, reminisced about “her childhood dream of being able to swim in Hamilton Harbour.”

Stay tuned for Chapter 2 in this series that will delve into some of the background of Plan 2014.

PARKER GALLANT

*The Board consists of seven members, each with an alternate, who represent Canada (3 members) Ontario (2 members and Quebec (2 members)

Wind power and reliability: 180 degrees apart

An article posted on my blog on February 17, 2019 was related to IESO’s release of grid-connected (TX) 2018 Electricity Data. It disclosed the cost of electricity for the average Class B ratepayer had fallen ever so slightly from 2017, reducing costs by about $5 annually.  The savings on the electricity portion of the average bill may have been eaten up by additional delivery and/or regulatory charges, so was probably not even noticed by most ratepayers.

As I noted then, what caused rates to drop was that we consumed more in 2018 than 2019, resulting in less wasted generation. In 2018, Ontario’s total demand was 137.4 TWh (terawatt hours) — up from 2017 when we consumed 130.3 TWh, for an increase of 7.1 TWh or 5.4%.  Nuclear and hydroelectric generation in 2018 generated 92.5% of total Ontario demand, not including spilled hydro or steamed-off nuclear which is paid for via the GA (Global Adjustment).

As an example of less wasted generation, OPG reported in 2018 that due to SBG (surplus baseload generation) they spilled 3.5 TWh, whereas in 2017 they spilled 5.9 TWh. That was 2.4 TWh less wasted hydroelectric generation we didn’t have to pay for!

Since IESO’s release of the grid-connected data, we are now able to see exactly where all Ontario generation came from, including both grid (TX) and distribution-connected (DX) due to the recent release of the OEB report “Ontario’s System-Wide Electricity Supply Mix: 2018 Data”. The OEB report indicates total Ontario generation of 154.4 TWh in 2018 up from 2017 when it was 150.75 TWh.

About the same time as the OEB released their report, the Ontario Energy Report was also released and it includes both TX and DX generation in detail. It also includes specific information on our exports and imports of electricity plus individual capacities of our generation sources.

Looking at some of the specifics causing our electricity rates to soar since the advent of the Green Energy Act (GEA) in 2009, it is relatively easy to see the principal causes. Wind and solar generation’s inability to deliver power when needed, despite its “baseload” designation, has factored in rising costs in two ways. The first is its detrimental effect on the HOEP and the second is its preponderance to create surplus generation that must be exported, curtailed, spilled or steamed off.

The HOEP in 2017 was the lowest ever, averaging 1.58 cents/kWh increasing to 2.43 cents/kWh in 2018. That means our exports of 18.591 TWh in 2018 generated revenue of approximately $451.8 million ($24.3 million per TWh) but cost ratepayers around $2.138 billion.

That means we lost almost $1.7 billion. The bulk of our exports (15.531 TWh) were sold to New York and Michigan so $1.4 billion of the $1.7 billion in ratepayer costs went to provide cheap power to those two US States.

The further driver to increased costs can be blamed on what we pay wind** and solar generators. For wind it averages $135/MWh and for solar $445/MWh. In 2018 TX plus DX wind generation was 12.3 TWh and curtailed wind was 1.9 TWh for which we pay $120/MWh. Total wind generation costs in 2018 therefore were about $1.888 billion. Solar generation in 2018 from DX and TX connected plants was 3.5 TWh and cost $1.55 billion bringing costs for the two intermittent sources of “baseload” generation to $3.438 billion or about 22 cents/kWh.

The combined cost of losses on exports plus the costs of wind and solar was $5.1 billion.   Is it any wonder our rates are so high?

Perhaps the time has come for all energy ministries to recognize wind and solar are not “baseload” power as defined due to their intermittent and unreliable nature.

Wind and solar power’s designation should logically be changed from “baseload” power to “abstract” or “symbolic” power! That change would better reflect their ability to deliver power when needed.

 

PARKER GALLANT

*Includes both the GA and the HOEP (hourly Ontario energy price).

**IESO suggests we can only count on wind to produce at a level of 13.6% of its capacity.  For solar it’s at about the same level suggesting solar is (in IESO’s view) actually more dependable!

Wind power: not in evidence on Ontario’s hot summer days

Looking for wind power for fans and A/C? Don’t bother

While the wind power lobby claims it could supply as much as one-third of our power, the hot summer days tell a different story — wind is pretty much nowhere to be found

A post on the wind power lobbyist the Canadian Wind Energy Association/  CanWEA’s website about seven months ago (December 6, 2018) stated:  “The Pan Canadian Wind Integration Study* – the largest of its kind ever done in Canada – concluded that this country’s energy grid can be both highly reliable and one-third wind powered.”

Based on the hot days of July 2, 3, and 4 we have just experienced here in Ontario, the “one-third” of wind generation required would have been 482,430 MWh meaning wind capacity would have to be quite a bit larger than the 4,486 MW* currently grid-connected.

On top of that, the wind turbines would have to operate well in excess of the level they operated at during those three days.

Over the three days, total electricity demand was high-averaging just under 483,000 MWh per day. While nuclear, hydro and gas provided almost all of the power (1.448 TWh) needed the 4,486 MW of grid-connected wind generating capacity contributed 12,056 MWh in total over those three days.

That output represented a meagre 0.83% of total demand.

What that suggests is this: operating at that level would require in excess of 86,000 MW of wind capacity (2.3 times Ontario’s existing total grid connected capacity) to simply meet the “one-third” claim.

It would be a big stretch to ever see them contribute the self-proclaimed “one-third” of power the wind power lobby claims.

Hot muggy summer days and very cold winter days when electricity demand is at its highest is generally when industrial wind turbines take the day off!

One-third wind powered would be the antitheses of a “highly reliable” grid.

PARKER GALLANT

*Partially funded by taxpayer dollars

**4,486 MW of capacity operating at 100% would produce approximately 323,000 MWh over three days