CanWEA gets it wrong on energy costs: university professor

University professor in engineering and environment says CanWEA guilty of “willful blindness”; quotes him incorrectly in statement on energy costs

Just a few days ago, I wrote that the Canadian Wind Energy Association (the trade association for the wind power industry, also known as CanWEA) posted a statement by its Ontario representative that people who say wind power is adding to Ontario’s electricity bills are misleading the public. Ms Gianetta referred to University of Waterloo professor Natin Jathwani to support her views.

Professor Nathwani e-mailed me in response to the claims made by Ms. Giannetta’s in her recent post on CanWEA’s website, which I repeated in “Wind power lobby myth buster is busted”.

Professor Nathwani’s email:

Dear Mr Gallant:

In your Blog, you have cited Ms. Giannetta’s post on CanWEA’s website on April 24, 2017 as quoted below:

Her article points to two articles that purportedly support the “myth” she is “busting,” but both require closer examination. She cites Waterloo professor Natin Nathwani’s, (PhD in chemical engineering and a 2016 “Sunshine list” salary of $184,550) article of March 6, 2017, posted on the TVO website, which supports Premier Wynne’s dubious claims of “a massive investment, on the order of $50 billion, for the renewal of Ontario’s aging electricity infrastructure.” Professor Nathwani offers no breakdown of the investment which suggests he simply took Premier Wynne’s assertion from her “Fair Hydro Plan” statement as a fact! It would be easy to tear apart Professor Nathwani’s math calculations — for example, “The total electricity bill for Ontario consumers has increased at 3.2 per cent per year on average” — but anyone reading that blatant claim knows his math is flawed!

First and foremost, the record needs to be corrected since Ms Giannetta’s assertions are simply incorrect and should not be allowed to stand.

If she has better information on the $50 billion investment provided in the Ministry of Energy’s Technical Briefing, she should make that available.

The breakdown of the investment pattern in generation for the period 2008-2014 is as follows:

Wind Energy $6 Billion (Installed Capacity 2600 MW)

Solar Energy $5.8 Billion (Installed Capacity 1400 MW)

Bio-energy $1.3 Billion (Installed 325MW)

Natural Gas $5.8 Billion

Water Power $5 Billion (installed Capacity 1980 MW)

Nuclear $5.2 Billion

Total Installed Capacity Added to the Ontario Grid from 2008-2014 was 12,731 MW of which Renewable Power Capacity was 6298MW at a cost of $18.2 Billion.

For the complete investment pattern from 2005 to 2015, please see data available at the IESO Website.

In sum, generation additions (plus removal of coal costs) are in the order of $35 billion and additional investments relate to transmission and distribution assets.

I take strong exception to her last statement suggesting that the 3.2 percent per year (on average) increase in total electricity cost from 2006 to 2015 in real 2016$. The source for this information is a matter of public record and is available at the IESO website.

Ms Giannetta’s assertion is complete nonsense because she does not understand the difference between electricity bill and generation cost. Let Ms Gianetta identify the “blatant flaw.”

As for the electricity bill that the consumer sees, there is a wide variation across Ontario and this is primarily related to Distribution.

The Ontario Energy Board report on Electricity Rates in different cities provides a view across Ontario:

For example, the average bill for a for a typical 750kWh home Ontario comes is $130 per month.

In Toronto it is $142, Waterloo at $130 and Cornwall at $106. On the high side is Hydro One networks is $182 and this is primarily related to cost of service for low density, rural areas.

Your Table 2 Total Electricty Supply Cost is helpful and correctly highlights the cost differences of different generation supply.

Only wilful blindness on Ms Giannetta’s part would suggest that wind and solar are coming in at a low cost.

Warmest regards,

Jatin Nathwani, PhD, P.Eng

Professor and Ontario Research Chair in Public Policy for Sustainable Energy Executive Director, Waterloo Institute for Sustainable Energy (WISE)

Faculty of Engineering and Faculty of Environment Fellow, Balsillie School of International Affairs (BSIA)

University of Waterloo, Waterloo, ON

Author: parkergallantenergyperspectivesblog

Retired international banker.

11 thoughts on “CanWEA gets it wrong on energy costs: university professor”

  1. Thanks to University of Waterloo Professors Natin Jathwani and Richard Mann for standing up and setting the record straight!
    For an update on the Health Impacts of Wind Turbines, here is a talk by Carmen Krogh, speaking at University of Waterloo in March 2017 to given an update on the harm from industrial wind turbines. Professor Richard Mann organized it.

    Liked by 3 people

  2. I’m trying to understand what the fuss is about. I have read all three pieces.

    The Professor says, in his original article:

    “Although actual electricity price increases over the past decade have been higher than the consumer price index, they are directly tied to a massive investment, on the order of $50 billion, for the renewal of Ontario’s aging electricity infrastructure.”

    CanWea responds by saying:

    “Ontario has made large investments in many different types of generation, transmission and distribution to increase reliability – Professor Nathwani calculates the investment at $50 billion over the past decade. This helped Ontario to shut down its coal-fired generating stations.”

    That sounds like pretty much the same to me.

    Then you, Mr. Gallant, say in your article, that CanWEA and the Professor “supports Premier Wynne’s dubious claims of “a massive investment, on the order of $50 billion, for the renewal of Ontario’s aging electricity infrastructure.” Professor Nathwani offers no breakdown of the investment…”

    I don’t know why the Professor would have a problem with CanWEA. It is your article that impugned the accuracy of the Premier’s estimate, the Professor’s confirmation, and CanWEA’s quote. The other three are in agreement. He is not criticizing CanWEA. He is criticizing you.


    1. Mr. Shepard, I wish to point out this post is the e-mail that the professor sent to me—it was not written by me! The only part I left out was the chart referenced in my original article and included in Professor Nathwani’s e-mail which was taken directly from IESO’s 18 month outlook.

      I would note Premier Wynne and many others including CanWEA have made the assertion that “Ontario, invested $50 billion, for the renewal of Ontario’s aging infrastructure.” A huge part of the $50 billion was in fact not made by the province, it was made by the private sector companies that rushed to Ontario for the lucrative above market contracts. Note: Ontario’s Auditor General(s) have certainly made the latter clear in several reports emanating from their office—we overpaid. Coupled with that many of the investments made in the public sector such as, smart meters, Big Becky, Mattagami, coal conversions to biomass, etc. were made at huge costs and so far have produced nominal benefits for ratepayers but are amortized over their anticipated life span and have driven up the cost of electricity but not to the extent of the private investments in wind and solar! The IESO chart confirms the foregoing and Professor Nathwani is in full agreement with the chart and my remarks about those costs.

      The investment in the transmission and grid system benefited the wind and solar developments who needed to be hooked up to the grid! Once again I would point you to the recent AG’s report which noted outages and the length of those outages have increased despite all the spending by Hydro One. You are free to interpret my posts in any manner you wish but please do your best to not throw darts where they don’t belong.

      Liked by 2 people

  3. But that’s not all. Then, in your article, you say:

    “It would be easy to tear apart Professor Nathwani’s math calculations — for example, “The total electricity bill for Ontario consumers has increased at 3.2 per cent per year on average” — but anyone reading that blatant claim knows his math is flawed.”

    What the Professor actually said in his piece was:

    “The total electricity bill for Ontario consumers has increased at 3.2 per cent per year on average from $15.5 billion in 2006 to $20.5 billion in 2015 (adjusted for inflation), and the unit cost of electricity has increased from 10.1 cents to 14.3 cents per kilowatt hour.”

    Those statistics are accurate, and are directly from IESO data.

    Interestingly, the CanWEA article doesn’t refer to the 3.2% real increase at all. It makes a difference point: new procurements of wind are below the average Ontario generation cost. It also alludes to the elephant in the room. While solar and wind costs per kwh. have been trending downward, nuclear is going way up, and will continue to do so for at least the next decade. OPG has already told us how much those increases will be, even if Darlington comes in on budget.

    Once more, if anyone had the Professor’s point wrong, Mr. Gallant, it was you. His email isn’t about CanWEA getting anything wrong. It is about you getting it wrong.


    1. Mr. Shepard I will try to put some points forward to put some context around how you interperted my remarks versus the Professor’s. While the Professor is looking at the “overall cost” of the commodity my remarks are related to the fact that the bill for “Ontario consumers” has risen considerable more. IESO report the average price of the commidity “electricity” in 2006 was 4.87 cents/kWh and in 2016 the price they report was 11.32 cents/kWh. That translates to a 5.45 cents/kWh increase and a simple percentage increase (without inflation factored in) of 112%–a far cry from 3.2% in real terms. The issue of comparing apples to oranges is not dissimaler to that of CanWEA who selectively point to wind as only representing a certain percentage of the cost of electricity but avoid a comparison with the percentage of generation. The other issue avoided is related to: spending on conservation, spilling hydro, steaming off nuclear, paying for curtailed wind and solar and idlying gas plants.
      All but the gas plant costs are relatively new additions to the delivered cost of the commodity. The addition of wind & solar backed up by gas plants has played a huge role in driving up costs as does the fact consumption since 2006 dropped from 151 TWh to 137 TWh and our net exports have increased by 3 TWh when measured against 2016. The “elephant in the room” has been in the room since passing of the GEA and has trampled Ontario ratepayers to a much greater extent than we have ever experienced. The numbers published by the OEB in late 2014 indicated approximately 600,000 households (about 11%) were going to, or were, experiencing “energy poverty” although the use of that particlular term was avoided. The next elephant, you suggest, entering the room (nuclear) is unlikely to cause rates to increase by the 112% we have already experienced principally caused by wind an solar—you should have another look at the IESO chart. Wind and solar and gas backup generate 47% of the GA yet collectively provide only 16% of generated power. Now that’s an elephant!

      Distribution costs have done their best to increase but not to the extent of the commidity cost. Once again you are free to interpert the Professor’s or my post in any manner you wish but try to keep an open mind!

      Liked by 1 person

    2. Mr. Shepard you state that “solar and wind costs per kwh. have been trending downward” I wish to direct you to a 2005 article in Wind Power Monthly on Ontario’s RFP for 955Mw of wind. The winning bidders signed 20 year power purchase agreements with the Ontario Power Authority at a weighted average price of 8.6 cents/kWh.—wind-contracts-955-mw Now fast forward to 2016 and the LRP1 resulted in the IESO signing five wind contracts totalling 299.5 MW, with a weighted average price of 8.59 cents/kWh. Mr. Shepard, that’s only a drop of 0.01cents/Kwh over the last 11 years, a very faint downward trend.

      Liked by 3 people

    3. Nonsense Jay.
      Let’s start and end with Brandy Gianetta’s deceptive: “Various pundits assert that the major reason for higher electricity bills in Ontario is the addition of renewable energy to the province’s electricity mix. This is a myth.”

      To your, “Those statistics are accurate, and are directly from IESO data”
      -the numbers are from the IESO, and may be accurate. It is from the OPO data posted last September, with the data adjusted to 2016 real values (so the 3.2 % annual increase is above inflation). The same data showed the costs broken down, with Generation and Conservation growing, in 2016 real dollars, from $8.6 billion in 2006 to 13.5 billion in 2015 (I’ll suggest $14.9 billion for 2016 – a figure the IESO should release). All other categories increased 1% over that timeframe (above inflation), but as an excellent blog post by yourself noted a lot of spending in that area is likely going to hit bills eventually.
      Regardless, spending on mega and nega watts rose 55% above inflation from 2006 to 2015, and my 2016 figure would make the total 74% (plus, for 2016 only, the 8% provincial portion of the HST). Astonishingly exports reported by the NEB show lower nominal revenues in 2016 than 2006, on roughly twice the volume. Large consumers in Ontario escape the full brunt of increases due to the ICI, so that 74% burden falls mainly on smaller consumers – the type who read blogs like this and assume anybody saying the average rate is 14.3 cents/kWh is insane, or manipulative.

      According to the IESO the increase in Generation (and conservation) from 2006 to 2015 was $4.8 billion – of which the IESO global adjustment disclosures show $2.9 billion (nominal) due to wind ($1.26), solar ($1.22B) and conservation ($0.45B) in the global adjustment.
      The $14.9 billion I suggest for 2016 means an increase from 2006 of $6.3 billion – of which the IESO global adjustment disclosures show $3.65 billion (nominal) due to wind ($1.55), solar ($1.63B) and conservation ($0.52B) in the global adjustment.

      The impact of wind may be over-emphasized compared to solar, but the trends of 2008 are what has driven costs.
      That’s no myth.

      As for the recent contracts, nobody who understands the decline in value with increase in market share could care. Those that realize the initial RES contracts were adjusted when curtailment became an issue won’t think initial contract terms will be reflective of later costs anyway.

      Liked by 1 person

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