IESO: pick a number, any number

February 4, 2018

The Independent Electricity System Operator seems have different ideas about its power statistics, which raises questions about how it manages contracts

The IESO’s 2017–2019 business plan (February 1, 2017) opened with this statement: “The Independent Electricity System Operator (IESO) operates within a complex and changing energy sector environment. Its broad mandate includes real-time operations of Ontario’s bulk power system, province-wide and regional planning, conservation, resource development and contract management.”

Further on in the business plan is this: “Over the next five years, 27 per cent of the IESO managerial staff and 12 per cent of the senior professional level staff will be eligible for retirement with unreduced pensions. Well over half of these staff are in Information and Technology Services and Market and System Operations.”

With more than 75% of all of IESO’s staff appearing on the 2016 “Sunshine List,” one would hope they were competent and able to provide reliable information, particularly when it comes to “contract management” and knowing what the capacity level is for that contracted generation!

However, some recent events suggest that may not be the case.

Contracted capacity of “embedded generation” (DX) is…?

Recent information from IESO suggests they don’t know how much they have contracted for distribution-connected (DX) capacity.  Here are three recent examples:

First we have the 18 Month Outlook for the period: January 2018 to June 2019 dated December 12, 2017 that stated: “By the end of the Outlook period, [June 2019] embedded wind capacity will exceed 600 MW and embedded solar will surpass 2,200 MW. Overall contracted embedded capacity will reach 3,300 MW over the Outlook horizon.”

Second this speech by IESO’s President and CEO, Peter Gregg on January 19, 2018 to the Ontario Energy Network upped the “Outlook” number by 1,000 MW as per this excerpt: “We now have over 4,300 MW of distributed energy resources in Ontario, over half of which is solar. This makes up roughly 12% of our total installed resource capacity.”

Finally, four days after the CEO’s speech, IESO’s Vice President Terry Young delivered a speech to ROMA, the Rural Ontario Municipal Association with yet another DX claim: “At the end of 2017, there were more than 3,800 MW of embedded generation within local distribution systems, a 25-percent increase over the previous year. These generators supply electricity to local distribution systems, which in turn reduces demand on the transmission grid.”

What they don’t know may hurt you

One of the issues troubling to those assessing IESO is their apparent inability to provide annual DX generation as a result of the embedded capacity. IESO are required to settle (pay) monthly to local distribution companies for DX generated electricity.  That being the case, why is the generation from those contracted DX entities not readily available?

That raises other questions such as:

IESO reported grid connected consumption dropped in 2017 by 3.6% (4.9 TWh), but did it?  Did DX generation increase more than grid-connected consumption dropped?  If the latter is true, then  consumption is still increasing, despite spending $400 million annually on conservation initiatives.

Almost eight years ago, IESO made it known they were developing a “smart grid” at a cost of $1.6 billion to utilize “smart meter” data. Ratepayers have been paying a monthly fee via the regulatory line on their bills to cover that cost since then yet for some reason IESO seem unable to deliver basic information.   Is this yet another example of wasted spending?

And, another disturbing issue surrounding the unknown amount of contracted and installed DX generation is this: IESO is obligated to follow directives issued by Energy Ministers telling them how much “renewable” energy is to be contracted. How is the general public to know if IESO has acquired too much or too little if three claims of DX generation may be out by as much as 1,000 MW?

If the contract management function is in such disarray that two senior officers of IESO are in serious conflict with a regular quarterly report issued by their staff, you have to wonder how well IESO is managing not only those contracts, but also “Ontario’s bulk power system, province-wide and regional planning, conservation, resource development”?

It also begs the question, why has IESO not audited contracted DX nor used its regulatory power to cancel contracts for power projects that have not yet broken ground or have failed to meet agreed milestones?

Perhaps the time has come for Ontario’s Auditor General to audit IESO.

Author: parkergallantenergyperspectivesblog

Retired international banker.

2 thoughts on “IESO: pick a number, any number”

  1. I sought an explanation from IESO about the different numbers thrown around and checked my e-mails after the posting but for what its worth here is the explanation I got from an IESO official:

    Here`s an explanation of the numbers:.
    · The “over 4,300 MW of DERs” figure includes distributed generation in service and under development, demand response, and behind the meter generation from conservation programs.
    · The “more than 3,800 MW of embedded generation” figure includes contracted (in service and under development) distributed generation. This includes facilities that are expected to come in service beyond the 18 Month Outlook time period, for example FIT 5 projects, which is why it differs from the 18 Month Outlook figure of 3,300 MW.

    Thanks for bringing this to my attention.”

    Just to clarify–“demand response” is related to the Class B to Class A subsidies. If a Class A client picks the right time to reduce their demand they get a break on the cost of electricity–in 2017 that reduced costs to A Class clients by an average of 42%.

    On the other issue it appears that “conservation” (IESO’s estimates) are now classified as “generation”–huh? If I said I would cook two apple pies but only cook one could I claim I conserved the ingredients because it was “behind the meter”–but would be serving the pie if someone wanted a second piece?


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