Stuff that drives me crazy…

Tall tales about electricity management in Ontario

March 13, 2018

What drives me crazy are false claims from the proponents of renewable energy (wind and solar) and bureaucrats running Ontario’s electricity system. Here are a few examples of false claims and, dare I say, “fake news.”

  1. Hydro One and all other electricity distributors submit an annual report to the OEB and the information is posted under the heading “Yearbook of Distributors”. Hydro One’s 2016 filing states “Total Service Area (sq km) 962,274 sq km”. In a video Ferio Pugliese, VP Customer Care & Corporate Affairs, clearly states during a Regulatory Commission of Alaska special public conference/panel discussion that “we have a very large base in Ontario with over 650,000 square kilometers of territory”! Mr. Pugliese was trying to convince the Alaska regulator and the concerned citizens that nothing related to their electricity bills would change if, and when, they acquire Avista. I think most would agree that losing 362,000 sq. km of service area is major.
  2. CanWEA the wind power trade association claims “Wind is delivering clean, reliable and low-cost electricity,” but express their unmitigated thanks for the recent Federal Budget by noting: “The Canadian Wind Energy Association commends the federal government for extending the ability of investors to utilize Class 43.2 of the Income Tax Act by five years, from 2020 to 2025. This fiscal measure allows investors to accelerate deductions of eligible capital costs associated with clean energy generation. This helps renewable energy developers to lower their costs”! This effectively means owners of industrial wind projects get to write off their capital costs fast and don’t have to pay income taxes. One must assume they need taxpayer support to deliver their claimed “low-cost electricity.”
  3. The government suggests “cap and trade” revenue is being handed back to us: “We’re investing all of our carbon market proceeds into projects to reduce greenhouse gas pollution.”   When the announcement was made in May 2009 about passing legislation, the press release noted: “The United States is moving to put a national program in place that could begin as early as 2012.” But that never happened, so Ontario has little company in North America with only Quebec and California also collecting this tax. The press release from the MOECC on February 28, 2018 bragged about the first joint auction with Quebec & California stating: “Ontario is now part of the largest carbon market in North America.” To the best of this writer’s knowledge it is the only carbon market in North America! Reviewing the Ontario-based companies on the recent auction list, one notes those compelled to purchase allowances include Hydro One, OPG, greenhouse operators and municipalities amongst others. Those allowances will find their way into the cost of living stream resulting in increases to electricity bills and any product emitting CO2; and will even raise your municipal taxes. The Cap & Trade tax will touch our lives in many ways. While the press release said, “All of the proceeds raised from the carbon market are being invested into Ontario’s economy through green initiatives that fight climate change and help make life better for Ontario residents.” Most taxpayers would disagree the “cap and trade” tax will make life better!
  4. IESO, which manages Ontario’s electricity grid and negotiates generation contracts with private and public companies, seems to talk out of both sides of their mouth. As an example, their forward looking planning documents suggest wind generation’s capability of delivering power (referred to as “capacity factor”) to the grid during peak demand periods is a miserly 12.9% whereas CanWEA claims: “Capacity factors of potential wind plants range from 34 per cent in British Columbia to 40 per cent in Nova Scotia.”. Additionally L. Kula, IESO’s COO and VP Planning Acquisition and Operations in a February 28, 2018 speech stated: “Ontario is at the forefront of decarbonizing our grid, something we should be proud of.   In the almost two decades since the market was established, we have retired coal as a generation source. In doing so, we have increased the amount of variable generation on the transmission system and on the distribution system. At the wholesale level alone, wind and solar combined met about seven percent of Ontario’s supply needs in 2017.” While generating 7% of Ontario’s supply wind represented 12.5% of installed capacity and performed poorly during our summer’s high demand periods. During June, July and August of 2017 it generated an average of only 4% of demand and generally when it wasn’t needed in the middle of the night! Decarbonizing our grid at a huge cost to ratepayers should not be something IESO brags about.
  5. IESO also makes claims which support the 100+ “directives” from the Minister of Energy responsible for driving up energy prices as the following example illustrates. Terry Young’s (VP, Policy, Engagement and Innovation), speech of January 23, 2018  to ROMA stated: “The conservation and energy-efficiency programs we offer help consumers of all types take greater control of their energy use and reduce energy costs. This is the most cost-effective supply resource available, at less than four cents per kilowatt-hour. Conservation savings, growing embedded generation and demand reduction programs have offset increased demand.” Mr. Young has obviously not noticed “increased demand” is fake news as it has fallen 10.7% since 2008, but the average price for Class B ratepayers has increased 99%. Most voters are under the impression bureaucrats are supposed to be neutral and just execute the directions of their political bosses and not brag about results. Spending $400 million annually on “conservation” is a direct hit to ratepayer’s pocketbooks.
  6. IESO now considers it is better to pacify their political masters rather than work to keep costs from rising. Recent examples include their ability to cancel contracts for non-compliance but for some reason they ignored their legal right to do so. Examples include: the Windlectric 75 MW wind development on Amherst Island (a major pathway for migratory birds and bats) and an 18.4 MW wind project known as White Pines in Prince Edward County. Those two projects alone will cost ratepayers almost $700 million over the 20 years in their contracts. Generation from wind turbines continues to be a waste of ratepayer dollars as easily seen in 2017 data. During the high demand months of June, July and August, wind power generation amounted to 4% of demand despite representing over 12% of Ontario’s generating capacity. During those three months turbines generated 1.355 TWh, yet Ontario exported 4.731 TWh to our neighbours in New York, Michigan, etc. at bargain basement prices. Despite the obvious, IESO’s current President and CEO Peter Gregg of IESO said in a speech to the Ontario Energy Network on January 19, 2018: “With respect to the development of new resources, we are cognizant of some of the concerns expressed by representatives of renewable resources like wind and solar and emerging technologies like storage.” Perhaps Mr. Gregg could be more “cognizant” of the effects of wind turbines on such things as human health, the killing of birds and bats and the economic hardship caused by electricity prices that have climbed by over 100% over the past few years caused by the addition of wind and solar generation being added to the grid and embedded within local distribution companies.

The points I’ve raised are not all the fake or false news emanating from the electricity bureaucrats, but hopefully the reader will understand the gist of what has happened to the electricity sector in Ontario.

Parker Gallant

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Author: parkergallantenergyperspectivesblog

Retired international banker.

5 thoughts on “Stuff that drives me crazy…”

  1. Parker, thanks for this post. It exactly expresses my own thoughts and aggravations, especially with respect to the point that public servants under the Canadian Parliamentary system should not be “cheer-leaders” for the policies of the politicians they serve. Officials, including those appointed to Crown corporations, have traditionally been expected to be appointed on merit and to be non-partisan. When they deliberately cross over the line and start to publicly promote the policies they are directed to implement, they make themselves less credible. A new government could, and should, remove such officials and appoint others committed to the public service ethic of non-partisanship. The temptation for a new government, however, could be to replace the present partisans with its own group of partisans, which is the approach generally followed in the United States, much to the disadvantage of public administration there.

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  2. Is there not a law against these bureaucrats providing false information? Is no one within this government monitoring this from an ethical perspective?
    An informed electorate must be given the truth.
    This is the basis of democracy.

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  3. In regards to number 6. Northland Power inc, claims revenue of 10 million EBITDA yearly as I expect the same goes for their partners as the FIT contract is a generous 15 cents per kwh ($150 mgw). Their 60 MGW (MMWLP) project on Manitoulin Island was allowed to proceed though they missed the Milestone Commercial Operation Date which the government did not catch. The government can then levy a penalty I understand.

    One of the requirements of Force Majeures ( delay of project) are that they be truthful. Within a Freedom Of Information request, Northland Power Inc claimed several Force Majeures that were not allowed and one specifically that was allowed then later revoked after the FOI was submitted.

    Sure, the government argues during the opposition for OEB Transmission line approval for this project, the proponent pays for the 10 kilometer transmission line and is not a cost to the consumer.Transmission line costs are soon recovered by the proponent in the generous FIT contract. It is ultimately a shell game and the consumer does pay.In my opinion this project should have never been allowed to proceed and should be revoked.

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