IESO, the Independent Electricity System Operator, finally released the data for 2019 related to generation, consumption and costs for electricity in Ontario within the TX (transmission connected) grid. Unless one understands how the system operates (along with basic math knowledge) you would be inclined to think—wow, we are so lucky to have such an awesome institution managing our electricity system. A good amount of the dialogue in the report seems meant to tell the reader how well IESO managed the system during a few erratic weather days when clouds suddenly blocked the sun and the wind either dropped or increased substantially without warning.
When you dive a little deeper into the data, you realize rates climbed again for Class B customers, be they residential, or small/medium sized businesses.
Those rates climbed despite Class B ratepayers reducing their consumption* from 101.0 TWh (terawatt hours) in 2018 to 98.4 TWh in 2019 for a decrease of 2.6 TWh (about what 300,000 average households consume annually) or 2.6%.
The 98.4 TWh in 2019, cost Class B ratepayers** $12,425.6 million versus $11,616.7 million in 2018 for the 101 TWh Class B ratepayers consumed. The $808.9 million in additional costs (up 6.9%) added 9.8% (1.13 cents/kWh) to electricity costs for Class B ratepayers bills but IESO’s rhetoric skips over that data!
As a coincidence (?) to the $808.9 million increase; IESO’s diatribe under the heading “Other 2019 Highlights” claims: “The Market Renewal Program business case confirmed a $800 million net benefits over ten years.” A quick math calculation suggests the annual savings of the “Program” was/is $80 million annually versus the costs for the one-year jump Class B ratepayers experienced. The 10 year savings IESO’s brags about were blown away in only one year.
So, what caused the $808.9 Million jump? A goodly portion of the additional costs were a result of recovering less on sales of surplus generation to our neighbours in NY, Michigan and elsewhere. When we export our electricity, we are only able to recover the HOEP (hourly Ontario energy price) as it Is market driven! The HOEP for 2019 was 1.83 cents/kWh versus 2.43 cents/kWh in 2018 so we recovered less despite exporting more. The 19.779 TWh (about what 2.2 million average Ontario household consume annually) we exported, cost us about $333 million more to generate than last year’s exports. Those costs were included in the Global Adjustment which increased to 10.8 cents/kWh or $108 million per TWh. The balance of the increase ($477 million) was principally related to the OEB (Ontario Energy Board) approving substantial rate increases for Bruce Power and OPG’s nuclear generation and refurbishment. Scott Luft has done a great job of focusing on what was behind that big jump in a recent post.
IESO should do some real planning producing results that actually reduce rates!
*IESO in the report under the heading: “Energy-Efficiency Savings” brag about their Save on Energy programs which have reputedly contributed “to overall savings of 7.4 TWh since 2015”
**A large portion of costs to Class B “residential” ratepayers ONLY is now paid by taxpayers via the “Electricity Cost Relief Programs” and will total $5.5 billion for the current year. Unfortunately, small and medium sized businesses in the province are paying the full costs causing many to raise their prices and/or move their businesses to other jurisdictions.