Wow, was Hour 20 a Look at the Future cost of electricity?

The market price, referenced as the HOEP (hourly Ontario energy price), at Hour 20 on August 29^th reached $571.93/MWh or 57.2 cents/kWh and that doesn’t include the GA (global adjustment) which would push the price to over 60 cents/kWh. 

One should wonder have Ontario’s politicians bought into PM Trudeau’s commitments at COP 26 and are seeking to emulate what the UK and EU countries are experiencing with their push to reach “net-zero” emissions. As just one example energy price forecasts suggest in the UK they could top £7,000 per household from April 1^st, 2023 or about $10.5K in Canadian dollars.  

It’s not entirely clear why the HOEP price reached the level it did at Hour 20 as it was a windy day in Ontario with storms in many areas meaning less sun generation but an exceptional day for the IWT (industrial wind turbines) owners. 

Those IWT generated 64,130 MWh over the full day which meant they were operating at 54.5% of their capacity and well above their annual average generation of about 30%. What the IWT were generating in the middle of the night was unneeded power (17,484 MWh or 59.5% of capacity) and the HOEP for the first six hours averaged a piddly $14.20/MWh. The bulk of the surplus was purchased by Michigan and New York meaning Ontarians were picking up the difference between what we paid for those six hours of IWT generation and what we sold it for.  It cost Ontarians $2,360,000 @ $135/MWh and we sold it for $248K @ $14.20/MWh meaning we lost $2.1 million in just six hours.

So, what happened at Hour 20 is a bit of a mystery as the peak Ontario demand hour occurred at Hour 17 reaching 21,871 MW and is now ranked as the third highest peak hour for the year.  IESO were wrong in their wind forecast for Hour 20 overestimating by almost 20% as they suggested IWT would generate 2,453 MW but they fell short with only 1,993 MW actually generated so that may have caused some upward push to the HOEP. At the same hour however, natural gas generation ramped up from 4,055 MW in Hour 19 to 4,711 MW in Hour 20 so easily covered the drop in IWT generation.  It may have been the variability of IWT generation over the hour as their generation bounces up and down based on wind speed and gusts causing the HOEP to reach higher levels in the 5 minute intervals of demand and trading volumes.

While the spike in the HOEP may have been an anomaly the concern should be what the upcoming future will be! The major concern should be due to the very recent IESO directive from Todd Smith, Minister of Energy wherein he “asked IESO to evaluate a moratorium on the procurement of new natural gas-fired generating stations in Ontario and to develop an achievable pathway to phase out natural gas generation and achieve zero emissions in the electricity system.”

With the planned shutdown of the Pickering Nuclear Plants by 2025 and their almost 3,000 MW of capacity coupled with the current 8,500 MW capacity of our natural gas plants we should all wonder how Ontario will avoid blackouts or restrictions on electricity use in the near future? 

At the same time, we should also anticipate electricity rates will skyrocket in a similar fashion to what we are witnessing in the UK and the EU countries and drive out our businesses while creating “energy poverty” for all but an elite group of Ontarians.    

One should ask, is that the game plan for the Ford led Provincial Government?