I was once again invited to be on the Marc Patrone show on radio station Newstalk Sauga 960 AM to discuss the recent event announcing the creation of the “Task Force for a Resilient Recovery”. While the principal chat was about the foregoing Marc and I covered other related issues dealing with the energy sector. It is a 12 minute segment posted here:
Parker Gallant Unmasks The Architects Of The Green Energy Scam
Ontario Premier Ford on March 24, 2020 issued a press release advising, because of the Covid-19 pandemic, his government would cut daytime rates for residential consumers, farms and small businesses for 45 days starting April 1st at an estimated cost of $162 million. On May 1, 2020 another press release added medium and large businesses to the equation stating it too would be effective as of April 1, 2020. This release said it would defer a portion of the Global Adjustment (GA) for anything over $115/MWh and possibly extend the deferral until June 30, 2020.
While the first press release suggested the cost, the second release didn’t! The May 1, 2020 release stated in all probability; the “deferred” amount would be recouped starting in January 2021. The foregoing has since been clarified and IESO noted the deferred amounts would be recovered from industrial and commercial* electricity customers only. The reduction to those customers (Class A) appears to be about $19/MWh (based on the April 2020 GA and the wording in the May 1, 2020 release). Taxpayers will be allocated costs not recovered!
The second release raises the question: How much will this amount to? Determining the dollar amount would be a guess but IESO have disclosed Class A and B consumption and GA costs for April 2020 so we can estimate the possible costs. Following is an estimate for this deferral et al, for April, May and June!
Class A customers consumed 2.764 TWh (terawatt hours) in April 2020 versus 3.301 in April 2019 so their consumption dropped by .537 TWh or 16.2%. Applying the $19/MWh suggested above indicates the April deferral will be about $53.5 million so if May and June’s consumption is around the same level the deferral will total about $160 million.
For Class B customers the cost will be considerably more. As noted above, it does not appear to be a deferral! Class B customers in 2019 consumed 7.382 TWh versus 7.017 TWh in April 2020 so their consumption fell 265 GWh (gigawatt hours) or 3.6%. The drop was small, even though residential consumers were “locked-down”. One should suspect closure of small/medium sized business caused the fall in consumption.
As noted, the original press release set the maximum GA at $115/MWh, so for April, when the GA was just over $150/MWh the relief was the difference of $35/MWh. What that means is the 7.017 MWh consumed in April may result in $250 million allocated to the annual budget for taxpayers to pick up! (7.017 TWh X $35 million/TWh = $246 mllion). May and June could bring that to $750 million.
Beyond the above, what is disarming is IESO’s first estimate for May’s 2020 GA is $179.10/MWh which could increase the monthly allocation by $210 million if the forecast is correct and consumption is similar! Over three months the amount allocated to taxpayers could therefore rise to $1.2 billion.
Just another burden on taxpayers and ratepayers.
Intermittent and unreliable wind and solar generation contracts add $3/4 billion of costs to electricity bills every year so without them this burden would be a minor occurrence!
*Clarity on the split between Class A and B commercial/industrial customers is not presented so for purposes of this exercise we have assumed those referenced by IESO are all Class A.
A recent article penned by yours truly, outlined how industrial wind turbines cost Ontario’s ratepayers and taxpayers as much as $2 billion annually while contributing little to ratepayer needs or grid reliability. Those costs, however, are not the only impact on electricity bills in Ontario for residential and small and medium sized commercial businesses who are labeled as “Class B” ratepayers!
Back in 2010 the McGuinty led Ontario Liberal government were hearing about the effects of the GEA via climbing electricity prices as well as issues with TOU (time-of-use) pricing. The loudest voice came from AMPCO (Association of Major Power Consumers of Ontario) who lobbied for lower prices for their members. As a result of their lobbying, Brad Duguid, than Minister of Energy and Infrastructure issued a directive to IESO, March 4, 2010 instructing them to create an industrial energy efficiency program. The program was developed and labeled the ICI (industrial conservation initiative). The ICI allowed large industrial electricity users to pick five (5) “peak” demand hours and they would be rewarded with lower rates. Kind of like winning the “Lottery” but much easier. During those 5 hours they would go off-grid, perhaps by shutting down or simply firing up a gas generator or two to get them through that hour. IESO labeled them “Class A” ratepayers. *
IESO’s design of the ICI has resulted in the claim; due to lower “peak demand” periods, ratepayers have been spared from higher electricity prices. The claim is made as the sector would reputedly have had to spend big dollars to acquire additional “capacity” to ensure we avoid grid failure due to those 5 “high demand hours”. That being the claim IESO don’t tell us; why we export (19.8 TWh) more TWh (terawatt hours) annually than the AMPCO members use (15 TWh). IESO also don’t tell us why we are obliged to pay for spilled hydro, curtailed wind and steamed-off nuclear whose costs are added to the Global Adjustment (GA).
What the ICI program accomplishes for AMPCO members is related to the GA, ie; the pot adding dollars on a continuing basis! The GA is the difference between contracted prices and market prices. As an example; if the contracted price for wind is 13,5 cents a kWh but when it enters the grid the HOEP (Hourly Ontario Electricity Price) or market trading price is only 2 cents/kWh the difference of 11.5 cents is allocated to the GA. The ICI works on the basis of the higher the GA is, the bigger the benefit to ICI members. As a result, the continuing annual decline in HOEP values has resulted in Class B ratepayers picking up a greater portion of the contracted or regulated price. In other words; if demand falls and the HOEP price tanks, Class B ratepayers are obliged to pay more not less.
The foregoing was evident during the first three months of the current year compared to the first three months of 2019. Class A ratepayers consumed slightly more year-over-year, and saw their GA allocation increase from $51.94 MWh in 2019 to $59.66 MWh in 2020 for an increase of 14.9%. Class B ratepayers however, saw their GA rate allocations increase $30.59/MWh or 37.8% from $80.85/MWh to $111.44/MWh.
The net result of the above was an allocation from Class B to Class A in 2019 for the three months of $211.5 million. For the comparable three months of 2020 the allocation increased to $374.4 million or an additional $162.9 million (+77%) in just one comparative year-over-year quarter.
It is kind of shocking to realize and understand Class B ratepayers actually consumed 1.3 TWh less in the first three months of 2020 than 2019 but are being held responsible for payment of $162.9 million more than they paid in the 2019 quarter to subsidize “Class A” ratepayers!
Maybe the time has come to create another Class of ratepayers to stop the diatribe emanating from IESO whose CEO and President has the nerve to proclaim in their just released annual report that : “our focus has stayed the same: ensuring Ontarians have affordable electricity, where and when they need it.”
We must ask the question: which Ontarians truly have affordable electricity and why only them?
* The availability to reference an operation/company as Class A was expanded by further directives from the Energy Ministry (Bob Chiarelli) but many of the additional ones are not members of AMPCO.
Parker Gallant Energy Perspectives 