IESO, Great Weather Forecasting or Simply History Repeating Itself

We ratepayers and taxpayers must assume IESO, who control the Ontario electricity grid, look at weather forecasts daily as they post data with hourly forecasted generation we will get from wind and solar over the 24 hours. They don’t do that for baseload generation such as nuclear and hydro or even natural gas but do for the two intermittent and unreliable sources of electricity.

The question becomes did IESO look at longer term weather forecasts confident IWT (industrial wind turbines) would replace the baseload of the 3,000 MW capacity of Pickering Nuclear (related to the VBO [Vacuum Building Outage])?  Then again, on October 13th, did IESO bless Bruce Nuclear closure of their G8 unit with a capacity of 800 MW for maintenance (?) confident we ratepayers would have sufficient power? 

Suddenly Ontario is without baseload capacity of about 3,800 MW (about what 3 million average Ontario households consume daily) but no problems or worries about rolling blackouts or smart meter control to reduce consumption. IWT have apparently stepped in to fill the gap. 

Looking at the past three days clearly demonstrates how IWT are intermittent but not just hourly, as has been obvious from reviewing their generation since the first of them were planted in rural communities in the province.  Their proven habits in the past decade have shown their generation is skewed with lots of generation in the Spring and Fall when demand is low but come hot summer days or very cold winter days when peak demand is often well over 20,000 MW they hardly show up.

October 12th IWT generated over 74,000 MWh and had another 5,000 MWh curtailed meaning they could have operated at over 67% of capacity. Peak demand reached 16,290 MW at hour 19.  October  13th they generated about 42,500 MWh and had only about 500 MWh curtailed so combined; operated at over 36% of capacity.  Peak demand again occurred at hour 19 reaching 16,277 MW. On October 14th those IWT were still humming generating 55,500 MWh and had another 7,900 MWh curtailed so combined they operated at 53.9% of rated capacity. Ontario’s peak hour once again struck at hour 19 reaching only 15,444 MW.  Over those three days IWT operated at an average of 52.6% of capacity whereas over a full year they average in the range of 29/30%.

The positive outcome from the missing 3,800 MW of baseload was the HOEP remained at reasonable market levels whereas if one looks at past HOEP averages it was $13.90/MWh in 2020 and $28.50/MWh in 2021.  What that suggests is Class B ratepayers/taxpayers reduced their subsidization of our surplus exports and Class A customers.  This current lack of the 3,800 MW of baseload power will help to drive up the HOEP continuing the drop in our subsidies.  The negative is our manufacturing sector will experience higher costs for their electricity consumption.

In summary we should be confident IESO, by allowing the nuclear shutdowns, were not forecasting weather events over the next month or more.  IESO were simply looking at data from the past which consistently shows the large drop in demand during our Spring and Fall seasons and based on past bad habits were confident those IWT would do as they have done for most years. They also knew those natural gas plants were at the ready when the wind isn’t blowing.

We will need that baseload power back operating when the cold weather is upon us in the coming winter as those IWT will once again show us how they are missing in action when needed.

It sure appears IESO has looked back and is confident history will repeat itself!

NB:  The first 13 hours of October 15th indicate IWT generation plus curtailed power has them operating at 77.9% of capacity collectively showing 49,614 MWh.

Generating Less Electricity Benefits Ontario Ratepayers

The OEB (Ontario Energy Board) on September 12, 2022 finally posted “Ontario’s System-Wide Electricity Supply Mix: 2021 Data” and it was the latest posting ever from them in the last seven years!  The OEB takes the TX (transmission connected) generation, ie; IESO data* they provide (usually within two weeks of the prior year-end) and add the DX (distribution connected) generation provided by the local distribution companies in the province. We assume it is a slower process to obtain the latter info from the 58 distribution companies but 8 ½ months seems longer than needed!

The foregoing combined data from the OEB report indicates generation from TX and DX generators fell from 154.7 TWh (terawatt hours) in 2020 to 150 TWh in 2021 or 3%.  The 4.7 TW drop equals the annual consumption of about 525,000 Ontario households!

As one would suspect some generation sources fell while some increased but not enough to offset the drop.  The biggest drop was from our nuclear plants which generated 4.8 TW less and our hydro plants also fell generating 2.8 TW less. Combined the 7.6 TW is about what 850,000 average Ontario households (16% of all Ontario households) would consume in a year.  The only generation source to significantly increase generation was Ontario’s grid connected natural gas plants who supplied 12.2 TW an increase of 2.5 TW from 2020 (up 25.7%) and about what 290,000 average households annually consume. The only other categories to show increases were wind; up 100 GW (gigawatts) or about what 10,000 households consume annually and “Non-Contracted” which increased by 500 GW or what 50,000 households would consume annually.  The OEB states the latter “represents a variety of fuel types that the IESO is unable to categorize”! We should suspect those “Non-Contracted” sources are mainly small gas plants operated by manufacturers and sub-contracted to supply generation when the local grid is potentially short of demand!  

The only bright star shining out from the report is related to Ontario’s “net exports” (exports minus imports) which declined by 6.6 TW and had the positive effect of pushing up the market price ie: HOEP (hourly Ontario energy price) from an average of 1.39 cents/kWh in 2020 to 2.85 cents/kWh in 2021. While that doesn’t sound like much it did decrease our costs by $118 million on our Net Exports in 2020 of 8.5 TWh. The increase in the HOEP would also decrease the taxpayer liability amount for those intermittent and unreliable non-hydro “renewable energy contract costs” (wind and solar) as referenced by IESO* and slightly reduce the GA (Global Adjustment) component!

We shouldn’t believe what has finally shown a positive year over year result to continue however, due to the push by the Minister of Energy, Todd Smith’s August 23, 2022 “directive” to IESO containing the following instructions:  “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”.

Get prepared for the future which like many European countries will include orders to turn off your air conditioners in the summer and reduce your thermostat in the winter to avoid blackouts. Oh, and don’t charge your EV (electric vehicles) until we tell you, you can!

Energy reliability is no longer a target our politicians promote! The word “reliability” is being replaced by the word “transition” and the OEB is front and center in executing the change with their just released “Energy Transition” post containing a poll we must all take!

*Note on IESO data release: As of January 1, 2021, Global Adjustment costs for all electricity consumers are being reduced because approximately 85 per cent of non-hydro renewable energy contract costs are being shifted from the rate base to the tax base. Savings will vary, depending on consumers’ electricity consumption, ICI participation, and location.

IWT with “First-To-The-Grid” Rights Demonstrate the Best They Can Do is Wimp Out

August 23, 2022 once more demonstrated IWT (industrial wind turbines) inability to produce power when it is actually needed. The day produced a peak demand hour close to being in the top 10 hours so far in the current year reaching 21,075 MW at Hour 17.  We should surmise many of the Class A electricity customers fired up their gas generators to take advantage of their status and achieve the rate reductions that come with reducing their power draw as the Class A status allows.

At hour 17 the market price of power or HOEP (hourly Ontario energy price) saw IESO buying and selling power at $159.41/MWh via the intertie markets.  They were selling to Michigan and New York states while buying power from Quebec to ensure reliability over the grid. The exchanges at that hour resulted in a negative flow of 61 MW meaning we imported slightly more power than we exported.

The IWT at hour 17 generated 465 MWh which was just shy of their peak for the day of 519 MWh at hour 16 and represented 2.2% of demand but their capacity is over 15% of Ontario’s total grid connected capacity. At the hour when those IWT were demonstrating their unreliability our natural gas plants produced 4.926 MWh or 23.4% of demand with nuclear and hydro producing almost all of the balance.

The only positive thing about the failure of those IWT to produce power when it’s needed during peak periods is that we generally sell our surplus power for higher prices unlike the Spring and Fall when demand is low but generation from IWT is much higher than summer months. During those months IWT are frequently producing so much surplus power we curtail them and pay $120/MWh for those happenings.  At the same time the HOEP is at low prices so what is actually accepted on the grid is sold to Michigan and NY for pennies of their actual cost.  Both of the foregoing events simply drive-up costs to Ontario’s Class B ratepayers which are the small and medium sized businesses and residential ratepayers. In the meantime, large public entities such as universities and hospitals (many of whom are also Class A ratepayers) dependent on tax dollars are unaffected as they fire up their gas generators so it’s simply another cost to ratepayers and taxpayers.

The foregoing IWT failure is almost a daily event during summer days and highlights the fact once the Pickering nuclear plant is shut down (2025) our natural gas plants will be called on to continually generate power. Without any additional reliable power added to the grid in anticipation of that closure, Ontario’s energy security is at risk.

The question on our minds should be; when will the Ford led government do something that ensures Ontario’s businesses and households will have secure electricity sources that are capable of generating power 24 hours a day and 365 days a year and pass regulations to curtail our subsidies to IWT?

IWT: Opps!…They Did It Again

The foregoing paraphrases the Britney Spears song, but those IWT (industrial wind turbines) factually; “did it again”, on August 12, 2022, as we Ontario ratepayers/taxpayers experienced!

Now if CanREA (Canadian Renewable Energy Association) would simply put out a press release and use the line from the Britney Spears song that said; “Oops, you think that I’m sent from above, I’m not that innocent” and admit they are both unreliable and intermittent some of us might be inclined to appreciate their candour!  We would still be upset their “first-to-the-grid” rights and their solar friends, caused energy prices to more than double in less than 10 years and now hit taxpayers for an additional annual cost of around $6 billion just to keep electricity prices at somewhat affordable levels.

IWT at Ontario’s peak hour on August 12, 2022; occurring at Hour 18 (hour ending at 6 PM), generated 211 MWh which was 1.1% of the hourly demand of 18,581 MW!  Thank goodness our natural gas plants were available as they generated 2,800 MWh which was 15.1% of demand. 

Looking back on the day at Hour 1, demand was low at 13,784 MW and naturally that was when those IWT were humming and generated an unneeded 1,365 MWh or 9.9% of that hours demand! At that hour nuclear generated 10,403 MWh and hydro 3,260 MWh demonstrating wind’s uselessness, forcing IESO to sell it off our surplus generation to our neighbours in Michigan, NY and Quebec for $13.96/MWh after paying the owners of the IWT $135/MWh.  

If we then look at Hour 10 those IWT were probably consuming more then their output at that hour as IESO reported they generated 75 MWh while demand was climbing and peaked at 16,284 MW meaning those IWT produced 0.46% of that hour’s demand.

As is obvious, they “did it again”!  

NB: Today (August 13, 2022) at Hour 9 those IWT generated 8 MWh with demand at 14.236 MW so their contribution at that hour was 0.056% clearly demonstrating they are totally unreliable!

Wind Once Again Absent When Needed

IWT (industrial wind turbines) once again on August 5th, 2022 acted like the petulant child who will not obey their parents. They did this as Ontario’s demand climbed during the day while they ignored the need to produce additional power. 

Peak Demand for Ontario reached 21,312 MW at hour 16 (hour ending at 4 PM) which made it one of the TOP 10 demand hours so far in 2022. No doubt most Class “A” customers (including public institutions such as universities and hospitals) had fired up their gas generators in anticipation of the peak; both to reduce the strain on the grid but, in particular, to benefit from lower rates in the future.

Those IWT at hour 16 were throwing a temper tantrum and even though they represent about 13% of Ontario’s generating capacity they produced a miserly 180 MWh or 0.8% of Ontario’s demand while operating at only 3.6% of their grid capacity. At that level the approximately 2,700 IWT present in the province may have been consuming more power than they were generating!

The Class A customers using their gas generators at that hour, to go off-grid, will reap the benefits of those IWT fails however as the HOEP (hourly Ontario energy price) peaked at $147.31/MWh.  The substantial cost transfer* to Class B ratepayers will be passed on to small and medium sized companies, residential ratepayers and to all taxpayers in the province.

It is also interesting to note that as demand was climbing in the morning for hours 9 and 10 those IWT generated only 179 MWh while Ontario’s gas plants delivered 8,008 MWh during those two hours. Without the gas generators Ontarians would have experienced blackouts so we should all try to imagine the costs to the economy without those natural gas generators!

Perhaps it’s time to tell the petulant child (IWT generators) their allowance is suspended if they don’t do what they are told to do!

*Class A ratepayers need to only pick 5 peak hours out of the 8,760 hours in a year to receive the cost reduction

Eye Catching Happenings, a Look Around

Item 1: Ontario Working to Secure Clean, Affordable and Reliable Electricity

When discovering Minister of Energy, Todd Smith, had asked OPG to “Investigate New Hydroelectric Opportunities”, it immediately had yours truly paraphrasing the Britney Spears song, “Oops, they did it again”!  The January 20. 2022 press release announced he had “asked Ontario Power Generation (OPG) to examine opportunities for new hydroelectric development in northern Ontario.”  If Minister Smith had dug though some of the files prior ministers had left behind, he would have discovered that an investigation had taken place before as Hatch Ltd completed one titled “Developing Hydroelectric Potential in Northern Ontario”.  The report even had the following quote from Bob Chiarelli, former Minister of Energy: “Our 2013 Long-Term Energy Plan expands the target for waterpower to 9,300 megawatts and establishes a priority for connecting remote communities. This report helps identify opportunities for hydroelectric projects that can help Ontario be ready to generate power when and where we need it.”  Ontarians know; that never happened!

It sure appears for some reason the current Minister is pleased to hand out our tax dollars to repeat the same review which serves to only further delay the potential to increase Ontario’s hydroelectric power.

Item 2: India’s solar irradiance 7 per cent below long-term average

The foregoing article from a few days ago stated:  “In what could have significant ramifications for productivity and returns from solar power projects in India, a latest study has found solar irradiance over the country over the past ten years was 7 per cent below long-term average.” What that suggests is generation from the 49.3 GW (gigawatts) reportedly in place in India at the end of 2021 will not deliver the generation anticipated because of those damn clouds. To make matters worse, another article, indicated India has recently experienced several very high demand periods which came close to breaking the record set in 2021. The article goes on to suggest India could face “widespread blackouts this summer”. The issue of energy security seems to be spreading further afield beyond countries who have adopted the “net-zero” COP-26 mantra.  It’s a bit of a surprise that India is facing those blackouts as they have targeted solar as their principal renewable source coupled with nuclear power. Additionally India did not commit to net-zero by 2050 at COP-26 but have instead said they “will aim” at 2070 as the year they consider it as possible.

Item 3a: McMaster University looks to install four gas-powered generators on Cootes Drive

A couple of weeks ago I penned an article pointing out the fallacies of the ICI (Industrial Conservation Initiative) program and how taxpayer funded institutions, such as York University, are taking advantage of it to the detriment of small and medium sized companies and their status as Class B ratepayers. On the same day the article was posted another article came to my attention from the Hamilton Spectator which was about McMaster University’s plan to install four gas-powered generators specifically aimed “to reduce the university’s energy costs” under the ICI program.  Curiosity piqued led to the examination of expenditures in their financial statements but I first looked at the budget expenditures by the Ontario Ministry of Colleges and Universities and noted those expenditures for the 2019-2020 year were just north of $6.655 billion.  Looking at York University’s financial statements disclosed for the 2017-year expenditures on “Taxes and Utilities” were $33.3 million and those had declined to $23 million for their 2021 year-end suggesting the installation of two gas-generators may have saved them $10 million annually.  Looking at McMaster’s financials discloses their “Utilities and maintenance” in 2017 were $38.6 million and for their 2020 year-end showed a small increase to $38.7 million. Presumably by installing four gas-powered generators they too will be able to reduce those costs utilizing the ICI program.  It seems there is no end to the taxpayer funded bureaucracies need for more and more taxpayer and ratepayer dollars.  The time has come for the Ontario Minister of Energy to kill the ICI program and stop the continual pocket picking of us taxpayers/ratepayers.

Item 3b: Phasing out gas plants by 2030

So, while 32 municipalities have teamed up with Jack Gibbons and the OCAA (Ontario Clean Air Alliance) insisting Ontario phase out all the gas plants by 2030; they are ignoring bureaucracies in their backyard who are installing gas-powered generators. Both Toronto and Hamilton have signed on despite the universities in their municipalities installing those gas-powered generators to reduce their energy costs. That seems extremely ironic as the gas generating plants provide back-up power for that intermittent and unreliable wind and solar generation whereas these gas generators have the sole purpose of reducing energy costs. It is also fascinating to note who some of those who donate to the OCAA are too, as they include none other than George Smitherman who when Minister of Energy during the McGuinty era brought us the GEA (Green Energy Act) which he promised would only raise rates by 1%.  Another supporter of the OCAA is Peter Tabuns of the NDP who supported Smitherman and the GEA. The supporters also include renewable energy companies and their founders as well as individuals like Mark Winfield of York University and Glen Estill, past president of CanWEA (Canadian Wind Energy Association) etc. etc. Those profiting from wind and solar seem happy to donate to help Gibbons continue his false premise that wind/solar and Quebec will supply all the electricity we need!

Item 4: Ottawa reveals its latest plan to plant 2 billion trees by 2030

No doubt many Canadians will remember when our PM Justin Trudeau, met with Greta Thunberg on September 27, 2019 before they marched in the “climate” rally in Montreal and then shortly after the march promised he would plant 2 billion trees in the next 10 years.  An article in the CBC dated December 21, 2021 indicated two years after the promise only 8.5 million trees had been planted so at that rate it would take 470 years before they were all planted rather than the 10 years he promised Greta. Not to worry though as the intention is to speed things up by using our tax dollars to get the annual planting up to levels of 320 million annually by 2025 and spending up to $355 million per year. We should find it amazing that a teenager without any scientific training has so much influence on politicians such as Trudeau that he commits to spend $3 billion of Canada’s tax dollars just so he can get a photo op with Greta and later one with him actually planting a tree. 

Conclusion: Climate Science is Unsettled

One hopes the foregoing demonstrates the ineptitude of our political leaders in respect to their worries about “climate change”!  Their worries have been imposed by guiding lights such as Greta Thunberg, Jack Gibbons and results in those politicians refusing to give up on the “net-zero” push despite the many qualified individuals such as Steven E. Koonin, telling us “Climate Science” is Unsettled!  

Bits and Pieces Related to the “Net-Zero” Push

There were a few recent announcements and events that should have caught the attention of the general population over the past couple of weeks so let’s look quickly at a few of them!

Largest private storage battery in North America’ to help Imperial Oil cut emissions in Sarnia

This one was in the Financial Post back on February 16, 2022 and stated an Italian company would build a 20 MW battery storage unit for Imperial Oil that would reputedly reduce “their energy expenditures by millions of dollars per year.” They would download cheap energy in the middle of the night to charge the battery storage unit and then use it during peak hours. Many of the “Class A” customers in Ontario already take advantage of this using gas generating units firing them up during peak hours saving millions.  Scott Luft noted in a post a couple of years ago; since the ICI (industrial conservation initiative) inception in late 2011 through to the end of 2019 the cost to Class B ratepayers was approximately $1.4 billion (average of about $170 million per annum) paid to reduce the GA for those large industrial ratepayers. One should assume the Ford government could have changed the way the burden is put on Class B ratepayers to subsidize Class A ratepayers but they have done nothing. The burden continues to fall on Class B ratepayers and part of that has been transferred to taxpayers first by the Wynne led government and then increased by the current Ford led government. Hmm, wondering, would it be cheaper for Imperial Oil to buy those Clean Energy Credits (CEC) Minister Smith is considering instead of using that battery storage unit?

Wind Turbine Setback Promises Not Kept

Before and during the last election campaign the Ford led Ontario Conservative Party promised if elected they would review the setbacks for industrial wind turbines (IWT) as well as the contaminated well water in the Chatham/Kent region.  In the almost four years they have been in power they have done nothing related to either of the two foregoing promises.  WCO (Wind Concerns Ontario) have recently (for the umpteenth time) pointed out the 7,000 complaints filed about IWT noise levels and also posted an article from four years ago about the Chatham Kent well water problems which have also been ignored.  Sure, looks to be almost one of those “Promise Made, Promise Missed” sayings which Premier Ford loves to cite except for that final word.

OPG Year-end 2021

OPG released their 2021 year-end results March 10, 2022 and despite a 4.5 TWh drop (5.5%) in generation they still managed to generate $1,325 million a slight (2.6%) fall from 2020.  Forgone generation due to SBG (surplus baseload generation) dropped from 4.3 TWh in 2020 to only 1.9 TWh in 2021 meaning “water rental payments” declined by $30 million. Currently two of the Darlington nuclear units are down for refurbishment with Unit 3 scheduled to be returned to service in the first quarter of 2024 and Unit 1 in the second quarter of 2025. With both those units undergoing refurbishment we should expect greater dependency on our gas generation plants meaning both OPG’s Napanee and Lennox plants should benefit by supplying more peak generation and maintain profitability for OPG without driving costs up.

Bitcoin mining data centre opens in Sarnia

It seems back in yesteryear, mining referenced; “the business or process of working mines” and extracting ore! In recent years it seems all about setting up an elaborate data centre with complicated math problems which when solved supposedly create a “bitcoin”!   One of those bitcoin mines has recently started operations in Sarnia.  Established by “Bitfury Group, an Amsterdam-based Bitcoin mining and crypto tech company” it will start with a 16 MW capacity and expand by 12 MW by May end. It may eventually expand to 200 MW.  To put the latter number in context; a plant capable of generating 200 MW per hour is about what 200,000 average Ontario households would consume annually. The power to support the “mine” will be provided by TransAlta’s Sarnia Cogeneration Plant, a 499 MW capacity natural gas-powered plant. The TASarnia plant is also under contract to IESO and several other Sarnia located companies. Curiosity piqued about how much energy “bitcoin” operations consume globally led to an almost one year old article in the Harvard Business Review. The article suggested, at that time, it was 110 TWh (terawatt hours) which is equivalent to about 80% of Ontario’s annual consumption.  One should assume all of that 110 TWh was/is provided by reliable fossil fuels or nuclear power as intermittent wind and solar could never be relied on to ensure those mining data centres continued to operate.

As one should assume from the foregoing “bits and pieces” the path to net-zero is full of pot-holes eco-warriors and inane politicians seem unable to visualize!

PS:  I was called out on the following “(Scott Luft noted in a post a couple of years ago; since the ICI (industrial conservation initiative) inception in late 2011 through to the end of 2019 the cost to Class B ratepayers was approximately $1.4 billion (average of about $170 million per annum) paid to reduce the GA for those large industrial ratepayers.)”.  I would point out I always have a lot of faith in what Scott posts so I must assume it related to something as simple as a misplaced period “.”!  It turns out the OEB, Market Surveillance Panel back in December 2018 evaluated the ICI and in their report stated:  “In 2017, the ICI shifted $1.2 billion in electricity costs to households and small businesses—nearly four times greater than the amount in 2011. In 2017, the ICI increased the cost of electricity for households and small businesses by 10%.”

A Spring Like Day March 6, 2022 and Ratepayers were Wind Whipped

Yesterday brought Ontario an early spring day with temperatures reaching the low teens in much of the province.  The day was coupled with sunshine and lots of wind which cranked up those IWT (industrial wind turbines) spread throughout Ontario’s rural landscape.  The unfortunate part of that latter generation is the fact it wasn’t needed! When Ontario has those warmer spring and fall days electricity demand is often at levels where nuclear and hydro can easily supply all the electricity we need. 

As it turned out wind generation IESO accepted yesterday reached 68,900 MWh and about 18,500 MWh were curtailed because nobody needed it.  Despite the foregoing IESO were busy doing what they could to give it away or sell it off to our neighbours in NY, Michigan and Quebec.  Because it wasn’t needed the average HOEP (hourly Ontario energy price) averaged a piddly $13.48/MWh for the full day and for the first 16 hours we gave it away earning 0.00 for every MWh IESO sold/gave away to those neighbours.

If one totes up the cost of the IWT generation accepted ($135/MWh) into our grid and what was curtailed ($120/MWh) you are looking at a cost over those 24 hours of approximately $11,522,000.  Over those same 24 hours we exported 54,800 MWh at the aforementioned $13.38/MWh meaning we generated revenue of $739,000.  If we deduct the latter from the total (grid accepted and curtailed) of what those IWT cost us it means the net cost becomes $10,783,000 assuming IWT supplied all of the exported power. 

If we go one step further and conclude of the 68,900 MWh generated by those IWT, 54,800 MWh were exported we are looking at a cost of $764.75/MWh or 76.5 cents/kWh for what was consumed (14,100 MWh) by Ontario’s ratepayers. The conclusion is; the only thing “green” about IWT generation is the amount of money it extracts from the pockets of Ontario’s ratepayers and taxpayers.

Promise Made, Promise Missed by a Country Mile

Lorrie Goldstein of the Toronto Sun recently penned a great article utilizing facts emanating from a February 16, 2022 report released by the FAO (Financial Accountability Office of Ontario).  Goldstein’s article took the factual information from the FAO report and pointed out how, when Doug Ford was campaigning back in 2018, he promised to reduce electricity bills by 12% but failed to do so based on the FAO report. Lourie neatly referenced it as a “stretch goal”, a term made famous in Ontario by former Premier Wynne.  Wynne had promised a 17% reduction goal in electricity rates but when she was unable to do that, she referenced it as one of the Ontario Liberal Party’s “stretch goals”.

The article and the FAO’s report inspired me to review my bill from April 2018 and compare it to the bill I had just received from Hydro One.

I first compared the actual cost of the “electricity” line and discovered back in May 2018 the calculations using my bill indicated it averaged 8.4 cents/kWh (kilowatt hour) whereas my recent bill averaged it at 8.94 cents/kWh. That clarified that the cost of the actual electricity consumed increased by 6%.  Further calculations including “delivery” and “regulatory” charges less the discounts; which in 2018 was the 8% provincial sales tax had accelerated under the Ford led government to become a 14.9% discount on my recent bill. The 2022 discount meant the bottom line per kWh costs were 13.8 cents/kWh versus 16.6 cents/kWh in 2018 representing a 16.8% reduction.  At first glance it appears Ford’s “promise made” was a “promise kept” but this is where the FAO report calls him out.

The FAO report in part 3. highlighted as, “Energy and Electricity Support Programs” lists and itemizes the relative costs of the nine (9) subsidy programs grossly expanded on by the Ford led Ontario Government. It concludes those subsidies will total $6.9 billion!

The foregoing $6.9 billion is being absorbed by taxpayers! Interestingly enough the electricity subsidies represent 52.7% of the Provincial deficit forecast in the Province of Ontario’s February 14, 2022 “Third Quarter Finances”. That forecast indicated we Ontarians can look forward to a provincial deficit of $13.1 billion for the year ending March 31, 2022!

If one does the simple math ($6.9 billion divided by 150.5 TWh [terawatt hours] of grid connected generation less imports) to how much, per kWh, the $6.9 billion represents; it is about 4.6 cents/kWh. That 4.6 cents/kWh added to the 13.7 cents/kWh brings the actual current costs to 18.3 cents/kWh. That means actual costs in the past four (4) years increased by 10.2% suggesting Ford’s promise to reduce electricity costs missed his promise by 22.2% or an average of 5.5% per year.

Promise made and promise missed by a country mile!  PS: Stay tuned for further concepts related to other potential juggling involving the Energy Ministry

Our Neighbours in NY, Michigan and Quebec were Hit with Electricity Inflation in 2021

Well, IESO finally released their 2021 Year in Review data and they noted demand increased by 1.2% from 132.2 TWh (terawatt hours) in 2020 to 133.84 TWh. As an aside, demand in 2019 (prior to the pandemic) was 135.1 TWh!

Examining IESO’s information; one of the interesting things of note is the fact that generation declined by 4.85 TWh with both nuclear (-4.8 TWh) and hydro (-2.7 TWh) down whereas gas generation was up (+2.5 TWh). Nuclear refurbishment caused its drop and drought in the Northwest caused lower hydro generation.  As a result, the decrease in grid connected generation plus the slight increase in demand resulted in “net exports” (exports minus imports) dropping by 6.6 TWh from 15.1 TWh in 2020 to 8.5 TWh in 2021 despite wind generation being up marginally by 2 GWh (gigawatt hours) or 1.7%. We should suspect the 12 TWh generated from IWT (industrial wind turbines) presented itself principally when it was unneeded and gas generation was up because IWT generation was missing in action when demand was high!

Believe it or not the drop in net exports saved us ratepayers and taxpayers quite a bit of money due to lower surplus generation which caused the HOEP (hourly Ontario energy price) average to jump from 1.39 cents/kWh to 2.85 cents/kWh, an increase of 105%.  What that meant is net exports of 15.1 TWh we sold (basically gave away) in 2020 generated total revenue of $209.9 million as compared to $242.2 million for the much smaller 8.5 TWh sold in 2021.

Just because IESO sold our exports for a higher price in 2021 then 2020 doesn’t suggest we recovered the actual costs of the generation which was far north of the HOEP.  If one includes the GA (global adjustment) IESO reported in 2021 which averaged 7.26 cents/kWh; collectively (Class B ratepayers) costs were 10.11 cents/kWh suggesting we lost around $617 million just for the net exports of only 8.5 TWh.

I’m sure our neighbours in Michigan, Quebec and New York appreciated the kindness of us Ontario ratepayers providing the subsidy of that $617 million but missed the much larger benefit of the $1,785 million subsidy we picked up for the 2020 year.  We presumably have delivered higher costs for them in 2021 which may have caused a bump in their inflation rate. 

From the perspective of Ontario’s ratepayers, selling less for more is great but what would be even better is if we actually recovered more than 28% of the actual costs of what we sold.