Quebeckers are Hopefully Grateful for Ontario’s Natural Gas Plants

The past couple of days in Ontario have demonstrated the ups and downs of energy demand both from those of us in Ontario and our neighbours tied to us via the intertie grids.

February 2, 2023

Starting with February 2, 2023, examining IESO data, clearly demonstrates the ups and downs of demand for electricity coupled with the market price variation (HOEP) of overproduction of IWT (industrial wind turbines).  The wind was blowing hard all through the day but with baseload nuclear and hydro providing most of the demand what wasn’t needed was most of the power being generated by IWT.  IESO forecast IWT would generate 94,503 MW over the full day (80.3% of capacity) but it wasn’t needed. Recorded output was 72,115 MW (61.3% of capacity) meaning IESO instructed IWT owners to curtail almost 22,400 MW. As most Ontario ratepayers know the IWT contracts provides them with “first-to-the-grid” rights and also pays for curtailed power at the rate of $120/MWh and $135/MWh for the accepted power. For the full 24 hours on the day the price allocated for accepted and curtailed IWT generation amounted to over $12.4 million in costs to Ontario’s ratepayers/taxpayers and about $172/MWh in costs for the accepted power.

Coupled with the foregoing; as demand was low for most of the day, the market price (HOEP) averaged $3.12/MWh so IESO were busy disposing of unneeded power for pennies of its costs.  Even at the daily peak hour (Hour 19) the HOEP was only $5.18/MWh.  For the full day exported power was 41,911 MW representing 58.1% of the generation IESO accepted from IWT.  If one assumes the unneeded power from IWT represented all of the exported power or caused it, the cost added to the 30,200 MW of IWT generation consumed by Ontario ratepayers is another $7.1 million bringing the cost of the 30,200 MWh, added to the grid, to $11.2 million or $370/MWh (.37cents/kWh).

The happenings on February 2nd once again demonstrate how we Ontarians continue to provide cheap power to our neighbours. We do that by absorbing the costs of those intermittent and unreliable IWT sprinkled throughout the province allowing our neighbours to buy our surplus energy for pennies on the dollar while we eat the costs.

February 3, 2023

February 3, 2023, turned out to be a “Top 10” Ontario peak demand day reaching 21,388 MW and 24,821 MW for the “market peak” at Hour 19! The result was the HOEP for the full day averaged about $41.70/MWh. While that represents a large jump from the prior day those IWT were still costing us a lot more then the aforementioned HOEP average. 

To put the foregoing in context, IESO data in the first 5 hours forecast IWT generation would be 18,795 MW but they only accepted 13,838 MW meaning about 5,150 MW were curtailed and the HOEP over those 5 hours was a piddly 0.62 cents/MWh.  If one, then calculates the HOEP for the remaining 19 hours in the day it becomes $56.60/MWh so, much higher than the first 5 hours! Continuing to look at those 5 hours it becomes apparent we Ontarians absorbed the costs of almost $2.5 million to generate those 13,715 MW. Hopefully our neighbours in NY, Michigan and Quebec appreciate our generosity for those MW which was very close to the IESO accepted IWT generation. 

Looking at the full day, IWT were forecast by IESO to generate 69,174 MW but their output was 62,940 MW meaning we paid for around 6,200 MW of curtailed generation but as noted in the preceding paragraph only about 1,000 MW more were curtailed in the following nineteen hours.  Over the day IESO were busy selling off approximately 87,000 MW to our neighbours in Michigan, NY and Quebec with the latter taking well over a third of them.  The last point should be no surprise as Quebec is a winter peaking province and on February 2nd  Hydro Quebec asked their customers to reduce their electricity consumption due to the anticipated cold starting late Thursday night.

The other interesting happening related to generation on February 3rd was how much gas generation there was over the day. Ontario’s natural gas plants produced 88,172 MW which coincidently was only slightly higher than our total exports.  It is worth pointing out when a MWh of natural gas is generated ratepayers are only paying the raw costs of the natural gas plus a small markup as the capital costs and the approved ROA (return on assets) have been included in the price of electricity since those plants were originally commissioned.  In other words once a gas plant is operating it generates power that is very much cheaper compared to both wind and solar.

Quebec Support

About 60% of households in Quebec heat with electric furnaces or electric baseboards so are dependent on electricity to stay warm during cold winter days. For that reason we should suspect Ontario’s natural gas plants may have played a key role in ensuring those Quebecers were able to avoid a blackout on the recent very cold days we have just experienced.

The other thing Ontario’s natural gas plants may well be doing is allowing Quebec EV owners to recharge their EV batteries. Approximately 10% of all new cars registered in Quebec* are EV possibly due to the large $8,000. grant the province provides to purchase them.  Interestingly, while Hydro Quebec tells households to turn down their heat and avoid using certain appliances during peak hours, they say nothing about when you should or shouldn’t charge your EV.

The generosity of Ontarians is astounding due to the treatment of IWT and the contracts in place providing those “first-to-the-grid” rights. On top of that, if we are subsidizing the sales of our IWT surplus power to other markets where it may be used to charge EV it just doesn’t seem quite right!

Maybe the Ford Government should ask Quebec to provide Ontario with carbon credits to offset the “emissions” of our natural gas plants that keep their people warm in the winter!

*A September 22, 2022 New York Times article stated the following about EV in Quebec: “Quebec has 150,000 electric vehicles on the road, compared with 113,000 in New York State, an indication of how ubiquitous charging can encourage ownership.“

Battery Storage Would Cost Ontario Billions to Replace Natural Gas Generation on December 20, 2022

Ontario’s Minister of Energy, Todd Smith should think seriously about December 20th and contemplate; if we were without natural gas generation, how would the province have avoided blackouts?  What would we need to have in place to provide the 124,792 MWh (what 4.1 million average Ontario households consume daily) our gas plants supplied on that December day?

More wind, more solar?  If he picked those two intermittent and unreliable sources, we would need a multiple of at least five times current capacity. Even then, if they only generated five times the 232 MWh, they did at Hour 3, we would have experienced a blackout in the middle of the night during a low demand hour. Natural gas generators at that hour produced 4,003 MWh (26.8% of demand).

Throughout the day grid connected wind generated about 21,000 MWh and solar 547 MWh. At peak demand, Hour 18 ending at 6 PM, wind generation neared its peak for the day generating 1,341 MWh (6.8% of demand) whereas our gas plants generated 6,033 MWh or 30.4% of peak demand. Because demand was relatively high and wind failed to generate less than an average of 900 MW per hour the market price (HOEP) averaged $82.88/MWh over the day so the 39,000 MW we sold to our neighbours in NY, Michigan and Quebec generated a reasonable price compared to days when the wind is blowing hard and the sun is shining.

If Smith said hydro, it would be sensible, however Ontario has pretty well exhausted its hydro sources near population centers so that’s not an option. We would need to open up the northern reaches of the province and spend billions of tax dollars to build roads, transmission systems and the hydro plants themselves to get the power to where its needed. Not feasible for well over a decade!

Nuclear would be a good and logical source, however the only possible new nuclear we might get in the next 10 years is a 300 MW capacity SMR (small modular reactor) now in the planning stage by OPG.

What’s left then for him to contemplate is either hydrogen or storage. The former is still in early test stages and unlikely to be scaled up for a decade or more. Despite the foregoing the push for it by many European countries is on as they view it as the solution to achieving “net-zero”.  The big concern about hydrogen is associated with possible leaks as a recent article noted: “Scientists have warned that hydrogen could be a significant “indirect” contributor to the greenhouse effect when it leaks through infrastructure and interacts with methane in the atmosphere.

One should wonder does Minister Smith have a belief “storage” is the option and if so, how much will be needed?  In the near term he seems to have somewhat recognized the fallibility of our electricity system as his Ministerial Directive of October 6, 2022 directs IESO to secure a minimum of 1,500 MW of storage generation and a maximum of 1,500 MW of natural gas generation.  On the former he had already directed IESO to negotiate a 250 MW battery storage contract with Oneida on August 27, 2022 despite the need for a cost/benefit study as noted in a earlier article.

Minister Smith had also asked IESO to prepare a plan to allow Ontario’s electricity system to be fully “decarbonized” by 2050 and in their response titled: “The Pathways to Decarbonization” they included 2,507 MW of storage capacity in 2035.

The full costs of that capacity will be in excess of $2.4 billion based on a recent well researched article suggesting battery costs are a minimum of US$700K (CA$950K) per MW of capacity. Battery storage capacity results in about only 80% of it as being available when it’s needed on the grid, but, it can deliver the rated capacity for three hours.  That means 2,507 MW of battery storage at a capital cost of $2.4 billion could deliver approximately 6,000 MWh before having to reload.

Now, if we consider the generation provided by Ontario’s natural gas plants on December 20, 2022, one notes we would need twenty-one times more battery storage to generate the almost 125,000 MWh they delivered. The capital cost would be astronomical and amount to about $50 billion. Repaid over the 10-year lifespan of the batteries (including a profit margin of 10%), it would result in adding $5.5 billion of annual costs to ratepayer bills. 

What the IESO chart suggests is natural gas capacity coupled with; “New Capacity Online by 2035” in the form of; Demand Response, Solar, Wind and new Nuclear, we will not need additional storage.  Let’s hope their forecast is accurate despite the “Disclosure” on Page 2 stating:

The information, statements and conclusions in this report are subject to risks, uncertainties and other factors that could cause actual results or circumstances to differ materially from the report’s findings. The IESO provides no guarantee, representation, or warranty, express or implied, with respect to any statement or information in this report and disclaims any liability in connection with it.”

The 2035 scenario depicted by IESO also contained the following suggesting they had some faith in part of their report: “New large hydroelectric and nuclear facilities were not selected due to lead times that extended beyond the horizon of this scenario. As firm imports from Québec would require resource development in that province, they proved to be costly and were also not selected. Finally, with 2,500 MW of battery energy-storage systems included in the base supply mix, the value of additional storage diminished, hindering its selection.

Hmm, kind of makes one wonder if the “Pathways” report is delivering what Minister Smith has in mind?

An article written by Allison Jones of the Canadian Press and dated December 26, 2022 reputedly confirmed Minister Smith’s directive to IESO to obtain the additional 1,500 MW of natural gas generation along with the “2,500 megawatts of clean technology such as energy storage”. The article went on to claim, “Smith said in an interview that it’s the largest active procurement for energy storage in North America.“ Another quote in the article came from Katherine Sparkes, IESO’s director of innovation who apparently said: 

As we look to the future and think about gas phase-out and electrification, one of the great challenges facing all energy systems in North America and around the world is: How do you address the increasing amounts of variable, renewable energy? resources and just make better use of your grid resources,” she said.

“Hybrids, storage-generator pairings, give you the ability to deal with the variability of renewable energy, meaning storing electricity when the sun isn’t shining or the wind not blowing, and then using it when you need it.” 

We ratepayers should all be troubled if the foregoing is a quote from IESO’s director of innovation! In that position she should know if the sun isn’t shining, or the wind isn’t blowing there is no energy that can be stored! 

On the other hand, if it’s a misquote by the author of the article, its what we have come to expect from the MSM reporters who seem to frequently fail to do any fact checking. The latter is evident in other parts of the article where obtuse comments are made and accepted with one of them suggesting their company will “make power plants obsolete” using EV and another suggesting “the provincial and federal governments need to fund and install bidirectional chargers in order to fully take advantage of electric vehicles.” No indication was in the article as to what sources of energy would be used to power up those EV batteries nor does the author question those making the statements.

It is readily apparent the author of the article failed to either question those interviewed or to seek other views that might challenge their claims.  Unfortunately, investigative journalism is no longer within the purview of those associated with the mainstream media.

Conclusion

Natural gas is a fossil fuel that benefits mankind in many ways and the cold December day we Ontario residents recently experienced clearly demonstrated how it is needed until something better comes along. It is self-evident the “something better” is clearly not battery storage.

Let’s turn up the heat on our Ministry of Energy and the many reporters in the media who message us with the propaganda perpetrated by those who want us to freeze in the dark!

Wind Peeks at Peak Hour on October 16th

Should anyone still believe IWT (industrial wind turbines) are both reliable and will generate power  when it’s needed they should have a look at IESO data from the 16th of October when Ontario’s “peak demand” occurred at Hour 19 reaching a very low 15,329 MW.

The peak hour of IWT generation occurred at Hour 8 reaching 1,855 MWh but in Hour 19 it had fallen considerably from Hour 8 and only generated 348 MWh (2.3% of demand) meaning it didn’t show up when it was needed.  As it happened, at that hour Ontario had net imports of 1,203 MWh that came from Michigan and Quebec (principally).  We should know and anticipate IWT will demonstrate the same attitude during those cold winter day when peak demand is in the 20,000 MW range. Imports from Quebec will likely be unavailable as its peak demand period is winter based as most Quebec households heat with electricity. Hydro Quebec during winter days asks ratepayers to reduce their consumption.

It is also worth noting solar generation at Hour 19 was zero as one should suspect and will continue to produce less power generation in the coming winter months. Thankfully last Sunday at the peak hour hydro generated 5,075 MWh (close to its peak of 5,121 MWh in hour 20) and natural gas provided 2,801 MWh, down from its peak generation of 3,440 MWh during Hour 17.

What Hour 19 on October 16th demonstrates is wind is clearly unreliable and very intermittent and without nuclear, hydro and natural gas we Ontario ratepayers would have experienced blackouts even though peak demand was very low.

The time has come to recognize IWT and Solar will not produce anything close to what is needed if the push for full “electrification” continues. 

The road to “net-zero” is paved with bad outcomes and it’s time for our elected politicians to recognize that fact.

Ontario Expanding Energy Efficiency to Help Families and Businesses Keep Costs Down

The following is a copy of the e-mail I sent to Ontario Minister of Energy, Todd Smith October 4, 2022, seeking information related to the captioned press release. If, and when I receive a response, I will post it!

“Minister Smith,

Your recent press release starts with:  

The Ontario government is increasing funding for the province’s energy-efficiency programs by $342 million, bringing the total investment to more than $1 billion over the current four-year electricity conservation framework.

I have read this over several times and fail to find anything other than the following that suggests rates will decline:  

This funding will support a new voluntary Residential Demand Response Program with an incentive for homes with an existing central air conditioning or heat pump unit and smart thermostat to help lower energy use at peak times and lower bills.

So turning up our air conditioners and turning down our electric furnaces (etc.) along with walking around in the dark will reputedly deliver these savings ($650 million) according to the following  in your press release!  

“By 2025, this expansion of energy-efficiency programs will help deliver enough annual electricity savings to power approximately 130,000 homes every year and reduce costs for consumers by over $650 million

The release also says:  

Our government’s success in driving electrification of industry and transportation and strong economic growth is increasing electricity demand

So demand will supposedly increase with the foregoing “electrification of industry and transportation” but by using less we Households “reputedly” will see a reduction in costs!  

Am I missing something or will this annual “$650 million” of “reduced costs” be allocated to taxpayers or has your ministry suddenly discovered some cheap source of electricity generation via new technology or some “net-zero” imports from our neighbours for a cheap price?

As my local MPP and a taxpayer I sure would appreciate a little clarification!

Yours truly,

Parker Gallant,

A concerned resident of your constituency”

Response from Ontario Ministry of Energy:

“Dodsworth, Michael (ENERGY) <Michael.Dodsworth@ontario.ca>   
to me, Todd

Good morning Parker,

Minister Smith forwarded me your message which I am pleased to respond to on his behalf.

Energy efficiency programming is a fast and cost effective measure that can save families money and reduce demand for electricity from the grid. These programs, which include supports for energy efficiency retrofits, Distributed Energy Resources and the Residential Demand Response Program you referenced, all will mean reductions in demand for electricity.

These programs are a complement to the government’s comprehensive plan for addressing increased demand for power due to economic growth and electrification, including ongoing capacity resource procurements, rather than an alternative.

By reducing demand and in particular peak demand, we can offset the need for some new electricity generation resources. This will mean a cost reduction for ratepayers and a net system benefit of ~$300 million (the cost reduction of $650 million less the increased investment of $342 million).

I hope this addresses your question satisfactorily.

Best,

My response to the Ministry:

Michael,

Thank you for your response but I fail to see how it will, as you state: “mean a cost reduction for ratepayers and a net system benefit of ~$300 million”!

Let’s examine your response bit by bit!

Energy efficiency (1.) programming is a fast and cost effective measure that can save families money and reduce demand for electricity from the grid. These programs, which include supports for energy efficiency retrofits, (1.) Distributed Energy Resources (2.) and the Residential Demand Response Program (3.) you referenced, all will mean reductions in demand for electricity.

1.Your claim on how “energy efficiency” will save families money ignores the fact “supports” for the programs are provided by taxpayer funds.  I would guess ratepayers without the ability to provide the additional funds from those taxpayers will be unable to afford their portion of the costs.  I would point out most ratepayers are also taxpayers so those unable to come up with the additional funds will be unable to invest in those “energy efficiency retrofits”

2.Distributed Energy Resources are those such as: “rooftop” or “ground mounted” solar, “wind turbines” “battery storage”, “small hydro” etc. and are contracted at rates well in excess of those of the likes of OPG, Bruce Power, etc. as they exist outside the purview of the OEB!

3.From my personal observation point this is the only one not supported by other ratepayers or taxpayers however the “installed cost” of a “smart meter” is a higher cost than an analog meter and the costs of those are spread throughout all ratepayers. It is also a fact smart meters have a shorter lifespan than an analog meter meaning they must be replaced sooner adding to the costs of this endeavour.

These programs are a complement to the government’s comprehensive plan for addressing increased demand for power due to economic growth and electrification( 4.), including ongoing capacity resource procurements, rather than an alternative.

4.While you and Minister Smith reference “electrification” and the OCP’s full support of the concept it appears the cost of that objective and the new capacity required by Ontario to meet that target have not had any serious focus.  To look at just one study; NREL, a national laboratory of the US Department of Energy, in their study stated “Widespread electrification increases 2050 U.S. electricity consumption by 20% and 38% in the medium and high adoption scenarios, respectively and relative to the reference.” For Ontario let’s focus on the “medium” scenario!  At the end of 2021 IESO reported total grid connected capacity in Ontario was 38,079 MW. If we assume Pickering Nuclear gets approval to extend its life that reflects the need to add 7,600 MW of NEW capacity (20% of 2021 capacity) or 10,600 MW (28%) should Pickering renewal not receive the green light! Please note the study states “consumption” which means both wind and solar plus storage would need to be at least triple that capacity level!

By reducing demand and in particular peak demand (5.), we can offset the need for some new electricity generation resources. This will mean a cost reduction (5.) for ratepayers and a net system benefit of ~$300 million (the cost reduction of $650 million less the increased investment of $342 million).

5.Should we assume a cost study has not been done based on the claim there will be a “cost reduction for ratepayers” or is this a false claim?  Many of us ratepayers lived through the McGuinty/Wynne days and constantly were fed similar stories from them related to the GEA. Under pressure from the largest manufacturing companies in the province they reacted to the false message and came up with the ICI (Industrial Conservation Initiative) which allowed those companies to benefit from significant cost reductions by reducing demand during just five (5) annual “peak demand” periods which still exists today. The incentive was so great those companies invested heavily in a variety of gas generators to take advantage of the incentive.  It should come as no surprise, due to this push by Ontario and many other jurisdictions around the world opining for “net-zero” that manufacturers of those generators have benefited greatly as a quote from a recent article suggests: “The global gas generator sets market is expected to grow from $7.82 billion in 2021 to $8.3 billion in 2022 at a compound annual growth rate (CAGR) of 6.48%. The gas generator sets market is expected to grow to $11.15 billion in 2026 at a compound annual growth rate (CAGR) of 7.57%.”  It is equally important that you and Minister Smith should be aware that many stand alone administered “public sector” corporations such as colleges, universities, etc. are now ICI beneficiaries which equates to an indirect and hidden form of taxation. 

In summary, I and my blog followers, would love to see some proof the recent moves by the Ministry of Energy (reputedly endorsed by IESO) will achieve that “net system benefit of $300 million” you allude to in your response!

Looking forward to your response,

Regards,

Parker Gallant,

Parker Gallant Energy Perspectives

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?

Bruce Power took their Four “A” Units offline and no one Noticed

The OCAA (Ontario Clear Air Alliance) has been pushing the closure of Ontario’s nuclear plants for years in addition to their more recent effort to gain municipal support for the closure of our gas plants.  They continually suggest the closure of both will not cause problems as we will get all the power those units now produce from Quebec’s excess hydro which is an outright lie. Quebec is a winter peaking province and pushes their residential and businesses to conserve power during that season.  No doubt the OCAA will renew the claim with Bruce taking all four of their “A Units (3,144 MW capacity) offline as part of the requirement to do its Vacuum Building Outage. That will allow OCAA to suggest they weren’t missed! 

The VBO is a regulation as noted in the Bruce press release: “All four operating units must be shut down once every 12 years to allow for inspections and maintenance to the vacuum building.”  The units will come back on line before “summer peaking season” to ensure Ontario has the electricity supply needed.

What is interesting about the units being taken offline is to look at Hour 18 (hour ending at 6 PM) on May 12th!  That time reflects the “peak demand” hour for the day with it reaching 17,179 MW for a five-minute segment.  At that hour nuclear generated 6,758 MW, hydro 6,176 MW and natural gas plants 3,666 MW.  From the three renewables IESO report; solar contributed 97 MW, biomass 50 MW and those IWT (industrial wind turbines) 866 MW so collectively they provided 5.9% of peak hour needs.

Now try to imagine the blackouts we would experience without nuclear and gas or what Quebec might have provided to replace the 57% of generation those two sources did!

As a matter of interest, the IESO “Intertie report” disclosed Ontario even exported 1,408 MW to Michigan and imported 500 MW from New York.  Quebec supplied 115 MW (less than solar and biomass combined at that hour)!  Those imports and exports traded at an average rate of $81.06/MWh which is much closer to their actual cost than when the wind is blowing hard during low demand hours and days driving down the HOEP (hourly Ontario energy price)!

So, Mr. Gibbons, Chair of the OCAA, the “cheap and abundant” hydro you told us Quebec would supply if we shut down our nuclear and gas generation never appeared at Hour 18 so what makes you believe we would be able to do without Ontario’s nuclear and gas generation?  You seem intent at wanting to cause widespread blackouts throughout Ontario!

The time has arrived for the OCAA and its supporters to back off from their spurious claims!

Four Years Later and I Repeat: “If I were Ontario’s new Minister of Energy …”

Back on May 30, 2018 an article I penned, just prior to the last provincial election, listed ways in which the incoming ruling party could reduce electricity costs by $2 billion annually.  Electricity costs had more than doubled in Ontario under the reign of the McGuinty/Wynne led Liberals due to their enactment of the GEA (Green Energy Act) when George Smitherman was the Minister of Energy.

Ontario’s voters were expected to respond when casting their vote in early June 2018 and they did!  The ruling OLP (Ontario Liberal Party) were decimated turning them into what many referred to as the “mini-van party”.

My prior advocacy work had focused on the “electricity sector” and the cost of wind and solar generation. My efforts included frequent dialogue with the Conservative appointed “energy critics” so, at that time, I and many Ontario ratepayers in rural and urban communities had hopes the Doug Ford led Ontario Conservative Party would deal with the mess the Liberals had created. Potentially the savings would have amounted to around $8 billion over the past four years.

The Ford led government based on a recent report from the Ontario Financial Accountability Office seems to have simply transferred $6.9 billion in electricity costs for the 2021-2022 year and $118 billion to taxpayers over 20 years, even though taxpayers are also ratepayers!  In quickly reviewing recently released platforms for the OLP, the NDP and the recent OPCP budget it sure appears they all have plans aimed at “global warming” and want to spend billions continuing the push to jump on board with “The Great Reset” advocated by the WEF and our Prime Minister, Justin Trudeau.

The only dissenting voice amongst the political parties seems to be the newly formed “New Blue Party” whose “BLUEPRINT” states they will take “down wind turbines to reduce electricity costs”!

Following are the recommendations put forward in the article four years ago and I will leave it to the reader to pontificate as to whether or not, any of them were acted on!

“Green Energy Act

Immediately start work on cancelling the Green Energy Act

Conservation

Knowing Ontario has a large surplus of generation we export for 10/15 per cent of its cost I would immediately cancel planned conservation spending. This would save ratepayers over $433 million annually

Wind and solar contracts

I would immediately cancel any contracts that are outstanding but haven’t been started but may be in the process of a challenge via either the ERT (environmental review tribunal) or the court system. This would save ratepayers an estimated $200 million annually

Wind turbine noise and environmental non-compliance

Work with the MOECC Minister to insure they effect compliance by industrial wind developers both for exceeding noise level standards and operations during bird and bat migration periods.  Failure to comply would elicit large fines. This would save ratepayers an estimated $200/400 million annually

Change the “baseload” designation of generation for wind and solar developments

Both wind and solar generation is unreliable and intermittent, dependent on weather, and as such should not be granted “first to the grid rights”.  They are backed up by gas or hydro generation with both paid, for either spilling water or idling when the wind blows or the sun shines.  The cost is phenomenal.  As an example, wind turbines annually generate at approximately 30 per cent of rated capacity but 65 per cent of the time its generation is at the wrong time and not needed. The estimated annual ratepayer savings if wind generation was replaced by hydro would be $400 million and if replaced by gas in excess of $600 million

Charge a fee (tax) for out of phase/need generation for wind and solar

Should the foregoing “baseload” re-designation be impossible based on legal issues I would direct the IESO to institute a fee that would apply to wind and solar generation delivered during mid-peak and off-peak times.  A higher fee would also apply when wind is curtailed and would suggest a fee of $10/per MWh delivered during off-peak and mid-peak hours and a $20/per MWh for curtailed generation. The estimated annual revenue generated would be a minimum of $150 million

Increase LEAP contributions from LDC’s to 1 per cent of distribution revenues

The OEB would be instructed to institute an increase in the LDC (local distribution companies) LEAP (low-income assistance program) from 0.12 per cent to 1 per cent and reduce the allowed ROI (return on investment) by the difference. This would deliver an estimated $60/80 million annually reducing the revenue requirement for the OESP (Ontario electricity support program) currently funded by taxpayers

Close unutilized OPG generation plants

OPG currently has two power plants that are only very, very, occasionally called on to generate electricity yet ratepayers pick up the costs for OMA (operations, maintenance and administration). One of these is the Thunder Bay, former coal plant, converted to high-end biomass with a capacity of 165 MW which would produce power at a reported cost of $1.50/kWh (Auditor General’s report) and the other unused plant is the Lennox oil/gas plant in Napanee/Bath with a capacity of 2,200 MW that is never used. The estimated annual savings from the closing of these two plants would be in the $200 million range.

Rejig time-of-use (TOU) pricing to allow opt-in or opt-out

TOU pricing is focused on flattening demand by reducing usage during “peak hours” without any consideration of households or businesses.  Allow households and small businesses a choice to either agree to TOU pricing or the average price (currently 8.21 cents/kWh after the 17% Fair Hydro Act reduction) over a week.  This would benefit households with shift workers, seniors, people with disabilities utilizing equipment drawing power and small businesses and would likely increase demand and reduce surplus exports thereby reducing our costs associated with those exports. The estimated annual savings could easily be in the range of $200/400 million annually

Other initiatives

Niagara water rights

I would conduct an investigation into why our Niagara Beck plants have not increased generation since the $1.5 Billion spent on “Big Becky” (150 MW capacity) which was touted to produce enough additional power to provide electricity to 160,000 homes or over 1.4 million MWh.  Are we constrained by water rights with the US or is it a lack of transmission capabilities to get the power to where demand resides?

MPAC’s wind turbine assessments

One of the previous Ministers of Finance instructed MPAC (Municipal Property Assessment Corp,) to assess industrial wind turbines (IWT) at a maximum of $40,000 per MW of capacity despite their value of $1.5/2 million each.   I would request whomever is appointed by the new Premier to the Finance Ministry portfolio to recall those instructions and allow MPAC to reassess IWT at their current values over the terms of their contracts.  This would immediately benefit municipalities (via higher realty taxes) that originally had no ability to accept or reject IWT.

If one does a quick addition of the foregoing one will see the benefit to the ratepayers of the province would amount to in excess of $2 billion dollars which co-incidentally is approximately even more than the previous government provided via the Fair Hydro Act.

Hmm, perhaps we didn’t need to push those costs off to the future for our children and grandchildren to pay!

Now that I have formulated a plan to reduce electricity costs by over $2 billion per annum I can relax, confident that I can indeed handle the portfolio handed to me by the new Premier of the province.”

Throw out the Industrial Conservation Initiative (ICI) Program with the Garbage

Universities and Hospitals and many other government operations are allowed to qualify as “Class A” institutions so take advantage of the ICI program by picking peak hours to go off-grid for their electricity needs.  The following “note” was found on page 7 in a study London Economics Institute did for the Canadian Manufacturers and Exporters dated October 22, 2019.

Examples of larger load customers that are not industrial (i.e. not the focus of this paper) include hospitals, large office complexes, and university campuses. The boundary for a “large” customer is generally around the 5,000 kW mark.” 

In other words, if peak demand at a university or hospital reached 5 MW, they qualified to access the ICI program.  

Former Minister of Energy, Bob Chiarelli, reduced the qualification to 3 MW in 2015 and then to 500 KW in 2017.  The reduction expanded the number of Class A customers and would obviously allow many other government institutions such as colleges and good-sized government buildings or departments to become ICI entities.  So, presumably for years, Class B ratepayers have been subsidizing numerous government institutions be they provincial or federal.  Unfortunately, IESO doesn’t publish a list of Class A ratepayers so it’s impossible to know how much additional taxes we Class B ratepayers are paying to support those government entities who are beneficiaries of cheap electricity prices.

As both a ratepayer and taxpayer it doesn’t seem right government institutions get preferred rates!  It allows them to suggest their budgets are lower so they can pay their professors, etc. more!  They basically access after-tax dollars from Class B ratepayers who have been forced to spend additional funds to obtain electricity for their small business or to heat their homes and cook their meals. 

Pretty sure York University where they crank out eco-warrior graduates via the Faculty of Environmental and Urban Change (EUC) are one of those taking advantage of the ICI as several years ago, they installed two gas generators which was covered in an article your truly penned back in 2020. The article from July 2020 provided details on how York University takes advantage of the ICI program in much more detail while outlining how their Professor Mark Winfield, an eco-warrior, claims it was “the leading edge of innovation in electricity systems around the world”.  

The time has come for Ontario’s Minister of Energy Todd Smith, to stop the double taxation allowed under the ICI program by simply cancelling the benefit for government related institutions.  An exchange with a contact brought me the following observation from someone I have much respect for as they know the system much better than yours truly. 

The ICI program has become a government welfare system for large industrials and it undermines the emission reduction efforts of others.  It should be redesigned to make sure everyone pays their appropriate share of the fixed costs of the electricity system that serves them.

PS:  Here is the link to article titled: Ontario is a Bottomless Pit for Class B Ratepayers as the ICI Demonstrates

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%.”

The OCAA is Seeking Future Blackouts for Quebec in the Winter

The Ontario Clean Air Alliance (OCAA) under Jack Gibbons was busy throughout 2021 making the rounds of various cities and municipalities throughout Ontario convincing them they should tell the Ford government to close all the natural gas plants in the province.  A total of 32 cities and municipalities joined hands with Gibbons thanks to inept (the only descriptive that made sense) councils and told the government of Ontario to shut those gas plants.  Gibbons somehow convinced them Quebec has a huge surplus of hydro generation that will easily replace those gas plants when our power demand needs them.  Apparently, none of those councils bothered to investigate Gibbons claim.

Gibbons bio indicates he is an “economist” and reportedly “studied economics at the University of Toronto (B.A.), Queen’s University (M.A.) and the University of British Columbia“!  We should have serious doubts about his claim based on the rhetoric associated with his push to close the gas plants. Gibbons comes across like a pitchman selling snake oil in the 18th and early 19th centuries.

If any of the mayors or council members bothered to do even a little research they would have discovered Quebec’s peak demand occurs in the winter.  Hydro Quebec encourage their ratepayers to use less power during the December to March period as 61% of households use electricity to heat their homes versus only about 17% in Ontario.

If the Ford led government in Ontario responded to the OCAA desires the results would have a negative effect on households in both provinces but in particular Quebec due to their peak winter demand*. 

A recent four (4) days of cold winter weather in both Ontario and Quebec dispel the “Gibbons/OCAA” notion!  Ontario was called on to provide considerable power to Quebec over those four days and without the availability of our natural gas plants (most of which were built to back up intermittent and unreliable wind and solar generation) our ability to provide that power would have been close to NIL as our Ontario demand was also relatively high.

Over the four days commencing January 13th through to January 16th we exported just over 106,000 MWh (megawatt hours) to Quebec for an average of 1,104 MW/hour and the peak day was the 16th with an average of 1,410 MW/hour.  Over those four days Ontario’s gas plants generated just over 395,000 MW so we were able to provide our neighbours with what they needed (27% of our gas plant generation) to keep those electric furnaces and baseboard heaters operating so they would avoid blackouts and freezing households.  We provided those 106,000 MW at an average cost of less than 5 cents/kWh based on the HOEP prices over those four days so their cost didn’t drive up Hydro Quebec’s energy prices whereas Ontario’s ratepayers lost money on every kWh exported.

Carbon Credits please

Perhaps Hydro Quebec should either provide Ontario with “carbon credits” or pay the Federal “carbon tax” for the power supplied, allowing us to recover some of the costs for that natural gas generated power to keep them warm. Unfortunately, Ontarians should doubt that will ever happen!

* In Québec, peak periods occur during winter because so many of us heat our homes with electricity.