Premier Wynne’s Easter basket full of rotten eggs

Count the eggs! $50 million plus, lost in just 3 days!

The nice weather on Easter weekend in Ontario disguised the fact that April 14th, 15th and 16th were really bad days for electricity customers.

Scott Luft’s daily reports detailed the bad news, even before the Independent Electricity System Operator or IESO got out their daily summary for April 12th.   Some of the information in Scott’s reports are estimates, but they have always proven to be on the conservative side. These three reports paint a disturbing picture of what’s going on, and how badly the Ontario government is mismanaging the electricity file.

Here are a few of the events that our Energy Minister Glenn Thibeault and Premier Wynne should find embarrassing. They also confirm what many of us have been telling them for several years.

First, Thursday April 13th saw a disclosure from the Energy Ministry that Ontario paid out $28,095,332 including about $240,000 in interest to Windstream Energy to satisfy the award made to them under the NAFTA (North American Free Trade Agreement) tribunal, due to cancellation of  a 300-MW offshore industrial wind turbine project.

Second, the HOEP (hourly Ontario electricity price) market, traded all of Ontario’s generation over the three days at “0” (zero) or negative value. While total demand for electricity was 1,031,448 MWh over the three days the HOEP market valued it at -$869,220 or an average of -.84 cents/MWh.  The “0” and negative values for the HOEP lasted 77 continuous hours, breaking a prior record of 62 hours.

Wasted, unneeded wind power

Third, during the three days, ratepayers picked up the bill for 99,109 MWh of curtailed wind which exceeded the transmission (TX) and distribution (DX) connected wind by 60.2%. Curtailed wind at an estimated $120/MWh alone cost ratepayers $11.9 million, driving the price of delivered wind (61,882MWh) to a cost of $335.34/MWh or 33.5 cents a kWh.  Total wind costs were $20.8 million.

Fourth, solar power over the three days generated and curtailed (1,124 MWh) 35,539 MWh at a cost of   $16.8 million, which works out to $472.86/MWh or 47.3 cents/kWh.

Fifth was the cost of gas which in three days produced 18,433 MWh, but the cost was $12.5 million and $676.56/MWh or 67.7 cents/kWh.  The 9,943 MW of IESO grid-connected gas operated at 2.6% of actual capacity during the three days.

Sixth was the generosity shown to our neighbours in New York, Michigan and Quebec who took delivery of 157,768 MWh of free power along with a payment of $132,525.

The quick math on the above indicates a cost of wind, solar and gas generation plus the payment for exported power comes to $50.2 million.

Nuclear and hydro was all we needed

That’s bad enough, but if you look at nuclear and hydro generation during those three days, clearly the $50.2 million was “money for nothing” paid for by Ontario’s ratepayers.  Nuclear (including steamed-off of 49,118 MWh) was 688,981 MWh and combined with hydro generation of 324,001 MWh of could have provided 1,012,982 MWh versus Ontario’s demand over those three days of 869,232 MWh leaving 143,750 MWh of surplus.  Three days of nuclear and hydro cost $61.9 million or 6.1 cents/kWh.

Bottom line? Ontario ratepayers picked up the bill for not only the $28.1 million paid to Windstream for a canceled offshore wind project, but also another $50.2 million, making the past four days very expensive for everyone.

The $78.3 million could have been better spent on health care or so many other pressing needs!

It’s time to kill the Green Energy Act and cancel any uncompleted wind and solar contracts before all our weekends turn out like this one!

One spring day just cost you millions

A happy day for power importers south of the border. For you? Not so much…

April 9, 2017 was a perfect day to demonstrate the mess the current Ontario government could have expected if they had simply done a cost-benefit study of the electricity sector prior to imposing the GEA (Green Energy and Green Economy Act).

The April 9th IESO generator report and Daily Market Summary provide highlights of many of the mistakes the Liberal government has made, as does my friend Scott Luft’s “Daily Electricity Supply Estimates.”  IESO’s report fails to provide details of distributor connected (DX) generation (principally solar and wind) whereas Scott estimates those along with the curtailment of wind, solar, hydro and nuclear generation. His estimates have proven to be on the conservative side in the past.

IESO’s “Market Summary” shows Ontario Demand was only 294,600 MWh (megawatt hours) which Scott noted was the “3rd lowest Ontario Demand day in the history of the market” and that day, along with five other recent “lowest Ontario Demand” days have all occurred within the past 12 months.   How low is demand? Scott says the six low demand days were lower than any day during the massive blackout of 2003.

Seriously.

Demand in Ontario on April 9th of 294,600 MWh could have been easily supplied by nuclear generation (236,400 MWh including 14,800 MWh steamed-off) and hydro generation (101,900 MWh including 1,200 MWh spilled, and 2,600 MWh from DX).  Those two clean, emission-free power sources could have delivered 338,300 MWh, leaving 43,700 MWh available for sale to our neighbours.  The 338,300 MWh should have cost Ontario ratepayers $20,554,000 based on what we pay on average for nuclear and hydro generation.  That would equate to 6.1 cents per kilowatt hour (kWh) combined!

As it happened, Sunday April 9 saw 51,400 MWh of net exports (exports less imports) sent to our neighbours in Michigan, New York and elsewhere, along with an average payment of $3.08/MWh. They gladly took those free MWh along with our payment of $158,312.00.

Sunday April 9th also saw Ontario’s ratepayers pick up the bill for transmission (TX) and DX-connected wind of 25,700 MWh and another 46,300 MWh of curtailed (one of the highest curtailed days ever) wind at a total cost of $9.290 million.  If we calculate the cost for just the accepted wind generation (25,700 MWh,) the cost per MWh becomes $361/MWh or 36.1 cents/kWh.

Ontario ratepayers also picked up the bill for the 10,533 MWh of solar generation (DX and TX) and the 667 MWh of solar estimated as curtailed. Solar’s costs were $5.280 million, which means the delivered generation cost last Sunday was $501.28/MWh or 50.1 cents/kWh.

Meanwhile, those same ratepayers picked up a $4.143 million bill for gas generators who delivered 5,773 MWh (TX and DX) at a delivered cost of $717.12/MWh or 71.7 cents/kWh. Scott Luft noted the 5,773 MWh delivered to the system by the gas plants set a record low.*

The cost of unnecessary power for ONE DAY?

The total cost of the unneeded supply of power on April 9th coming from wind, solar, gas and biofuel ($368,000) plus the payment made to export ($158,312.) came to over $20 million.

What that means is, this one day of generation, Ontario’s ratepayers are obliged to pay for, was $40.8 million or 13.6 cents/kWh yet the 294,000 MWh they actually consumed was produced at a cost of $17.9 million (not including the $2.7 million loss on exporting).

Premier Wynne has admitted her government has made mistakes on the energy file. The “mistake” on that Spring day turned out to be a burden on all of Ontario’s ratepayers (rich and poor) with the extra cost of over $20 million in order for the Minister of the Environment and Climate Change and Premier Wynne to be able to claim the “cap and trade” tax is driving down emissions in the energy sector, by reducing generation from fossil fuels (gas).

They are not likely to mention that anyone using electricity from Ontario’s generators would have had to more than double — 13.8 cents/kWh instead of the 6.1 cents/kWh — so they could make that claim!

* Lower gas generation will allow Glen Murray, Minister of the Environment and Climate Change to claim the “cap and trade” tax is working.

How much did Premier Wynne’s hydro “mistake” actually cost?

Five months ago, Premier Kathleen Wynne admitted to the delegates at the annual Ontario Liberal Party convention her government “made a mistake” allowing electricity rates to rise so high.  Those rates have actually soared, increasing by 80.9% from 2009.

Comparing Ontario electricity rates to other indicators such as inflation, shows just how bad the situation is. Comparing the IESO (Independent Electricity System Operator) Monthly Summaries for January and February 2009 with the same two months in 2017, the combined costs of HOEP (hourly Ontario energy price) plus the Global Adjustment (GA) show costs per kilowatt hour (kWh) have increased from 5.85 cents/kWh to 10.58 cents/kWh. That is an 80.9% increase.  Average inflation over the same time-frame has increased about 14%.   (The reader should note the 2009 and 2017 costs are before HST so the 8% reduction commenced January 1st has had no effect on contracted or regulated electricity rates.)

So how bad? The cost of the basic commodity has increased by almost six times the inflation rate!

Commodity cost is way up

Reviewing the IESO Monthly Summaries for the two-month periods in 2009 versus 2017 also shows Ontario demand fell by 7% or 1,713,000 MWh (1.7 TWh). The Summary reports indicate the 24.43 TWh representing Ontario demand in 2009 cost $58.49 million/TWh or $1,429 million for January and February. The 22.7 TWh of Ontario demand in 2017 cost $105.78 million/ TWh or $2,330 million for the same two months.  That represents an increase in the commodity cost of electricity of $901 million for 7% less electricity — an average monthly increase of $450 million.

So, why?

Exports

One of the reasons was the drop in the market price as the HOEP fell from an average of $51.93/MWh in 2009 for the two months to $21.56/MWh in 2017 while the GA jumped from an average of $6.56/MWh in 2009 to $82.27/MWH in 2017. What that means is, the loss on exports from Ontario in 2009 cost Ontario ratepayers $13.1 million and in 2017 cost ratepayers $174.2 million as the GA costs are not included in the sale of exports via the HOEP.

OK, of that $900+ million increase, we have $174 million found … $727 million to go!

Wind power

Another obvious cause of the big jump was generation and payment for curtailment of power from industrial wind turbines (IWT). Back in the early part of 2009, Ontario had approximately 800 MW of IWT capacity; in the early 2017 we have about 4,550 MW of capacity.   According to my friend Scott Luft, who uses IESO data to estimate the generation and curtailment of IWTs,  in 2009 the turbines delivered almost 395,000 MWh in January and February. In 2017, it’s a different story: generation and curtailment combined jumped to about 2,926,000 MWh.

The contracted wind power prior the passage of the Green Energy Act is estimated to be at the rate of $90/MWh, whereas wind power contracted for after the Act was at $135/MWh (plus a cost-of-living annual increase) meaning they currently are estimated at $140/MWh. The math on the 2009 generation therefore shows a cost of $35.5 million and the 2017 generation/curtailment cost becomes $409.6 million.  The increased cost of wind from 2009 is ($409.6 million less $35.5 million) $374 million.   Deducting the $374 million from $727 million leaves $353 million to find to get to $901 million!

Gas

Since 2009, more than 3,300 MW of gas plant capacity has been added to the Ontario grid. Its addition was basically to back up the wind and solar capacity (which is unreliable and intermittent) to ensure sufficient generation is available during renewables’ failure and high demand periods.  The private sector companies investing in those plants are paid for their capital investments amortized over their life span. When generating electricity they receive fuel costs plus a nominal markup. Payments details are not available in the public domain, but it is understood payments contracted are per MW of capacity, and  estimates given are $8/15,000 per MW per month.  Assuming the 3,300 MW of capacity secured since 2009 is at the mid-range ($12,000 per MW) the cost to ratepayers is $79 million (3,300 X $12,000 X 2 months).

That $79 million means we are still looking for $274 million.

Consuming less but paying more

IESO shows ratepayers consumed 1.7 TWh less in the first two months of 2017 than in 2009, but paid more. That is evident in OPG reports.  As OPG has not released its 2017 1st Quarter report estimates are based on the 2016, 1st Quarter report.  First we estimate spilled (wasted) hydro was 1.2 TWh at a reported cost of $44 million/TWh so that cost ratepayers $53 million.   The 21.0 TWh produced by OPG in the 2016, 1st Quarter generated average revenue per TWh of $70.4 million.  Estimating the first two months of 2017 generation at 14 TWh results in a cost of $985.6 million.  In 2009 OPG generated 25.6 TWh at an average of $57.8 million/TWh. Again estimating the total cost of the 17 TWh generated by OPG in the first two months produces a cost of $982.6 million so adding the $3 million to the spilled water cost shows an increase of $56 million.  Subtracting $56 million from $274 million means we are looking for the last $218 of the increase.

Solar, conservation, bio-mass and sundry

We assume the balance of the increased 2017 versus 2009 costs came from solar and bio-mass with a portion from the conservation program. Based on Figure 23 “Total Global Adjustment by Components” of the IESO Summary report we can estimate the costs of each of those for the two months.  It appears conservation spending (absent in 2009) represented about $50/55 million for the first two months of 2017 and bio-mass (incented by the FIT and MicroFIT programs) generated costs of around $40 million.  Solar (low during winter months) generated a minimum of $100/$120 million in costs for the two months based on the IESO Figure 23.  While those are “best” estimates to get to the increase of $901 million for the two months, we have not included increased costs from the IESO and OEB budgets which have both increased.

“No checks” in the system

An article recently appeared in the Globe and Mail written by George Vegh, former general counsel to the OEB.  This paragraph is perhaps why Premier Wynne admitted to her “mistake”

“Generation procurements are determined entirely by the government. The system operator – the Independent Electricity System Operator (IESO) – implements government directives. Neither the Ontario Energy Board nor any other independent regulator reviews these procurements. There are no independent criteria, no cost-benefit analysis, no consideration of the need for the procurements, and no review of alternatives. In short, there is virtually no check on the power to procure supply.”

 

What we have in Ontario is a “mistake” that will continue to cost Ontario ratepayers and taxpayers billions for years to come.

Admitting a mistake is one thing, doing something about it is another: Premier Wynne needs to recognize the Ontario Liberal government’s error, kill the Green Energy Act, and halt continued procurement of power from unreliable and intermittent wind and solar generators!

Found! Where the Wynne government spent $36 billion!

Not all of it useful.

March 26, 2017

Ontario Energy Minister Thibeault claimed the government spent $35 billion on the electricity sector while Premier Wynne says it was $50 billion. But neither of them provided an accounting as to exactly what the money was spent on, and what the value was for ratepayers.   They both claim the system was “broken” when the Liberals took over governing, and the money spent fixed the system.

If Minister Thibeault’s $35 billion is factual it would represent spending $8,000 per residential ratepayer; if Premier Wynne’s $50 billion is true it means $11,000 per ratepayer. Bear that in mind as you travel through my computations.

The spending via directives from the Energy Minister’s office were, and continue to be, frequent (well over 100 to the OPA [merged with IESO], OPG, OEB and Hydro One); the directives often had no connection to fixing anything, or generating electricity.

Here’s a look by category. Some of these are estimates but the estimates come from reasonable and reliable sources. 

Billions Spent to December 31, 2016

Category: Frills and shiny baubles *

1.Spending on “smart meters”!                                      $2 B

(Ontario’s Auditor General in her report of December 2014 basically said we have wasted the money spent!)

2.The “smart grid” aimed to work with smart meters!  $1.2 B

(We are all billed for the costs of developing the “smart grid” but the benefits accrue to only a few select individuals and companies.)

3. “Closing the coal plants” requiring OPG to write off the     $ .6 B

(This meant the OPG had to write off the remaining value of those plants including their scrubbers for removing emissions!)

4.“Conservation” spending, $3-4 million/year       $2.5 B

5. Moving the gas plants                  $1.1 B

TOTAL spending for frills and shiny baubles: $7.4B

Category: The unreliable and intermittent**    

The IESO’s 18 Month Outlook covering April 2017 to September 2018 provides approximations of grid and distribution connected wind and solar which are:

Wind generation as at March 31, 2017 will be approximately 4,650 MW and at a capitalcost of $2.2 million per MW had a cost of                                                                             $10.2 B

Solar generation as at March 31, 2017 will be approximately 2,389 MW and at a capital cost of $2.6 million per MW had a cost of                                                                             $ 5.2 B

Transmission spending by Hydro One to connect wind and solar to the grid and for embedded connection expenditures is estimated to have had a cost of                                  $5.0 B

TOTAL spending for unreliable and intermittent $20.4B 

Category: Photo-op generation***

1.“Big Becky” which went $600 million over budget in an effort to squeeze 150 MWs of capacity from Niagara Falls at a cost of   $ 1.5 billion

2.“Mattagami” originally a $1.6 billion dollar project to increase the rated capacity by 438 MW (NB) it went over budget by $1 billion reaching a cost of    $ 2.6 billion

TOTAL spending for Photo-Op generation $4.1B

Note: In 2010, before both of the above were completed, OPG produced 30.6 TWh (terawatt hours) of hydro generation; so, despite adding the above 588 MW of capacity, hydro generation in 2016 fell to 29.5 TWh.  A quick look at the generation from the Mattagami units on March 21st indicates they generated power at about 8% of rated capacity, while all other hydro was operating at an average of about 50% of rated capacity.

Category: Value for money

It appears that some of the claimed investments in generation did actually provide some value. The Bruce Nuclear refurbishment (NBB) of two units came at a cost of $4.8 billion but according to Ben Chin, former VP of the OPA, the cost to ratepayers was limited to   …        $ 3.4B

Note: Bruce Nuclear over the four (4) years (2013 to 2016) have annually generated an average of 10 TWh above their 2012 generation, prior to the refurbishment, at a cost of about 6.6 cents per kWh.

TOTAL spending for Value for money: $3.4B

TOTAL estimate for all spending to the end of 2016:                                                            $36.7 B                                                   

This estimate comes reasonably close to the $35 billion Energy Minister, Glenn Thibeault claimed was spent in his September 13, 2016 press release.

Category: What’s still to come?

The IESO Outlook referenced above indicates we have contracted for additional generation which will be added to the grid in the next 18 months (April 2017 to September 2018) including:

Another 500 MW of wind capacity with an estimated capital cost of                                   $ 1.1 billion

Another 100 MW of solar capacity with an estimated capital cost of                                    $   .3 billion

Another 1,300 MW of gas (assumption is single cycle @ $.75 million/MW) at a cost of $0.9B  

TOTAL for What’s still to come? $2.3B

 Even if one includes the money still to be spent, the total investments (most of them wasted) is shy of the $50 billion Premier Wynne claims has been spent, by $11 B.

We still need to see Minister Thibeault’s accounting, and Premier Wynne’s too, to allow the taxpayers and ratepayers of the province to determine whether all of the spending has provided the value for our tax dollars claimed by the Premier and Energy Minister.

___________

NOTES

*Money spent that created no generation nor improved transmission nor reduced blackouts or brownouts.

**Refers to the intermittent and unreliable nature of wind and solar, which are unable to deliver generation when the wind isn’t blowing and the sun’s not shining.

***Money spent on large hydro infrastructure projects that produce little power but presented great photo-op situations for Ontario Liberal Energy Ministers and even Premiers.

 

 

 

Where did the $50 billion go, Premier Wynne?

He said, she said: we say, where did the money GO? [Photo: Toronto Star]
Last September 13, Minister of Energy Glenn Thibeault issued a press release announcing the  Ontario Liberal government would reduce electricity bills for five million families, farms and small businesses.  The relief granted was equivalent to the 8% provincial portion of the HST. The press release also claimed Ontario had “invested more than $35 billion” in new and refurbished generation.

Fast forward to March 2, 2017 and that $35 billion jumped to $50 billion in a press conference the Premier jointly held with Minister Thibeault. An increase of $15 billion in six months!

The press conference was to inform us the 8% relief announced by Minister Thibeault would be added to, with a further 17% reduction. A Toronto Star op-ed Premier Wynne wrote March 7, 2017 reaffirmed the $50 billion investment claim made the previous week, and further claimed: “By delivering the biggest rate cut in Ontario’s history and holding rate increases to inflation for at least four years, this plan provides an overdue solution.”

That made history alright, but not the way she meant. What the Premier forgot to say was that her government had brought us the biggest rate increases in Ontario’s history.  In March 2011 the Ontario Energy Board (OEB) website shows the average electricity rate was 6.84 cents per kilowatt hour (kWh) and on May 1, 2016 it had increased to 11.1cents/kWh.  In just over five years, the price of the commodity — electricity — increased 62%, a multiple of the inflation rate during that five years, which added about $400 to the average consumer bill.

Electricity price goes down, your bills go UP

From 2010 to 2015 Ontario demand fell by 5 TWh (terawatt hours) to 137 TWh.* That is enough to provide electricity to 550,000 “average” Ontario households for a year, yet the price for residential consumers increased 62%.   The increase was not driven by the trading value via the hourly Ontario electricity price (HOEP) market.  In fact, the market treated Ontario generated electricity badly as it fell from an average of 3.79 cents/kWh in 2010 to 1.66 cents/kWh in value for 2016 —  a 56.2% drop.

As to how they were achieving this “relief,” Wynne and Thibeault told us they were pushing the payback period for the 20-year contracts (wind and solar) out another 10 years. Those generation sources are the principal cause of the increase in electricity prices.  (For further proof of that, read  Scott Luft’s recent analysis on the costs of “other” generation in 2016 which confirms its effect on our rising electricity rates.)

Where did the money go?

What the Wynne/Thibeault announcement means is, ratepayers will pay for the intermittent and unreliable power for their 20-year contracted term(s), and continue to pay for the same contracts which, by that time use equipment that will be heading for, or already in the scrap yard.

It is time for Minister Thibeault to disclose what is behind his claim of $35 billion invested and for Premier Wynne to disclose the details of the $50 billion she says went to “necessary renovations” to rebuild “the system.”

Time to come clean.

* Ontario consumption remained at 137 TWh in 2016.

Premier Wynne’s $50-billion elephant

Do a Google search of “premier wynne+elephant in the room” you get 1,140,000 hits while a search for just “premier wynne” only gets 486,000 hits. The word “elephant” has been used by Ontario’s premier on a number of occasions. For example, the “elephant” popped up at one of the expensive Ontario Liberal Party fundraising dinners a year ago where she declared, referring to the provincial deficit, “So while some want to characterize Ontario’s deficit as the elephant in the room, I think a panda is the more appropriate metaphor,” she said. “Truly, Jia Panpan and Jia Yueyue [visiting pandas at the Toronto Zoo] were adorable. But the pandas are leaving Ontario in 2018, and in 2017-18 our deficit will be gone, too.”

The “elephant” has returned for her government in the form of high electricity prices but instead of cute little “pandas,” Premier Wynne was forced to call them her “mistake”!

Let’s look at that elephant now.

The recent release of Ontario Power Generation (OPG) 2016 annual report provides enough information to allow one to figure out exactly what created the elephantine mistake and where to point the finger.   To do that we will compare the results of 2016 to 2009* and show the cause of the above market climb in electricity prices.

Price Comparison

IESO’s (Independent Electricity System Operator) data discloses the cost of electricity generation in 2009 was 6.22 cents/kWh or $62.20 per megawatt hour (MWh) or $62.2 million/TWh (terawatt hour) and in 2016 was 11.32 cents/kWh or $113.20/MWh or $113.2 million/TWh. The increase from 2009 to 2016 represents a jump of 82% in only seven years and in simple terms, is a jump of 11.7% annually.

Using the above prices to show the full cost of electricity generation in those two years is accomplished by multiplying total generation by the cost per TWh so:

Total generation 2009: 148 TWh X $62.2 MM= $9,205 MM

Total generation 2016: 149.5 TWh X $113.2 million = $16,923 MM

(Source: IESO)

That means an increase of $7,718 million (+83.8%) in the raw cost of the commodity-electricity.

Finding the “mistake”

Why did the cost jump 83.8%?

Let’s start with the generation produced by OPG who, according to their 2009 annual report generated 92.5 TWh and 78.2 TWh in 2016. Bruce Nuclear in 2009 generated 35.7 TWh and in 2016 they generated 46.1 TWh.  Collectively OPG plus Bruce generated 128.2 TWh in 2009 and that represented 86.6% of total generation (148 TWh) by all generators that year.  In 2016 the collective total was 124.3 TWh which represented 83.1% of all generation (149.5 TWh) in that year as reported by IESO.

Costing the generation 

2009

For OPG: The costing of generation coming from OPG is a relatively simple task requiring only their gross revenue for the year divided by the generation they reported.  For 2009 gross revenue was $5,640 million for the 92.5 TWh delivered making the all-in cost $61 million/TWh.

For Bruce Nuclear: The reported price paid to Bruce was $65.90/MWH.   So, for the 35.7 TWh they generated, the gross revenue generated was $2,352 million or $65.9 million /TWh.

The combined costs of $5,640 million from OPG plus the $2,352 million from Bruce was $7,992 billion to produce 128.2 TWh making the combined cost per TWh $62.34 million or 6.23 cents/kWh.

As noted above, total costs for all generation reported by IESO for 2009 was $9,205 million meaning $1,213 million ($9,205 million less OPG/Bruce combined of $7,992 million) was spent to acquire the 19.8 TWh generated by the other private generators, making their costs per TWh $61.3 million or 6.13 cents/kWh.  (Note: 9.8 TWh was generated by OPG’s coal plants in 2009.)

2016

For OPG: As noted above OPG in 2016 generated 78.2 TWh and their gross revenue was $5,653 million making their generation cost per TWh $72.3 million (7.23 cents/kWh).  Included in OPG’s gross revenue was a $207 million payment for hydro spillage of 4.7 TWh due to SPG2. (surplus base-load generation).

For Bruce Nuclear: Bruce in 2016 generated 46.1 TWh at a reported cost of $66 million/TWh making so gross revenue was $3,043 million including the cost of steaming off almost 1 TWh due to SBG.  

The combined costs of $5,653 from OPG plus the $3,043 million from Bruce was $8,696 million to produce 124.3 TWh making the combined cost per TWh $70 million or 7.0 cents/kWh.

Cost of the “other” generation

The all-in costs for generation for 2016 was, as noted above, $16,923 million. If one deducts the combined costs of OPG and Bruce Nuclear for their generation in 2016 ($8,696 million) the balance of $8,227 million went to pay for the 25.2 TWh produced by other generators.   Simply dividing the $8,227 million by the 25.2 TWh creates a cost per TWh of $326.5 million or 32.7 cents/kWh. ***

Had the 25.2 TWh cost ratepayers $70 million/TWh, or the same as the OPG/Bruce Nuclear generation combination (25.2 TWh X $70 million = $1,764 million), Ontario ratepayers would not be on the hook for the $6.9 billion in excess costs! ($8,227 million – $1,764 million= $6,932 million or the very high $326.5 million/TWh)

In just one year’s data, compared to 2009, we have located many of the reasons for higher electricity costs. The Premier now claims $50 billion was needed to invest in transmission and generation but her “mistake” was in not seeing the costs would go up more than 83%, principally related to the acquisition of intermittent, unreliable renewable energy from wind and solar!

There may be even more elephants in this particular room.

 

*The choice of 2009 is related to the Legislative passage of the Green Energy and Green Economy Act (GEA) in the Spring of that year creating the FIT and MicroFIT programs and subsequent acquisition of renewable energy at above market prices.

**Surplus Base-load Generation is simply anticipated “base-load less Ontario demand”.

***The per TWh cost reflects the FIT contracted generation for industrial wind turbines, solar panels, bio-mass along with curtailed wind, conservation spending, the cost of selling our surplus power to other jurisdictions at only 15% of its cost, etc. etc.

Ontario Power Generation report: good news and bad news

Ontario Power Generation (OPG) just released its annual report for the year ended December 31, 2016.

It’s a mix of good and bad news.

For example, gross revenue (net of fuel expenses) increased by $137 million and $34 million of that increase found its way to the bottom line, for a $436 million profit.

Generation from 2015 increased slightly from 78 terawatt hours (TWh) to 78.2 TWh, with nuclear generation increasing by 1.1 TWh and hydro decreasing by .9 TWh, which was further exacerbated (see next paragraph) by spillage due to surplus base-load conditions.

The bad news was that 4.7 TWh of hydro was “spilled” or wasted in 2016, up from 3.7 TWh in 2015. Those wasted 4.7 TWh of power could have supplied more than 500,000 (approximately 11% of all residential ratepayers) average Ontario homes with electricity for the full year.

The spillage by OPG didn’t affect their revenue, however, as they are paid for spillage at an average of about $44/MWh or $44 million/TWh. That means they received $207 million for wasted power and paid the Ontario Ministry of Finance the “water rental” fee for the spillage (although the latter wasn’t disclosed in the report).

Other “good/bad” news indicates OPG sold their Head Office on University Avenue in Toronto with closing scheduled for the second quarter of 2017. They expect the sale will generate an after-tax profit of $200 million.  The bad news is, OPG is obligated to turn over the profit to the Consolidated Revenue Fund. The land, building and maintenance costs fell to the ratepayers of Ontario to pay for via the electricity rates, yet the profit generated on its sale will be tossed into the bottomless pit of the Finance Ministry, instead of going towards reducing OPG’s costs of generation which could have benefited ratepayers.  That $200 million won’t even pay the interest on Ontario’s debt for a week!

SOLD! But the money won’t help you ..

The previous Energy Minister Bob Chiarelli on June 9, 2016 (four days before he was replaced by Glenn Thibeault) also issued a “declaration” to OPG instructing them: “to transfer, sell, dispose of or divest all of the Corporation’s interest in the Lakeview Site, comprised of the Municipal Park Lands and the Uplands”.  The Lakeview site is 67 acres running along the Lake Ontario shoreline and the Municipal Park Lands are the remaining 110 acres of the Lakeview Site.  Any excess revenues associated with the sale is to be transferred to the Government (Consolidated Revenue Fund), again rather than going to reduce electricity rates.

Ontario’s ratepayers absorbed the impairment costs of closing the coal plants in 2003, absorbing a “loss of $576 million as a result of the termination of cash flows from these stations after 2007.” The ratepayers of the province deserve to benefit from any recovery resulting from the write-off of the plant closings!

All this is more evidence of the “shell game” being perpetrated on Ontario ratepayers and taxpayers and the continuing legacy of the McGuinty/Wynne-led governments.

More to come …