Should the Pickering nuclear plant be closed? Not based on cost and performance…

Pickering: working at 95% capacity during the heat wave [Photo: OPG]
July 6, 2018

Wind power a failure during recent high demand during heat wave; dependable power needed

I got a call at 11 a.m. on June 25th from the producer of the Scott Thompson show on CHML 900 AM to appear on the show to discuss the suggestion by NDP leader Andrea Horwath about closing the Pickering Nuclear plant.

Essentially it was about her statement during the election campaign indicating the NDP’s position on Pickering:  “we will begin the decommissioning process immediately, which will bring more jobs to the area — as opposed to the Liberal plan, which is to mothball that facility for 30 years and allow the next generation to figure out the decommissioning”.

Doug Ford, leader of the Ontario Progressive Conservatives, on the other hand stated: “The Pickering plant can continue to safely operate until at least 2024. We can generate 14 per cent of Ontario’s power needs right here”.

The producer suggested Scott wanted to explore the opposing issues with me.

Aware I was scheduled to be on his show at 12:35 p.m., and remembering that a Brady Yauch article a few months earlier in the Financial Post had suggested closing Pickering, I felt I should do more research before the call back.  Brady’s principal point was Pickering was a poor performer and the estimated costs ($300 million) of the extension would prove to be negative for ratepayers.

OPG’s website describes Pickering as follows: “Pickering Nuclear has six operating CANDU® (CANadian Deuterium Uranium) reactors. The station has a total output of 3,100 megawatts (MW) which is enough to serve a city of one and a half million people, and about 14 per cent of Ontario’s electricity needs.”.

Pickering Nuclear traces its roots back to 1971 when it first commenced operation with four units and expanded to eight units in 1983.  Two of the first four units have been in voluntary lay-up since 1997.  The CNSC (Canadian Nuclear Safety Commission) awarded OPG’s Pickering and Darlington nuclear stations its highest safety rating in 2017.

Combined, the Pickering and Darlington nuclear stations generated 10.4 TWh (terawatts) of power for the 1st Quarter of 2018 at a combined cost of 7.2 cents/kWh (up from 5.8 cents/kWh in the comparable quarter).  The 10.4 TWh was sufficient to supply the 4.6 million average residential households in the province.

Directing my research to IESO’s hourly Generator Report I was able to discern Pickering at hour 10 of June 25th had just generated 2,308 MWh out of 10,457 MWh produced by all the nuclear plants in the province.  Pickering nuclear represented 22% of nuclear generation at that hour, 15.6% of Ontario demand and 14% of total demand (including exports).   At hour 10, wind turbines were generating 452 MWh or 10% of their capacity versus Pickering nuclear which was operating at about 74.5% of its capacity.

Both nuclear and wind are classified as “base-load” generation!

As it turned out, when I was on Scott’s show the bulk of our chat was related to his prior guest’s discussions about Premier Ford’s cancellation of the “cap and trade” tax.  Only a couple of questions were raised about Pickering which I responded to.

Interestingly enough, now that the Ontario July heat wave has passed, I felt the urge to look at the performance of Pickering and IWT over the seven days when peak demand was high.  Pickering nuclear performed well generating close to 3,000 MWh each and every hour over the period meaning it was operating at over 95% of capacity.  Wind power generation, however was all over the map reaching a high of 2,769 MWh (62% of capacity) at midnight July 1st and a low of 5 MWh (0.11% of capacity) at 10AM on July 4th!

It is obvious that wind fails miserably as “base-load” generation when needed and the relative cost of generating power (sans back-up costs) is over 17 cents/kWh.

It sure looks like we should keep Pickering nuclear operating, as Premier Ford suggested.

Parker Gallant

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Should we rip Ontario’s wind turbines out of the ground?

During the Ontario Progressive Conservative leadership race, candidate Tanya Granic Allen declared “I’m going to rip those turbines out of the ground!”  Many folks in rural communities suffering from health effects caused by those industrial wind turbines (IWT), and people who have trouble paying their electricity bills probably cheered that statement. They might have wondered what doing that would cost.

Let’s ponder that question and try to put a dollar figure on it!

The capital cost of IWT suggested by AWEA (American Wind Energy Association) was approximately US $1.3 million per megawatt (MW) which equates to about CDN $1.7 million/MW. IESO’s recently released 18th month Outlook Report (July 2018 to December 2019) indicates we have 4,400 MW (rounded) installed “grid connected” IWT and 600 MW of “embedded” IWT wind generation.  What that suggests is, the total capital cost of grid and embedded IWTs is in the neighbourhood of $6.5 billion.  In addition, there are outstanding contracts for another 375 MW.

Looking at the current installed capacity of 5,000 MW and a capacity factor of 30% those 5,000 MW should generate 13,140,000 MWh yearly. Now, assuming the average price paid for IWT-generated power is $135/MWh* (megawatt hour), those 5,000 MW would earn annual revenue of approximately $1.8 billion.  Over the 20-year term of the contracts they would result in revenue of about $36 billion.

Because of the unreliability of wind power** it must be backed up with natural gas plants. E.ON Netz Gmbh claimed in a 2005 Wind Report that a “back-up provision of 90% of the wind would be necessary”.  What that means is, the 5,000 MW of IWT require the back-up of 4,500 MW of natural gas plants.  Those gas contracts call for payment when idling in order to amortize the capital costs over the 20-year term of the contracts.  The approximate cost to ratepayers is $10,000/MW of capacity per month.  That back-up annual cost is approximately $600 million and over 20 years $12 billion.

That brings the annual cost of the 5,000 MW of IWT and its back-up of gas plants to about $2.4 billion. Not included in that $2.4 billion are costs for spilled hydro (6 TWh in 2017) or curtailed wind (3.3 TWh in 2017) which were spilled/curtailed due to wind generation presenting itself when unneeded. The latter two add another $650 million to the costs of IWT generation bringing the costs of the 9.2 TWh of IWT generation in 2017 to $3.050 billion. Grid accepted wind in 2017 was 9.2 TWh and gas generation was 5.9 TWh meaning collectively those 15.1 TWh cost ratepayers $202 million per/TWh or 20.2 cents/kWh (kilowatt hour)!

Based on the above, “ripping those turbines out of the ground” would mean spilled hydro alone could replace 65% of the grid accepted IWT generation. The remaining 9.1 TWh (wind + gas) could have been easily supplied by gas generation at a nominal cost of approximately $300 million.   The annual savings would be $1.5 billion without the IWT generation!  What that means is the IWT capital costs ($6.5 billion) could be repaid in under 4.5 years without considering the fact that many of them have depreciated in value since installation.

So, just maybe, this is an idea worth consideration. Rip the turbines out and pay the developers the capital costs, and refinance the monies over five years via our electricity bills.  I would suggest we call it the SDRC (Smitherman Debt Retirement Charge) to recognize the Ontario Minister of Energy who created the Green Energy Act.

The biggest obstacle to ripping the turbines out of the ground is the knowledge the contracts were written in favour of wind developers, not ratepayers. So, you could expect “ripping them out” would result in a myriad of lawsuits seeking full restitution for the remaining terms of the contracts, meaning the developers would seek to be paid the $36 billion noted above.

My recommendations are simple:

  1. Cancel the wind power projects in process (375 MW) awaiting the REA from the MOECC or those being fought before the ERT (Environment Review Tribunal) and the Ontario court system and
  2. Tax the hell out of those already up and running.

Parker Gallant

*The average cost is actually higher as all of the FIT contracts contain escalation clauses allowing for annual increases equal to the cost of living escalation to a maximum of 20% or $27.per MWh.

**IESO’s 18th Month Outlook report forecasts IWT capacity at peak demand periods at only 13.8% and a peer reviewed paper by Marc Brouillette indicates IWT only produce power of value to the grid 35% of the time they are generating power.

Ontario’s electricity export tariff

Special to The PostMedia Network, June 14, 2018

BY PARKER GALLANT, GUEST COLUMNIST

Former Energy Minister Chiarelli and his claim of a $6B profit on surplus electricity exports. “You can verify it.” No, you can’t.

Many will recall Bob Chiarelli, when in the position as Ontario’s Minister of Energy, was questioned on the costs of exporting our surplus electricity on TVO and stated: “since 2008, the province of Ontario – and you can verify it with the IESO – has made a $6 billion profit on the trading of electricity.”

Needless to say Minister Chiarelli was called out by the media and opposition parties for making such a spurious claim.

Let’s look at Ontario’s 2017 electricity exports and see what he would claim about them. The U.S. Energy Administration Information (EIA) in a recent release, had the following information posted from data supplied by Canada’s National Energy Board (NEB):

“Electricity accounts for a small, but locally important, share of bilateral trade. In 2017, the value of U.S. imports of electricity from Canada increased for the second straight year, reaching $2.3 billion*. The United States imported 72 million megawatt hours of electricity from Canada in 2017 and exported 9.9 million megawatt hours, based on data from Canada’s National Energy Board.”

As it turns out, Ontario’s exports of 19.1 million megawatt hours (MWh) in 2017 represents 26.5% of the 72 million MWh reported as exported by the NEB and those 19.1 million MWh generated “revenue” of $496.6 million (approximately) made up of the $15.80/MWh of the yearly average HOEP (hourly Ontario energy price) as reported by IESO and another $10.20/MWh for transmission** costs.

The implied revenue generated represented 16.6%* of total Canadian electricity revenue versus 26.5% of total Canadian electricity exports. The Ontario based generators of that 19.1 TWh of power were paid a yearly average of $115.5 million/TWh (yearly average includes HOEP plus global adjustment based on the IESO’s December 2017 monthly summary.

That means the cost to Ontario ratepayers for exported power was $1,709.5 billion and the credit (net of the monies to Hydro One of $194.8 million for transmission) resulted in Ontario’s ratepayers picking up the missing revenue of $1,507.7. Anyone with a small math knowledge would not refer to that as a profit as it would represent a cost of about $300 per Ontario household.

Export tariff?

The cost to ratepayers of electricity exports in 2017 at over $1.5 billion and prior years played a significant role in driving up electricity rates and represented almost 10% of total generation costs. To put that in current context, Ontario’s ratepayers were slapped with an “export tariff” by our Ontario government of 88% which greatly exceeds the US tariffs recently announced by the US government on Canadian manufactured steel and aluminum.

Getting slapped with only a 10% or 25% tariff would be a net benefit to Ontario’s ratepayers.

*Presumably US dollars so would represent approximately $3 billion CDN dollars at a $1.30/$1.00 exchange rate.

**A large part of these revenues ($194.8 million estimated) went to Hydro One who control about 99% of all transmission in the province.

If I were Ontario’s new Minister of Energy …

 

One initiative: look at why an expensive expansion to hydro isn’t being used

On June 8, after the Ontario election, Ontario’s new premier – whoever that is – will be thinking of selecting a new Minister of Energy. With the challenges in that portfolio, the immediate question for anyone considering accepting the job would be, how can one fix the electricity side of the portfolio after the damage done over the previous 15 years by my predecessors?

Here are a few “fixes” I would take that to try to undo some of the bad decisions of the past, if I were the new energy minister.

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 and may be in the process of a challenge via either the Environmental Review Tribunal) or in the courts.                                 This would save ratepayers an estimated $200 million annually.

Wind turbine noise and environmental non-compliance

Work with the (new) 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 power generation comes at the wrong time of day 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 LDCs 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 .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 unused 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, the former coal plant converted to high-end biomass with a capacity of 165 MW. It would produce power at a reported cost of $1.50/kWh (Auditor General’s report). 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 U.S., 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 Minister’s 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.

Do a quick addition of the numbers and you will see the benefit to the ratepayers of the province would amount to in excess of $2 billion dollars.

Coincidentally, that is approximately even more than the previous government provided via the Fair Hydro Act. 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 could indeed handle the portfolio handed to me by the new Premier of the province.

Parker Gallant

Ontario’s complicated (and expensive) struggle with energy poverty

In a recent article on CBC Sudbury, Wendy Watson, Director of Communications for Greater Sudbury Utilities, was quoted as saying there are 590 customers in Sudbury who could face possible disconnection this spring, compared with just 60 when the ban against power disconnections started in November.

The Energy Minister responded saying, he hoped people having trouble paying their power bills will talk to their hydro utility and look at the numerous programs the government offers to help low-income citizens.

Coincidentally, a recent article in the Financial Post carried dire news: “The proportion of Ontarians living in low-income rose a scandalous 26 per cent from 2003 to 2016. No other province even comes close to performing that badly.” The article also noted “the latest Statistics Canada data show that in 2016, the percentage of Ontarians living in low-income exceeded the national average for the fifth straight year.”

Also in the CBC Sudbury article is an interesting comment from Ferio Pugilese, EVP Customer Care for Hydro One. CBC reported he said the company has worked hard to configure payment plans for customers over the last three years and find ways for them to pay “that fit their lifestyle.” Pugliese also told the CBC that disconnections and the amount owing from outstanding bills to Hydro One are down 60 per cent in the last year.

What Mr. Pugilese says sounds impressive — unless you look at a 29 page report the OEB (Ontario Energy Board) produced for the 2016 year (referenced in an earlier article about “energy poverty”).   The article didn’t specifically highlight Hydro One’s data but, needless to say, it stood out as the “winner” in most categories including: disconnections (up 407% from 2013 to 2016), number of customers in arrears at year-end (8.5% of all their customers or one household out of each 12 on a street), total dollar amounts of arrears (51.7% of all residential ratepayers but only 24.7% of all residential customers), number of arrears payment agreements (55.9% of all arrears payment agreements), total monies owing under arrears payment agreements (75.1% of all) etc., etc.

So, based on the horrendous results reported by Hydro One for 2016 in respect to customers arrears, the question is, how could they have possibly reduced their disconnections and the amounts owing by 60%?

Well, the answer is, Hydro One should send a big thank you to all taxpayers and future ratepayers as many of those arrears were picked up by via the Fair Hydro Plan and by several changes in the allocation of ratepayer costs to taxpayers.

Here are some that significantly benefited Hydro One!

The litany of band-aids                                                                                                                 

First look at an October 19, 2016 press release which states “The Ontario Rebate for Electricity Consumers Act, 2016 will reduce electricity costs by 8 per cent on the amount before tax, an average savings of about $130 annually or $11 each month, for about five million residential consumers, farms and small businesses.” On the “about five million” ratepayers, that $130 annual reduction represented about $650 million in foregone tax revenue and for Hydro One, it was a reduction of around $140 million they didn’t have to bill ratepayers for.

Now the second big benefit for Hydro One is found in another note in that press release: “Eligible rural electricity ratepayers will receive additional relief, decreasing total electricity bills by an average of $540 a year or $45 each month.”

The ratepayers referenced were those under the RRRP (rural or remote rate protection program) which the Energy Minister in his May 11, 2017 press release (announcing the Fair Hydro Act) noted: “Enhance the Rural or Remote Rate Protection (RRRP) program to provide distribution charge relief to about 800,000 customers and shift costs from ratepayers to provincial revenues. This would include customers served by local distribution companies (LDCs) with the highest rates.” That translates to a cost of $670 million and for Hydro One, with over 300,000 of those customers, it represents taxpayer funding of $160 million annually.

The third benefit for Hydro One was the substantial (50%) increase in the OESP (Ontario Electricity Support Program) which will also be funded by taxpayers. When the plan was first launched, the estimate for annual costs was approximately $200 million, so the increase would drive that to $300 million. With Hydro One servicing 25% of Ontario’s five million ratepayers, they would again receive a minimum of $75 million from taxpayers.

Collectively, the above three benefits will result in taxpayer support for Hydro One of $375 million.

Reviewing Hydro One’s 2017 annual report discloses that 54% of “distribution revenue” came from residential ratepayers, which would amount to $2.36 billion. And, the cost of power (CoP) would represent $1.25 billion, meaning Hydro One’s net revenue from those customers was $1.11 billion. If one excludes the foregone sale tax of $140 million, it means Hydro One will annually receive subsidies from taxpayers of $235 million — that’s 19% of their net distribution revenue!

Due to the Green Energy Act, Ontario’s electricity ratepayers have subsidized renewable energy generation for years (principally wind and solar) and now, with the Fair Hydro Act, the government enlisted taxpayers to subsidize the local distribution companies, with Hydro One being the biggest beneficiary.

Knowing the intricacies as described, it is easy to understand why Hydro One’s EVP Mr. Pugilese can make the claim that disconnections and outstanding bills are down 60 per cent. Hydro One is being handed $235 million of taxpayer money, which must have gone a long way to reduce both the disconnections and amounts in arrears.

Parker Gallant

 

*At year-end 2016 Hydro One claimed they had disconnected 14,114 customers and at year end had 96,397 customer accounts in arrears that represented $69.7 million.

In writing these posts, I am an independent observer and commentator on Ontario’s energy sector.

Quarterly stats show wind power blowing Ontario electricity costs higher

A power project that began operating in 2017 … wind power causes waste of other, less expensive sources of clean power due to lucrative contracts

A cold, windy winter cost Ontario electricity consumers. And if the first quarter of 2018 is typical, we’ll pay even more…

The IESO (Independent Electricity System Operator) recently released the March Monthly Summary along with the Generator Output by Fuel Type Monthly Report, so that interested parties can see a year-to-year comparison for the first quarter of 2018 versus 2017.

What the “Generator Output” shows for the first three months of 2018 versus the same period in 2017 is, grid-connected generation output was up by over 600,000 MWh (+1.6%). That suggests the colder than normal winter created increased demand, which it did by just over 700,000 MWh.  As it turned out, gas generation increased year over year by about 750,000 MWh, while Hydro generation decreased by almost 200,000 MWh.

Grid-connected industrial-scale wind turbines (IWT) also generated almost 180,000 MWh* more in the first three months of 2018 versus 2017, and saw curtailed (paid for but not used) generation increase by over 50,000 MWh.

Both of those elements increased costs for ratepayers.

In 2017, the approximate cost of wind power generation in the first quarter, coupled with curtailed generation, was just shy of $532 million. In 2018 it was $30 million higher ($562 million). If the first quarter is typical, the cost to Ontario’s ratepayers for the full year could be over $2.2 billion — just for wind power! (Note the foregoing cost estimate does not include spilled water, steamed off nuclear or the high costs of back-up generation in the form of gas plants standing “at the ready” when the wind isn’t blowing.  On the latter issue a 2017 peer reviewed report by Marc Brouillette for the Council for Clean and Reliable Energy showed wind turbines produce power of value to the grid only 35% of the time.)

To reflect on what the IESO report suggests: even though winter months are considered high demand, the grid-accepted wind power presents 65% of the time when it’s not needed. Wind power, in addition to causing waste of other (clean) sources of power such as spilled hydro, steamed off nuclear, etc., results in the IESO selling surplus power to our neighbours at prices well below the cost of wind power production due to their lucrative contracts.  Proof? Look at the grid-accepted wind power versus Ontario’s net exports.   Grid-accepted wind in the first three months of 2017 was 3.46 terawatts (TWh) and net exports (exports less imports) were 2.92 TWh; the comparable period for 2018 saw grid-accepted wind generation of 3.64 TWh and net exports of 2.86 TWh.  In other words, the wind power, if all exported, was done with only partial recovery of its costs and was excess to actual demand.

That raises the question:

Why did Ontario contract for it in the first place and why was it given “first to the grid” rights? And, why don’t we cancel any outstanding contracts** that haven’t been started if what it generates is surplus?

Paying over $500 million per quarter and as much as $2 billion annually for wind power generation increases energy poverty and sends Ontario’s manufacturing jobs south.

Parker Gallant                                                                                                                                 May 1, 2018

*Thanks to Scott Luft for his data on wind generation and curtailment!

** The government awarded five contracts for almost 300 megawatts of new wind power in 2016, one of which has reached Renewable Energy Approval. The contracts will add $1.3B to Ontario’s electricity costs.

 

Are the executives in Ontario’s electricity sector befuddled?

The light still comes on when we flick the switch, most of the time, but perhaps someone needs to flick the switch in respect to some of the people in charge of the system.

I say that after recent observations of Ontario government bureaucrats. I do not, however, mean to slight  the engineers and power workers who are keeping the lights on.

A few examples…

IESO, its strange contract awards and accounting for surplus generation – Recently, Terry Young, VP of IESO, (“responsibilities include stakeholder and community engagement, communications, regulatory affairs, Indigenous relations, conservation, and other programs necessary for the implementation of effective energy policy”) was called upon by the council for a southwestern Ontario municipality to explain why a huge multi-million-dollar wind power contract had been awarded. The local newspaper, the Chronicle, had an interesting article about his presentation and Q & A session with Dutton-Dunwich council. The municipality of Dutton-Dunwich had held a referendum on wind turbines and 84% of the residents opposed them.

Despite that, Invenergy of Chicago was awarded a contract by IESO; the company had enlisted the support of four First Nations communities from hundreds of kilometers away to boost them in the bid process. Mr. Young was asked why three local First Nations were not approached by Invenergy. When questioned by council on this contract award all Mr. Young would say was, “I’m not here specifically to talk about the project, but I do understand the concerns that you have had”. He did say he would try and get an answer to the question.

In his presentation he noted generating more electricity than needed “has garnered a lot of attention and mostly for the price that is being paid that we export it at less than what’s being paid in Ontario.” He said exporting electricity is one way to “recoup costs.” What he didn’t say was exporting a product that costs ratepayers $135 and receiving say $35 is simply a dumb exercise, but that is basically what IESO does by contracting for industrial wind generation that offers power out of phase with demand 65% of the time, according to a peer-reviewed study doneby Marc Brouillette for the Canadian Coalition for Renewable Energy.

So, the question is: Why hand out additional contracts for intermittent and unreliable power when Ontario is in surplus?

Mr. Young’s answer, as reported: “As of March 2018, the system has an installed capacity to generate 36,945 megawatts. Yet consumption on a normal day runs closer to 29,000 megawatts, Young said. This over-capacity is further complicated because Ontario doesn’t have an efficient way to store power.”

Ontario’s power use in an average day in Ontario and can be easily supplied by a combination of our existing nuclear and hydro capacity (21,481 MW), without any need for wind or solar generation.

Hydro One hands out rate credits in four U.S. states but tell Ontario farmers to conserve –   The planned acquisition of Avista Corporation has senior executives travelling to the western U.S. states speaking to regulators and promising electricity rate credits extending out 10 years. At the same time in Ontario, they are telling local farmers to conserve or get hit with higher rates according to the Farms.com Newsletter.

In the former case, when the acquisition was announced Hydro One’s CEO, Mayo Schmidt claimed the transaction “will be accretive to earnings per share in the mid-single digits in the first full year of operation.” The rate credits offered in Washington State, alone, to Avista’s ratepayers* amounts to $31 million and 3.1% of Avista’s annual revenue. That was obviously put on the table to persuade state regulators to allow the acquisition. (One has to wonder if the “accretive to earnings” claim made by Schmidt was the reason he was given the large increase in his compensation in 2017 by Hydro One’s Board of Directors.)

Meanwhile, were Hydro One staff attempting to reduce Hydro One’s revenue in Ontario? Why else would they contact farmers, telling one of them he had “one year to lower my usage or they will be raising my hydro rates by 35-40%. They were calling me to ‘warn me’ .” Two other farmers advised the Farms Newsletter they received similar calls.

To be clear, any rate increase would require approval by the Ontario Energy Board (OEB) and while Hydro One have several rate increase applications before the OEB, it is doubtful they would seek that kind of an increase, or that the OEB would approve it. The nature of the report resulted in an inquiry by the writer with Hydro One to determine the extent of their tactics to reduce consumption and if this was a pattern!   No response has been forthcoming as yet.

There is also the issue of differing reports on how big Hydro One’s service area is, from its executives, which I previously documented.

Confusion seems to be a current event within Hydro One and transparency has become a forgotten term since they have become a publicly traded company.

We should be concerned at what the executive of both IESO and Hydro One are saying, and doing.

Parker Gallant

April 23, 2018

 

*Jan 2018 all-in us state prices show Washington as 7th lowest with all-i rates at 9.51cents/kwh. https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a