While You Were Sleeping, Quebec, Michigan and New York Raided Your Piggy Bank

The IESO reports from Midnight to 7 AM on June 7th indicate over those seven hours they sold off Ontario’s surplus generation* to our neighbours in Quebec (7,178 MWh), Michigan (6,849 MWh) and New York (3,114 MWh) for an average price of $1.25/MWh generating a pitiful $21,426  for those 17,141 MWh.  Ontario’s electricity demand during the bulk of those hours was in the 12,000 MW range which it frequently experiences during nights in the Spring and Fall months.  

As the foregoing suggests we didn’t need any other power beyond what nuclear and hydro can easily provide yet those wind turbine contracts give them “first-to-the-grid” rights and even pay them for curtailed power!

As it turned out, a large part of the 17,141 MWh sold off during those seven hours to our three neighbours were related to how those IWT (industrial wind turbines) were operating! IESO had forecast IWT would generate 13,481 MWh during those hours but they only accepted 8,068 MWh and curtailed 5,413 MWh.

The above exercise meant just the IWT cost was $1,738,740 and coupled with the cost for the other exported generation (9,073 MWh) at an average cost of $116/MWh (the latter includes about $30/MWh paid by Ontario taxpayers) brings the total cost to $2,791,200 or about fifty-three cents for each of the 5.3 million Ontario households.

While 53 cents per household is only 7.6 cents per hour; if it happened for the 8760 annual hours per year it would amount to over $600.00 per Ontario household and be a major hit to the 50% of families who are only $200.00 away from being able to pay their bills!

The time has come for the re-elected Ford led Government to do something about this mess and stop the continued bleeding of our after-tax dollars for this fictional “non-emitting” generation harming those 5.3 million Ontario households.

*Low demand coupled with nightly IWT generation drives down the market price referenced as the HOEP (hourly Ontario energy price) forcing ratepayers to pay for the difference between the contracted price and the market price.

June 4th; Just Another day of Generosity by Ontario ratepayers and taxpayers

Well, once again, Ontario’s electricity generators were producing power we didn’t need. Nevertheless, the ratepayers and taxpayers of Ontario were obliged to give it away to our neighbours in Michigan, Quebec and New York.  This is a regular occurrence during the Spring and Fall seasons as demand is generally at the lowest levels for us but the GEA (Green Energy Act) imposed by the Liberal government during the McGuinty/Wynne years declared wind and solar generation were the future so they gave them contracts with very high rates and “first-to-the-grid” rights!

Ontarians have been paying the price for over a decade and despite the fact Liberals were found guilty of their stupidity on the electricity file and booted out of power, the current and recently reelected Ford led Conservative Party has done nothing to change things over their prior four years of power!

So, Saturday the fourth of June was simply another example of how the mess continues!

Peak demand in Ontario occurred during the 18th hour and peaked at 14,437 MW. Nuclear and hydro alone at that hour generated 14,631 MWh so wind and solar were not needed but those damn contracts stand in the way. At that hour wind was operating at 16.9% of their capacity and they could have peaked at 45% of their capacity at 1 AM but IESO (Independent Electricity System Operator) had them curtail 1,200 MW. 

IESO were busy selling off our surplus power throughout the day to our neighbours and did so with slightly over 24,000 MWh to Michigan, 22,300 MWh to Quebec and about 12,000 MWh to NY!  That power was sold at the astronomical (sarcasm intended) average HOEP (hourly Ontario energy price) of $6.34/MWh.

What the preceding tells us is we are giving Michigan and New York, clean green power to help then keep energy costs low and reduce their emissions. Quebec benefits by not using their hydro generation which they have presold to US States like NY under lucrative contracts.  No benefit for Ontario’s ratepayers or taxpayers as the following outlines!

If we simply assume the approximately 58,000 MWh, we exported earned us only $368,000 (58,000 MWh X $6.34/MWh), we should consider what it cost us!

The mix of electricity sold presumably included wind generation (26,000 MWh including curtailed), solar, hydro, nuclear and perhaps even a little natural gas. The minimum cost was approximately $116/MWh based on the GA (Global Adjustment) estimate by Scott Luft and the 2nd estimate by IESO for May and includes the $30/MWh taxpayer subsidy. Using the $116/MWh the cost of those exports becomes $6,728,000 and including the 4,900 MWh of curtailed wind total costs rise to over $7.3 million.  So, for what cost Ontario ratepayers/taxpayers $7.3 million we received less than $400K.

What the foregoing points out to the politicians in charge is that there is something inherently stupid with the way our electricity system is managed. We changed the political parties once because of the electricity file but the Ford government simply shifted a large part of the costs to the taxpayers so it was hidden from sight.

Perhaps the next election will be focused on the provincial debt and include the costs the Ford led government hid inside our Provincial debt.

If they actually do something to sort out the mess created by the Liberals it could reduce the provincial deficits by $6.9 billion as reported by the FAO of Ontario assuming they can keep electricity costs flat, perhaps by taxing the intermittent and unreliability of that expensive and harmful wind generation.

Only time will tell!

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

Promise Made, Promise Missed by a Country Mile

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ontario Ratepayers Blinked, and Nothing Happened

In a little over four months from today Ontarians will find ourselves having to decide who to vote for in the forthcoming election?  After four years of the Doug Ford led government, we will, no doubt, look back and wonder, do they deserve another term?

Personally, I have been scratching my head and searching for their accomplishments, particularly as it relates to the “electricity” sector where my critical analysis started about a dozen years ago with the assistance of individuals with much better electricity generation insight.  Back when the OPC party sat in opposition their “official critics” of the ministry would often call me seeking input. The current Minister of Energy, MPP Todd Smith occupied that position for about three years and would seek my views. His predecessor, Vic Fedeli, would do the same prior to becoming finance critic.   

When the Doug Ford led OPC party won the last election with a significant majority the Wynne led Ontario Liberal Party became the “minivan” party.   Many of us who supported Ford et al, looked forward to seeing real action from the Ford appointed Energy Minister.  We expected they would change things reversing the electricity price climb that had increased ratepayer costs by well over 100%.

Ford appointed Greg Rickford as Minister of Energy, Mines, Northern Development and Indigenous Affairs and while Rickford may be a competent individual it wasn’t clear he was familiar with the complexities of the energy portfolio! Rickford moved quickly to kill the GEA (Green Energy and Green Economy Act) immediately announcing cancellation of 758 contracts that had not started.  The cancellation would reputedly save ratepayers $790 million but failed to mention it was over the full term of the 20-year contracts. The future savings were less than $40 million annually or about 0.2% of the annual cost of electricity to ratepayers.

Water tax allocation etc,                                                                                             

Rickford could have simply reduced the “water fuel expense” ie: tax, from the $11.2 million per TWh (terawatt hour) paid by OPG to $10 million/TWh and actually saved ratepayers $40 million per annum, but he didn’t! Ratepayers even pay the water tax when OPG is forced to “spill” water because the wind is blowing and/or the sun is shining and the “first to the grid” rights are given to industrial wind turbines (IWT) and solar panels. He could have allocated that cost to the IWT contracts at the very least. Rickford may also have been involved in the retirement of the Hydro One Board along with the CEO Mayo Schmidt, although Premier Ford was seen to take credit for that! That event didn’t save us money.

In my humble opinion the foregoing basically represents the bulk of what Rickford accomplished while Minister of Energy unless one accord’s him the credit for increasing the cost transfer to taxpayers from the 31.2% of my May 29,2018 hydro bill when Wynne was the Premier to 38.5% on my most recent bill.  The foregoing of course only served to increase the future cost to taxpayers who are also ratepayers. The C.D. Howe Institute estimated in their June 15, 2021 report taxpayer subsidies climbed to $6.5 billion for the 2021/2022 fiscal year.  

A mere three days after release of the C. D. Howe report a cabinet shuffle occurred and Premier Ford appointed Todd Smith to what is now labelled simply; The Ministry of Energy.

We will look at Smith’s accomplishments and directions over his first 8 months in the next post so stayed tuned!

Winds Whips Hydro in Ontario or So It Appears

As December 1, 2021 drew to a close at Hour 22 on the IESO “Generators Output and Capability Report” wind generation suddenly passed hydro generation and stayed ahead of it for the following 20 hours, pausing at Hour 19 on December 2nd but passing hydro again for hours 20 and 21.  Over those 23 hours wind (as reported by IESO) reputedly out-produced Ontario’s hydro generation by almost 21,000 MWh.  Based on IESO data it appears about 2,700 MWh of wind generation was also curtailed. What IESO data doesn’t disclose is how much hydro was spilled over those 23 hours.

For wind and solar data IESO report it on three lines by hour; “Available Capacity, Forecast and Output”.  When hydro is “spilled” or nuclear is “steamed off” we won’t see that reported by IESO and are uninformed until financial reports from OPG or Bruce Power are released.  OPG’s 9-month financial report for September 30, 2021 indicates they spilled 1.7 TWh (terawatt hours) due to SBG (surplus baseload generation) to that point in the year.  Hydro spillage is paid for by ratepayers and so far, has added over $100 million to this year’s electricity bill. The 1.7 TWh is equivalent to (approximately) what 250,000 average households would have consumed over those 9 months.

The reasoning by IESO as to whether they will spill hydro or curtail wind (which we also pay for) is reputedly determined by the HOEP (hourly Ontario electricity price). Most contracted IWT (industrial wind turbines) are paid $135/MWh and $120/MWh if curtailed.  IESO in situations that create SBG will sell off the surplus (if the HOEP is high enough) before they spill hydro or steam off nuclear.  It has never been clear to many why the contracts awarded for either IWT or solar panels were granted “first to the grid” rights but both of those intermittent and unreliable generation sources were, so we must pay them even if the generation is unneeded!

A quick look at the costs for those 23 hours  

The 2,700 MWh (approximately) of curtailed wind meant generators were paid $120/MWh costing $324,000. Those same IWT generators were paid $135/MWh for the 98,800 MWh of accepted wind amounting to $13,338,000.  To top off the costs for the 23 hours favouring wind generation, OPG was paid $60/MWh for spilling hydro (minimally estimated at 21,000 MWh) adding $1,260.000 and bringing total costs to $14,922,000 for the 23 hours!                                        

The $14,922,000 represents a cost of $151/MWh for the 98,800 MWh of accepted wind generation but doesn’t include costs associated with the gas plant backups for wind and solar which would add another $3 million or so for the 23 hours nor does it include losses from selling power to our neighbours.

On the latter, IESO were selling off approximately 2,500 MW hourly to our neighbours in Michigan, NY etc. for the HOEP average price of about $30/MWh. Those 60,000 MWh therefore generated about $1.8 million reducing the total cost above to $13,122,000.  If we accept the fact those exports were IWT generated the remaining 38,800 MWh supplying local ratepayers cost $340/MWh.

Had OPG provided those 38,800 MWh the cost would have been $60/MWh ($2.3 million) saving Ontario ratepayers over $12 Million!

One should wonder why the McGuinty/Wynne government blessed those contracts and why the Ford led government has done nothing to fix it?

Events like those 23 hours clearly show wind whips Ontario’s ratepayers not it’s hydro generation!

NB: Over the days of December 1st and 2nd during one of the hours wind was generating almost 93% of its capacity and on another hour was generating only 15% demonstrating its intermittent and unreliable habit!

Open letter to the Honourable Todd Smith, Ontario Minister of Energy

Dear Minister Smith,

Re:  Oneida Battery Park Project

I recently note you sent a letter dated August 27, 2021, to Ms. Lesley Gallinger, President and CEO of the Independent Electricity System Operator (IESO) in respect to the captioned.  The letter instructed IESO to negotiate a “draft” contract with the parties proposing the 250 MW battery storage project.

I was pleased to observe you couched your directive with the following instructions:

I will not consider a directive to the IESO asking it to execute the drafted final contract until:

• National Resources Canada’s determination regarding the $50 million in funding under the Smart Renewables and Electrification Pathways Program is known; and

• The ownership of the project is fully clarified, including the equity participation of both NRStor and Six Nations of the Grand River Development Corp.”

Along the lines of your directive I sincerely hope you are aware of an article I penned January 23, 2021 partially analyzing the project when it was first announced in a press release from the Federal taxpayer owned Canada Infrastructure Bank (CIB).  The press release indicated the CIB would invest $170 million of our hard-earned tax dollars. My article attempted to point out the negative impact the project would have on Ontario ratepayers despite our tax dollars being thrown at the project.  It now appears another $50 million of our tax dollars may be slated to join the $170 million already committed!

The other issue which I would point out is in respect to what recently occurred to a similar project in Southeast Australia.  An article on August 5, 2021 on the CNBC website was headlined: “Tesla Megapack fire highlights issues to be solved for utility ‘big batteries”.  The article noted: “There have been around 40 known fires that have occurred within large-scale, lithium-ion battery energy storage systems,” which should be considered; if this project is allowed to proceed.

What I wish to reiterate to you and IESO is; you must recall the Green Energy and Green Economy Act caused Ontario’s electricity rates to spike by well over 100%.  Projects such as this will add further costs to the system and negatively impact ratepayers including small and medium sized companies.  The effects will be a reduction in employment, drive manufacturers and other businesses elsewhere and create further energy poverty.

The possibility of fires on large-scale lithium-ion battery energy storage systems also cannot be ignored.  A fire such as happened in 40 cases would simply serve to increase emissions as would the mega batteries relatively short life span and their eventual disposal.

I sincerely hope the Ontario Ministry of Energy and IESO will bear the foregoing in mind before any approval is granted to proceed!

Your very truly,

Parker Gallant,

Parker Gallant Energy Perspectives

The Niagara Independent

The captioned on-line news outlet is a great source of truthful news and excellent opinion articles and they reached out to me to seek my blessing to run one of my articles. I ageed and it is posted on their site today. You can find it here:

The Niagara Independent also frequently posts articles by Catherine Swift, former CEO of the CFIB (Canadian Federation of Independent Business). Co-incidently one of her articles was also posted today and is definitely worth a read as it covers a lot of ground. Find it here:

Comparing Ontario Covid-19 Lockdowns in Reducing Electricity Demand

Earlier this year IESO released their 2020 stats and noted Ontario’s electricity demand fell 2.1% (down 2.9 terawatt hours [TWh]) from 2019 or about what 325,000 average households would consume in a year.

In 2020 the first full lockdowns in Ontario started in late March and basically stayed in place until late June/early July when some relief was allowed.  The current year’s lockdown looks very similar!  So, did the 2021 lockdowns result in further consumption reductions compared to the same quarter in 2020?

As it turns out consumption in the current April, May, June quarter saw a jump of 1.4 TWh compared to the same three months of 2020. That 1.4 TWh increase (up 4.7%) represents what 625.000 average Ontario households would consume in three months.  Ontario’s ratepayers consumed 29.724 TWh in the three months of 2020 and in 2021 consumption jumped to 31.130 TWh.

The GA (global adjustment) for 2021 totaled $2.687 billion and adding the average of the HOEP (hourly Ontario energy price) of $15.50/MWh for the three months brings the total cost to Ontario’s ratepayers and taxpayers (taxpayers are now picking up a large portion of the electricity costs) to $3.169,5 billion! The latter total indicates an average cost of approximately 10.2 cents/kWh (kilowatt hour) with the math simply being: $3.169,5 billion divided by consumption of 31.130 TWh.

The GA for 2020 was considerably higher as the Ford government capped the GA at $115/MWh (megawatt hour) due to the concern it would spike, so it totaled $3.825,7 billion and coupled with the average HOEP (average $8.10/MWh for the three months) brought the total cost to $4.066,4 billion.  That means the cost per kWh in 2020 for the same three months looks to be about 13.7 cents/kWh.

So, one should wonder, why the drop in average costs if consumption increased 4.7%?  

Well as it turns out our net exports (exports minus imports) declined 2.9 TWh so in 2021 that decline saved Ontarians about $425 million for those three months as we didn’t have to eat the GA of $115/MWh and the average HOEP (the sale price) was higher (up $7.40/MWh) so in 2021 we got a little more for each MWh we sold.  Additionally, curtailed wind declined by 183K MWh* saving us another $22 million.  I suspect we also didn’t spill as much hydro or steam-off nuclear which would also have reduced 2021 costs but that information is not disclosed as yet.  Less solar generation in 2021 may also have played a role at reducing costs.

It becomes obvious Ontario’s grid; supplied principally with nuclear and hydro supplemented by gas generation would produce lower costs. For all of 2020 nuclear and hydro supplied 94.3% of Ontario demand and cheap and reliable gas easily supplied the balance.  The intermittent and unreliable supply of wind and solar at the exorbitant contracted 20-year rates does nothing to reduce emissions while burdening ratepayers and taxpayers with much higher costs. 

The three-month comparison highlights the mess created by the previous Liberal Government(s) under the leadership of the McGuinty/Wynne terms as Premiers of the Province and their enactment of the Green Energy Act coupled with those contracts signed with wind and solar generators during their time in power.

*Thanks to Scott Luft for tracking industrial wind generation and curtailment monthly.