Ontario electricity ratepayers paid up big-time to reduce emissions

The “Ontario Energy Quarterly” is a report containing a myriad of information related to the Ontario electricity sector and seems to be a collective production of the Province, the OEB and IESO.  It includes a chart tracking Ontario’s electricity sector emissions from 2010.  The report always appears six or seven months after the actual reporting date.  Their recent report indicates as of the end of the 2nd Quarter of 2019 Ontario’s emissions had fallen from 20 megatonnes (MT) in 2010 to only 2 MT by June 30, 2019

To put the foregoing in perspective the Ontario Environment Commissioner in 2016 indicated Ontario’s emissions peaked at 208 MT in 2000 and according to the Federal Ministry of the Environment and Climate Change Ontario’s emissions in 2017 had fallen to 158.7 MT.  So, Ontario’s emissions fell 49.3 MT meaning the 18 MT drop in emissions from the electricity sector represented 36.5% of it. At the end of the 2019 2nd Quarter, emissions from the electricity sector represented only 1.25% of total Ontario emissions in 2017 versus 11.5% in 2010 when total Ontario emissions were 174.1 MT.

The above was achieved without a “carbon tax” but it’s been an expensive proposition for ratepayers.

Costs of reducing 18 MT of emissions in the Ontario electricity sector

Many reports and articles related to reduction of emissions in Ontario’s electricity sector suggest wind and solar generation was responsible for eliminating coal generation in Ontario.  Those purveying the claims avoid the facts and fail to mention costs. The decade beginning in 2010 was the advent of above market contracts signed under the GEA for wind and solar that began to appear on our landscape.  Those contracts drove electricity costs up generating unreliable intermittent generation necessitating back-up from gas plants* including the TransCanada Oakville gas plant move which cost $1 billion.

Looking at generation for the past decade (2010-2019) from wind and solar is a relatively simple task as Scott Luft using IESO data, posted generation by source and estimated costs in charts (complete with text) starting with 2008.  He also charts our exports and its revenue over the same time period.

Wind: Let’s start with industrial wind turbine generation which in the ten-year period (2010-2019) resulted in accepted wind of 83.3 TWh and 10.5 TWh of curtailed wind.  The combined cost of the generation and curtailment was $12.760 billion representing an average cost per kWh of 15.32 cents.

Solar: Over the decade solar panels generated 21,9 TWh with most generation delivered to local distribution companies.  The costs of those 21.9 TWh was $10.504 billion or 48 cents/kWh.

Spilling water: As if to make matters worse, as Ontarians reduced their demand for electricity dropping it from 139 TWh in 2010 to 135.1 TWh in 2019 the generation coming from wind and solar created numerous situations causing SBG (surplus baseload generation) and IESO instructed OPG and other hydro generators to spill water rather than generate clean hydro power.  Once again Scott Luft has summarized available data and estimated the cost of the SBG for just OPG over the past five years. The cost was almost $500 million and was billed to ratepayers.

If one accepts the premise, wind and solar are responsible for the 18 MT reduction, then one must accept the emission reduction represented a cost to Ontario ratepayers of $23.764 billion including the $500 million from hydro spillage. That translates to an emission reduction cost of $1,320/tonne, well above the current carbon tax of $20/tonne and the one proposed by the Ecofiscal Commission of $210/tonne.

Exports: Over the past 10 years, IESO were busy selling our surplus power to NY, Michigan and other provinces and states.  In total, 182 TWh went south, east and west to our neighbours for the market price (HOEP).  Funds lost from those sales (net of transmission costs recovered) were the GA (Global Adjustment) costs of almost $12.5 billion or 6.8 cents/kWh.

It is worth noting; exports of 182 TWh were 173% of the 105.2 TWh of accepted wind and solar generation so, exporting less could have saved us that loss of $12.5 billion.

The foregoing clearly demonstrates the 83.3 TWh wind generated plus the 21.9 TWh solar generated power over the past 10 years wasn’t needed to reduce emissions in Ontario’s electricity sector!  We needed less intermittent unreliable generation as our nuclear and hydro generation (supported by less gas plant capacity) could have supplied our needs and we could still have exported 76.8 TWh.

Ontario Premier Doug Ford should demand the federal government recognize the above “facts” and reimburse the province’s ratepayers by either issuing 182 million tradeable “carbon credits” or pay the province the $23.7 billion we have paid to reduce our emissions. Either one would prove beneficial and when applied to the sector would serve to reduce Ontario’s electricity rates making the province more competitive, thereby improving our economic future.

Failing the above we residential ratepayers should all be looking forward to receipt of our rebate cheque even its only 90% of the $1,320 per tonne we have paid over the past 10 years!

*Gas plants generated 160.6 TWh from 2010 to 2019 at an estimated cost of $19.726 billion or about 12.3 cents/kW.

 

Ontario’s three Classes of electricity ratepayers

The title above is intentionally misleading.

Ontario has only two classes of ratepayers which are: large industrial users referred to as, Class A and the rest as simply Class B!

Class A’s do have sub-categories related to their peak demands and in order to obtain lower rates, they must pick the “high five” hours of the year when Ontario’s demand reaches its highest level(s).  Picking those hours and reducing their demand (by firing up a diesel generator) allows them to achieve significant savings. Reference to IESO’s report for 2019 detailing Class A consumption and the cost of the GA allocated, indicates the average cost of the GA (Global Adjustment) was 5.89 cents/kwh. That GA cost plus the average HOEP of 1.83 cents/kWh for 2019 produced an average cost of electricity for Class A ratepayers of 7.72 cents/kWh.  The substantial all-in lower cost of electricity for Class A ratepayers is due to the allocation (subsidy) of the GA costs being charged to Class B ratepayers.

The Ontario Liberal Party during its time in power piled up electricity costs by signing contracts well above market rates for intermittent and unreliable power from wind and solar which needed back-up power from gas plants.  The combination of the three sources of power drove rates up resulting in large industrial customers making the point: Ontario’s cost of electricity made them uncompetitive.  The result was the Liberals simply reallocated costs to residential and small/medium sized companies.

The all-in Class B rate (GA plus HOEP) for 2019 was 12.63 cents/kWh.

Recently, not all Class B ratepayers had to pay the foregoing average rate, as “residential ratepayers” * now receive a taxpayer subsidy, appearing on our electricity bills as the “Ontario Electricity Rebate”.   A “rebate” of 25% off of the electricity line on our bills was initially referenced as the “Fair Hydro Plan” and enacted by the Wynne led government mere months prior to the last provincial election.  The Liberal government, under Wynne, noted voters were extremely upset with electricity rates climbing by over 100% in just several years. They felt it would affect the outcome of the election without the rebate.  Despite the rebate Ontario’s Liberal Party felt the wrath of the electorate and lost party status.  The Ford government moved the rebate to taxpayers and added other allocations such as:  conservation spending ($400 million annually), low income support programs ($200 million annually), Northern Ontario tax credit ($120 million annually) etc. to the taxpayer pot.  As a result (based on the writer’s calculation) taxpayers are now picking up almost 40% of the GA allocated costs for residential ratepayers under the “Electricity Cost Relief Program” recently estimated to cost $5.5 billion.

Second class, Class B ratepayers

The small and medium sized businesses** in Ontario are still bearing the full brunt of the increased electricity costs as they get no relief.  They are treated as second class citizens of Class B which are already regarded as second class citizens by our electricity operator. A significant factor affecting them is related to Ontario’s time-of use rates with the highest costs (20.8 cents/kWh during On-Peak hours) applied to when most small/medium sized businesses are operating and consuming electricity.

A recent occurrence allowed me to review an electricity bill for a company with just under 100 employees.  Their electricity costs were 18.9 cents/kWh.  A comparable company operating in the USA would pay (average of all US states) 10.8 cents/kWh according to the US Energy Information Administration.  The net difference of 8.1 cents/kWh would have saved the company almost $200,000 annually which may have resulted in the hiring of additional staff.  Those employees would have produced additional taxes for the Provincial and Federal coffers.

Bear in mind this is only one of the hundreds of thousands of small/medium sized businesses in Ontario.  Imagine what would have happened if we had not contracted at those above market rates for the intermittent and expensive power generated by those many foreign wind and solar generators that rushed to Ontario to take our hard-earned dollars.

The time has come to treat Ontario’s largest employers with the respect they deserve by axing the Global Adjustment and the time-of-use pricing mechanism!

We should surmise those small/medium sized companies are not in favour of subsidizing large industrial complexes or those greenhouse operators producing marijuana!  Let’s level the playing field!

*Full disclosure! I calculated my average electricity line cost from my recent bill (adjusted for the “Electricity Cost Relief Program”) and it worked out to 9.11 cents/kWh

**The CFIB in a 2016 report stated Ontario had 1.4 million small/medium sized businesses.

IESO and their colourful 2019 Year-end Data

IESO, the Independent Electricity System Operator, finally released the data for 2019 related to generation, consumption and costs for electricity in Ontario within the TX (transmission connected) grid. Unless one understands how the system operates (along with basic math knowledge) you would be inclined to think—wow, we are so lucky to have such an awesome institution managing our electricity system.  A good amount of the dialogue in the report seems meant to tell the reader how well IESO managed the system during a few erratic weather days when clouds suddenly blocked the sun and the wind either dropped or increased substantially without warning.

When you dive a little deeper into the data, you realize rates climbed again for Class B customers, be they residential, or small/medium sized businesses.

Those rates climbed despite Class B ratepayers reducing their consumption* from 101.0 TWh (terawatt hours) in 2018 to 98.4 TWh in 2019 for a decrease of 2.6 TWh (about what 300,000 average households consume annually) or 2.6%.

The 98.4 TWh in 2019, cost Class B ratepayers** $12,425.6 million versus $11,616.7 million in 2018 for the 101 TWh Class B ratepayers consumed.  The $808.9 million in additional costs (up 6.9%) added 9.8% (1.13 cents/kWh) to electricity costs for Class B ratepayers bills but IESO’s rhetoric skips over that data!

As a coincidence (?) to the $808.9 million increase; IESO’s diatribe under the heading “Other 2019 Highlights” claims: “The Market Renewal Program business case confirmed a $800 million net benefits over ten years.”  A quick math calculation suggests the annual savings of the “Program” was/is $80 million annually versus the costs for the one-year jump Class B ratepayers experienced.  The 10 year savings IESO’s brags about were blown away in only one year.

So, what caused the $808.9 Million jump?                                                                                     A goodly portion of the additional costs were a result of recovering less on sales of surplus generation to our neighbours in NY, Michigan and elsewhere.  When we export our electricity, we are only able to recover the HOEP (hourly Ontario energy price) as it Is market driven!  The HOEP for 2019 was 1.83 cents/kWh versus 2.43 cents/kWh in 2018 so we recovered less despite exporting more. The 19.779 TWh (about what 2.2 million average Ontario household consume annually) we exported, cost us about $333 million more to generate than last year’s exports. Those costs were included in the Global Adjustment which increased to 10.8 cents/kWh or $108 million per TWh.  The balance of the increase ($477 million) was principally related to the OEB (Ontario Energy Board) approving substantial rate increases for Bruce Power and OPG’s nuclear generation and refurbishment.  Scott Luft has done a great job of focusing on what was behind that big jump in a recent post.

IESO should do some real planning producing results that actually reduce rates!

*IESO in the report under the heading: “Energy-Efficiency Savings” brag about their Save on Energy programs which have reputedly contributed “to overall savings of 7.4 TWh since 2015”                          

**A large portion of costs to Class B “residential” ratepayers ONLY is now paid by taxpayers via the “Electricity Cost Relief Programs” and will total $5.5 billion for the current year. Unfortunately, small and medium sized businesses in the province are paying the full costs causing many to raise their prices and/or move their businesses to other jurisdictions.

Knighthood within the Eco-royalty

The latest issue of the magazine, Corporate Knights is, as always, about clean capitalism and the latest issue does not deviate from that theme.  No matter which article you read it’s all about “climate change” and reducing emissions.  The magazine is published quarterly and distributed by the Globe and Mail and Washington Post.  Advertising dollars seem to come from those companies endorsed via their “rankings”. This issue contains a “Global 100 Progress Report” and many on that list have placed ads.

An article in this issue was written by Gideon Forman an analyst with the David Suzuki Foundation. For over 11 years Forman was Executive Director of CAPE (Canadian Association of Physicians for the Environment).  CAPE was and still is a relatively small charity with annual revenue of $386K (June 30, 2019 CRA filing) and received $107K of that from the Federal government. Nevertheless they claim many victories including phasing out coal plants, cosmetics pesticides, etc., etc. The David Suzuki Foundation on the other hand in their CRA filing for 2018 show revenue of $11.7 million and spent $1.8 million of those revenues on fundraising activities.

Forman’s article in Corporate Knights is titled “The man of wind, water and sun” and is a fawning article about Brian Iler, a lawyer who appears to reside on the Toronto Islands. Iler is an environmentalist and the article notes he “has been the creative legal mind behind a host of cutting-edge renewable energy projects, social ventures and co-ops that have challenged received wisdom.” The article goes on to note Iler was “the go-to counsel for Ontario’s cooperative sector,” and he “received a call from an engineer who wanted to erect wind turbines in Toronto. That was the start of the development of the iconic TREC wind turbine* at Exhibition Place now owned by Toronto Hydro. Finding a location for the wind turbine was difficult “until a naturalists’ group proposed Exhibition Place, but the zoning didn’t work.” A city official suggested; “Call it an amusement device” and “That’s what appeared on the building permit.”

Iler in April 2013 wrote an article about industrial wind turbines and in it he claimed “Scientists agree that the noise emitted by wind turbines ‑- the chief source of alleged health effects -‑ is basically indistinguishable from normal background sounds we experience in everyday life, whether we live in an urban or rural area.”

While Iler made the foregoing claim about wind turbines he was very upset about other noises and for several years fought against the Island Airport due to the “intolerable” noise.   An article in The Bulletin Iler penned June 6, 2018 stated: “That airport is a legacy heavy industrial use, completely out of step with the dominant recreational and residential character of our waterfront today.”  Iler was castigated in a letter from the CEO of Ports Toronto who, in his letter to Mr. Iler stated: “You are in fact the founding Chair of an organization dedicated to the airport’s closure, a position I might note that is clearly out of step with the sentiment of the vast majority of Toronto residents.”

The airport closes at 11 PM so one assumes the noise ceases at that time. Perhaps if Mr. Iler spent a few windy nights 500 metres from a 500 foot high wind turbine, he might not think of them as “an amusement device”!

Another part of the article commends Iler stating; “Iler is an expert on innovative funding models. Thanks in part to his efforts, Ontario has become a hotspot for renewable-energy-based community bonds, including SolarShare (a co-op that floats bonds to finance sun-powered arrays throughout Ontario) and ZooShare (a biogas co-operative).  Both of the foregoing have negatively impacted ratepayers and taxpayers in Ontario.

Ilier himself claims he played a major role in convincing the McGuinty led Ontario Liberal government to enact the GEA (Green Energy and Green Economy Act) in his biography (posted on his firms website).  He and other self-appointed luminaries such as Bruce Lourie, Marion Fraser, etc. were members of both OSEA and/or the GEAA (Green Energy Act Alliance) who convinced former Energy Minister and Deputy Premier, George Smitherman, to push the GEA through the provincial legislature.  Ratepayers of the Province have been paying the price of that “Act” since its enactment!

While Corporate Knights and environmentalists of the Gideon Forman ilk want to crown themselves and others such as Brian Iler; it is the ratepayers/taxpayers of Ontario who continue to suffer the consequences!

Perhaps it’s time for those who self-label themselves as knights to recognize they are charlatans.

NB: A contact of the writer disclosed the following suggesting another fact was untrue!

“The OPA called out Exhibition Place for claiming the wind turbine was the source of energy for charging their electric golf cart type vehicles. In fact, both turbine and charging stations were connected to the grid with separate accounts. As I recall, this was likely because the kWh payment for power delivered to the grid was higher than their kWh cost for the charging. Our point was that their claim about the wind turbine charging the golf carts was misleading to the public who might consider something similar.”

NBB: The Exhibition Place turbine was also created for the purpose on indoctrinating our children as this excerpt from a  August 28, 2012 indicates: “The Exhibition Place wind turbine doubles as the linchpin of a large-scale education program. In the 2008/2009 school year TREC reached more than 4,000 grade 5, 7 and 9 students.”

*The Trec Co-op Exhibition Place wind turbine is an abysmal economic failure as noted in an article penned in July 2014.

CanWEA’s “White Paper” opens doors to lower rates

Shortly after CanWEA’s President, Robert Hornung lamented about the Ontario governments cancellation of an industrial wind turbine project a post on their blog raved about a recently released whitepaper* titled “Wind Energy and the Ontario Market”. The paper was prepared specifically for the Canadian Wind Energy Association by Power Advisory LLC. The latter is the employer of Jason Chee-Aloy, former Director, Generation Procurement with the OPA (Ontario Power Authority), a McGuinty creation that has merged with IESO. One should assume Mr. Chee-Aloy played a significant role in contracting the many wind and solar projects by the OPA spread throughout the province and was probably the author of the “whitepaper”!  He presumably knows his way around the contracts he instigated.

The 45 page “paper” is sprinkled liberally with acronyms including one labelled “EAs” or environmental attributes and notes: “Within nearly all IESO contracts, the IESO retains ownership of all EAs, or similar non-emitting products, produced by generators under these contracts.  This is definitely the case for all wind generators under IESO contracts, no matter the contract type or vintage.”

While ratepayers would disagree with many recommendations in the paper the ones related to the foregoing suggesting IESO monetize those EAs has merit as noted in Recommendation # 6:

The wind energy industry should work with the IESO and other contract counterparty generators to explore monetizing associated EAs/RECs, where the revenues from the sale of EAs/RECs would be shared between these generators and the IESO.  The IESO could then credit all Ontario electricity customers with these revenues helping to lower electricity costs for them.”

No doubt, most ratepayers in the province would agree if we can monetize those EAs lets’ do it; BUT there is no need to share any revenue generated with the operators as they already receive well above market rates from those contracts that drove up electricity costs.

The monetization process would result in the issuance of “renewable energy certificates” (RECs) which could be sold by IESO in the carbon/emissions trading market and all revenues could be applied by them to reduce ratepayers’ monthly bills.

While we’re at it let’s do the same for solar, biomass, hydro and nuclear generation which are all deemed “emissions free”!

If the existing wind contracts can’t be cancelled let IESO at least be directed to generate revenue for the benefit of all ratepayers without sharing any of the revenue with the generators.

The other benefit that may well occur is the ability for the Ford led government to argue against the carbon tax imposed by the Federal Government in the upcoming Surpreme Court appeal.

This could turn into a big win for Ontario’s ratepayers and taxpayers!

*The term “white papers” originated in England as government-issued documents. One famous example is the Churchill White Paper, commissioned by Winston Churchill in 1922. Today, the term is most commonly applied to “deep dive” style publications.

Ontario ratepayers and taxpayers pay up for Hydro One’s Niagara transmission line

The 76-kilometre Niagara transmission line, meant to strengthen power ties between New York State and Ontario, with a capacity to import/export as much as 800 megawatts of electricity has finally been completed.

Recently, information submitted to the OEB (EB-2018-0275) in a rate application stated: “The Project was originally approved by the Ontario Energy Board on July 8, 2005 pursuant to EB-2004-0476 but construction was halted in 2006 until earlier this year due to a third-party land dispute.

The Niagara transmission line was finally completed August 30, 2019, or over 14 years after construction started. It’s been a long road!

The decision and order from the OEB blessed the application (they generally do for Hydro One) noting; “Niagara Reinforcement Limited Partnership’s (NRLP) interim 2020 revenue requirement request of $9,389,914 is approved.”

The approval for NRLP rather than Hydro One is a reflection of well over a decade of negotiations to satisfy the Six Nations of the Grand River and, the Mississaugas of the Credit First Nation.  Contained in a note in the 3rd Quarter financial results of Hydro One, indicates a portion of the Niagara line was sold to them in the entity now referenced as NRLP. The pertinent part of the audit note stated:  “Hydro One Networks sold to the Six Nations of the Grand River Development Corporation and, through a trust, to the Mississaugas of the Credit First Nation a 25.0% and 0.1% equity interest in NRLP partnership units, respectively, for total consideration of $12 million, representing the fair value of the equity interest acquired.”  The Mississaugas also hold an option to purchase another 20%. NRLP was created for the sole purpose of allowing that to happen.

On November 5, 2015 an article headlined “Powerline to nowhere” on CTV, noted the cost of the line to that point was $100 million plus $54.5 million in interest payments (including $5 million in interest payments for 2016).  If one adds another $10 million in interest payments for 2017 and 2018 it appears the total cost of the Niagara line was in the neighbourhood of $165 million at a minimum.  In NRLP’s submission to the OEB the actual costs of the line were claimed to be $120 million, but it’s unclear if that included any interest. Either way the cost of the line was north of $165 million yet 25% of it was sold for $12 million which seems like a pretty good deal.  Details on the Mississaugas option were not disclosed.

It should be noted Hydro One had to seek an injunction in July 2019, after repeated attempts were made to block work on the transmission project.  They stated; “Work stopped again in January when members of the Haudenosaunee Confederacy Chiefs Council (HCCC) blocked access to the construction sites and issued a “cease and desist” order.  The CBC reported; “Hydro One’s statement of claim says the defendants “have a long history of organizing blockades, causing public disruption, breaching court orders” and interfering with land development and utilities as a tactic to negotiate compensation and other benefits to members of the Confederacy.”  The article also said: “The Six Nations and Mississaugas will have 45 per cent ownership* of the project, said Hydro One, and the project will create jobs and economic benefits.”  The injunction was granted by the judge in that appeal and as noted the line was completed August 30, 2019

The estimated cost of the line (north of $165 million) mentioned above has now been passed on to Ontario ratepayers via the OEB decision.  There were lots of other costs picked up by taxpayers in Ontario** and the rest of Canada as suggested in the partial list of material contained in the Chronology of Events at Caledonia in the former Federal Indigenous and Northern Affairs Canada Ministry website suggesting the other activities associated with the happenings in Caledonia also may have cost the Canadian taxpayers as much or more than the $165 million associated with the Niagara transmission line but that is for someone else to determine.

Conclusion

Perhaps we in Ontario should be grateful for the delay in completing the transmission line as it prevented the sale of even more of our surplus power from wind and solar etc. to New York for pennies on the dollar. The delay may have accidentally saved us ratepayers hundreds of millions of dollars due to the 14 years it took to complete.

*Acquisition details related to the Mississaugas’ 20% purchase option are not available but are believed to expire quickly.

** The Ontario government agreed to pay $20 million to residents and business owners of Caledonia who suffered through the native protest at a housing development in Caledonia.

November 2019 a reflection on the cost of reducing emissions in Ontario’s electricity system

IESO finally released the November 2019 Monthly Market Report in early January and compared with November 2018 overall costs (GA + HOEP) for Class B ratepayers was down slightly from $123.69/MWh to $120.54MWh (12 cents/kWh) or 2.8%. Falling exports of 975,600 MWh (down by 151,200 MWh or 13.4%) from 2018 resulted in Ontario experiencing a drop in overall costs despite the GA being slightly higher (98 cents/MWh) in 2019*.  The drop in exports resulted in ratepayer costs of $97.1 million versus $111 million in November 2018. Ontario ratepayers are obliged to pick up the GA costs**.

Intrigued by the marginal good news for November 2019 and the arrival of 2020, nostalgia overtook my brain waves!  A decade ago, I started my quest to explore the electricity sector in Ontario. My quest coincided with a high electricity bill and the passage of the Green Energy and Green Economy Act (GEA) in 2009.  The GEA passage led to the OPA (Ontario Power Authority) receiving directives from various Energy Ministers in the McGuinty/Wynne led Liberal provincial governments telling the bureaucratic experts how to run the system.  It was meant to signal the world; Ontario was a beacon in emission reductions.1 The ministerial directives were aimed at contracting for renewable energy (principally in the form of industrial wind turbines [IWT] and solar panels) and closing two coal power plants.  Due to above market rates offered to (mainly foreign) companies and the lack of a cost/benefit analysis rates skyrocketed as projects were commissioned.  The consequence of creating the highest electricity rates in Canada and the US resulted in total defeat of the Ontario Liberal Party in 2018.

Based on the “nostalgia” it is perhaps worth going back a decade to November 2009 and compare it with the one just passed.

All-in Generation Costs for November 2009:

The IESO Monthly Market Report for November 2009 indicated the weather over the month was warmer than normal whereas in November 2019 is was colder than normal and as one might expect the latter resulted in higher Ontario demand coming in at a daily average of 375,178 MWh versus 370,578 MWh in 2009.  The extra 138,000 MWh we consumed in 2019 would translate into higher costs even if the cost of generation had remained the same. The weighed average cost (GA +HOEP) for November 2009 was $68.39 MWh so the additional 138,000 MWh Ontario ratepayers consumed should have added approximately $9.4 million.  It is worth noting back in 2009 there was only one ratepayer class so the $9.4 million would have added 84 cents for each additional MWh consumed. The average household back then was consuming 800 kWh monthly.  The total consumption of 11.117 TWh (terawatt hours) by Ontario ratepayers in November 2009 had a cost of $760.4 million.

All-in Generation Costs for November 2019:

 So, ten years later in November 2019 the 11.255 TWh consumed by Ontario ratepayers cost considerably more than the $760.4 million suggested above.  The weighted average cost for this recent November came in at $120.24 for Class B ratepayers; an increase of $51.85/MWh or 75.8% for the 8.106 TWh they consumed.  For Class A ratepayers the ten-year increase was only $3.59/MWh or 5.2% for the 3.384 TWh they consumed.  Putting the foregoing in perspective if Class B ratepayers consumed 8.106 TWh in 2009 the cost would have been $554.4 million and in 2019 it was $974.7 million or $420.3 million more for just November!   For Class A ratepayers the increase would have been a much lower amount of only $12.1 million costing them $243.6 million versus $231.4 in 2009.

As one can deduce from the foregoing the $760.4 million all-in costs for one month of electricity generation in 2009 jumped to $1.218 billion (up $457.9 million) in the decade.  The jump of $457.9 million impacted Class B ratepayers (residential and small and medium sized businesses) to a much greater extent than Class A businesses and is only representative of one month.

What caused the jump?

The increased costs drove our average rate of 6.84 cents/kWh in November 2009 to 12.02 cents/kWh (UP 75.7%) in November 2019.  That increase is about four times the inflation rate and there are several reasons for the jump in costs.

One of the major causes of the increase was the addition of industrial wind generation and solar to our grid(s) over the decade.  Their intermittent and unreliable ability to generate electricity when needed meant back-up capacity (principally gas plants including the $1 billion to move two of them) was required. To top things off the intermittency of wind generation caused the market price (HOEP) to fall and the GA to increase.  The GA is not included in the sale of surplus electricity to our neighbours so we earn less for our exports to NY, Michigan, etc. but Ontario ratepayers must absorb the difference (the GA) in the contracted value and the HOEP market price.

A rough calculation of the additional losses on our exports in November 2019 versus November 2009 indicate it represents about $68 million of added costs.  Thanks to Scott Luft’s wind generation and curtailment files I was also able to calculate IWT generation costs which increased considerably from November 2009 adding $178 million to the increase. Those two additional costs of about $246 million represent about 54% of the $457.9 million increase. The balance of increased costs can be attributed to payment for additions in; solar generation, gas plants (idling costs), biomass, and some of OPG’s expenditures on Big Becky ($1.5 billion) and the Lower Mattagami ($2.6 billion) hydro projects.

If November’s comparison becomes a measure of how the GEA harmed our electricity sector by driving our electricity rates up almost 76% in the last decade we will be looking at total additional costs of around $5.5 billion in 2019 versus 2009. The $457.9 million is but one month of comparison out of the 120 months since the start of 2009 so the final number for the decade will probably be in the tens of billions of dollars to achieve those emission reductions sought by the governing Ontario Liberals.

*The GA or Global Adjustment rate for Class B ratepayers has been higher in 10 of 11 months in 2019 compared to 2018.                                                                                                    **Exports are sold at the HOEP (hourly Ontario electricity price) price via the market to traders who buy/sell our surplus energy to Michigan, New York, Quebec and other grid connected markets.

  1. The Ontario Energy Quarterly shows our CO2 emissions fell from 20 megatonnes at the start of 2010 to 2 megatonnes at the end of the 2019 second quarter.