Why ‘down’ is actually ‘up’ in topsy-turvy Ontario
Last month, the Independent Electricity System Operator (IESO) released the grid-connected 2018 Electricity Data. Under the “Price” heading the IESO said this: “The total cost of power for Class B consumers, representing the combined effect of the HOEP [2.43 cents/kWh] and the GA [9.07cents/kWh] was 11.50 cents/kWh”.
In 2017, that combined price was 11.55 cents/kWh, so there has been a slight decline. That slight decline represents an annual savings to the average household consuming 9,000 kWh per annum of—wait for it—$5.00.
If Bob Chiarelli was still Minister of Energy, he would probably suggest you could now purchase two “Timmies” with that much money!
The price drop isn’t very much but, the question is, how or why did the average price drop?
Ontario’s overall consumption in 2018 increased from 2017 by 5.3 TWh (terawatt hours) or 4%. In 2017 the IESO reported grid-connected consumption was 132.1 TWh and in 2017 it increased to 137.4 TWh. This is increase is a “good thing.” Here’s why:
Curtailed (paid for but not used) wind power fell by 1.207 TWh, which saved around $145 million!
Nuclear maneuvers (steam-off) or shutdowns declined by 791 GWh (gigawatt hours) and saved approximately $60 million.
Net exports (exports less imports) also fell by 2.318 TWh and, combined with the higher HOEP average for the year, saved ratepayers approximately $320 million.
Foregone hydro generation was probably lower as the first three quarters reported by OPG show it dropped from 4.5 TWh to 2.4 TWh (down 2.1 TWh). That saved around $90 million.
Taken together, that $615 million ratepayers had to absorb in 2017 comes to much more than Class B residential ratepayers benefited in 2018. There are only 4,665,000 of them so total net savings was only about $25 million.* Other Class B ratepayers presumably received some very minor benefits, too.
The reason these benefits were not more is because additional costs were levied in 2018, absorbing most of the remaining $590 million. The Ontario Energy Board approved large rate increases for OPG for the regulated hydro and nuclear generation segments. The rates for the latter rose substantially and will also increase further in 2019 and 2020 before falling back in 2021 as the OEB used their power to attempt to “smooth” the nuclear refurbishment costs over several years.
Despite the fact that increased consumption in 2018 helped to, ever so slightly, reduce costs, the IESO continued their efforts to get us to reduce consumption by spending upwards of $350 million on conservation programs.
The small price drop for Class B ratepayers turns the economic law of “supply and demand” which is: increased demand will increase prices. Somehow that law works in reverse in Ontario’s electricity sector!
Enjoy your two extra “Timmies” this year!
*These savings have nothing to do with the 25% reduction under the Fair Hydro Act which eliminated the 8% provincial portion of the HST and provides a 17% reduction for residential ratepayers. The FHA amortized assets over a longer timeframe than normal in the rest of the electricity generation world.
People in Ontario have seen some of this before … it didn’t end well
Part one in this series dealt with the creation of the Ecofiscal Commission and had a short review of its commissioners (economists), advisors and funders. Part Two looked at the Chris Ragan/TVO interview with Steve Paikin and several of the claims made by Mr. Ragan, Chair of the Commission.
Today, I deal with the significant influence the Ecofiscal Commission and its economists/commissioners have had in respect to the Pan-Canadian Framework and various government documents created in support of “pricing carbon pollution”. The Pan-Canadian Framework gives special mention to “Canada’s Ecofiscal Commission” in a call-out on page 7: “Carbon pricing is the most practical and cost‑effective way to lower GHG emissions while encouraging low‑carbon innovation — Canada’s Ecofiscal Commission”. The only other non-government credit handed out is to the World Bank. That alone speaks volumes about Ecofiscal’s influence!
Chris Ragan’s influence was obvious in his appearance at the Standing Committee on Environment and Sustainable Development November 1, 2018 where he dazzled them! In his presentation he suggested: “The proposed federal backstop is also a quite well-designed policy,” and went on to say: “there are two main challenges that you need to address. One is the impact on business competitiveness. The second is the impact on household purchasing power.” He also claimed “you can however, design policies in a way that address those challenges head-on” and “This is the output-based pricing element of the federal backstop”.
(Mr. Ragan’s views on this echo what Ontarians were told when the Green Energy and Economy Act was presented. Consumers, both residential and businesses, would become innovative in order to reduce the use of electricity. We know how that worked out!)
The questions posed to Ragan were gentle and he handled them with conviction. Ragan answered one question by saying: “I am not an expert on the number of tonnes we have to go, basically because that’s not our focus.” Huh?
One of the issues ignored by the media in respect to the Pan-Canadian Framework is how it is really more than just “pricing carbon pollution” via the carbon tax. It also established “clean fuel standards” which “would promote the use of clean technology and lower carbon fuels, and promote alternatives such as electricity, biogas, and hydrogen.” Additionally, the federal government will establish a “methane regulation” and “energy efficiency/building code amendments”. Along with that array of additional costs for businesses and households in Canada, the government would be able to purchase foreign “carbon offsets” using our tax dollars. In effect, the Pan-Canadian Framework adopted by the First Ministers of the 10 provinces and three territories on March 3, 2016, referred to as the “Vancouver Declaration on Clean Growth and Climate Change,” created as many as five ways Canada’s taxpayers and businesses will be hit with costs.
On October 3, 2016, Environment and Climate Change Canada issued a press release containing a quote from Minister McKenna stating: “Pricing pollution is one of the most efficient ways to reduce greenhouse gas emissions and to stimulate innovation. Already 80 percent of Canadians live in a province where there is pollution pricing. We want to continue this trend and cover the final 20 percent.”
As most people now know, that 80 percent has fallen significantly with the election of the Ford government in Ontario and is likely to fall further pending the outcome of the upcoming Alberta election.
Needless to say, the Environment and Climate Change Ministry put out several documents to augment their views and the wonders of “pollution pricing” in driving down emissions. One of those documents was referenced as “Estimated impacts of the Federal Carbon Pollution Pricing System”. Canada’s Ecofiscal Commission is touted for its recommendations and is cited three times in the “Endnotes”.
One of the ENGOs, the Pembina Institute, also gets two nods in the Endnotes, one of which states:
“Pollution from coal power plants results in health issues that cost the health care system over $800 million annually, according to a study performed by the Pembina Institute in 2014.” Now in yet another Pembina Report a year earlier they had this claim: “According to the analysis, climate change impacts from coal-fired power range from $1.1 to 4.5 billion annually.”
Pick a number, any number, seems to be the theme, so politicians and ministry officials apparently do nothing to confirm what they are told!
The Ecofiscal Commission is also to be an intervenor in the Ontario Court of Appeal in respect to “the matter dealing with the Greenhouse Gas Pollution Pricing Act (GGPPA)”. Their “Factum” was handled by none other than Stewart Elgie, a professor of law and economics at the University of Ottawa, and director of the University’s interdisciplinary Environment Institute and founder of Ecojustice. The latter is also scheduled to be an intervenor. The factum clearly indicates Ecofiscal’s support for the Federal carbon tax and makes this assertion under 12 (a) of the factum: “The use of price-based regulation minimizes the costs to provincial economies — saving an estimated $70 billion per year across Canada, compared to prescriptive regulations, based on the CEC’s economic modeling.”
The suggested $70 billion seems like a stretch but perhaps as the bulk of the commissioners in Ecofiscal are quasi-government employees perhaps they are confident that the annual costs would be 225% more than the combined 2018 budgets of both Saskatchewan and Manitoba. Perhaps they are trying to make the case that by 2022 the carbon tax priced at $50/tonne will only extract $35 billion (based on Canada’s 2016 emissions of 704,000 tonnes). Their argument apparently is that we would be saving $35 billion annually by simply accepting their “economic modeling.” As a former banker, I have trouble buying into their suggestion.
As an Ontarian, It is hard for me to believe this is anything more than our experience from the creation of the Green Energy and Green Economy Act (GEA). It even includes some of the players involved in that fiasco via the GEAA (Green Energy Act Alliance) whose goal was: “to make Ontario a global leader in clean, renewable energy and conservation, creating thousands of jobs, economic prosperity, energy security, and climate protection.” The GEAA basically wrote the GEA for the McGuinty government.
Last week, a news article appeared in the Nation Valley News reporting the local Conservative MPP, Jim McDonell’s response to a question asking on why the government hasn’t cancelled the 100-MW Nation Rise wind power project. Mr. McDonell said, “We’ve always been clear: We would cancel any project we could cancel economically,” and he added “… we just can’t spend a billion dollars to cancel a project and get nothing from it.”
The same day, a press release from the Ford government noted that Premier Doug Ford told people attending the annual Rural Ontario Municipal Association (ROMA) conference, that “We’re lowering electricity costs”
I am at a loss to explain Mr. McDonell’s suggestion that cancellation of the Nation Rise IWT project would cost the same as the McGuinty/Wynne gas plant moves, but that’s what he said. It’s worth a look back at how this power project came into being, as it illustrates the disaster that has been Ontario energy policy for the last 15 years.
The Nation Rise wind project was one of five awarded contracts in March 2016; after that, its history gets really interesting … and very political.
Cost of the project
The Independent Electricity System Operator (IESO) at that time noted the average price for all the projects proposed was $85.90/MWh (or 8.5 cents per kWh). Over 20 years that would produce revenue of about $450 million, or less if their bid was lower than the average..
If the project were cancelled, no court would award them the full contract amount; it is more likely the government would be on the hook for perhaps 5 to10 % of that amount (on the high side).
There is no doubt that cancelling this project would save Ontario citizens hundreds of millions.
Timing of the approval
According to the Environmental Registry the Nation Rise entry for the Renewable Energy Approval or REA is dated May 7, 2018 and indicates it was loaded to the registry May 4, 2018. That is just four days before the writ was drawn up by former Premier Kathleen Wynne, formally announcing the upcoming Ontario election. It was known* the voting date would occur on June 7, yet the REA — a major decision — was given by the Ministry of the Environment and Climate Change (MOECC). At that time, not only were polls forecasting a defeat for the Liberal government, “electricity prices” and hydro bills were a major election issue. The MOECC issued the decision anyway.
Is the power needed?
In 2015 (before the IESO called for more wind power proposals) Ontario had a huge surplus of generation. Our net exports (exports less imports) were 16.8 TWh (terawatt hours) or enough to supply almost 1.9 million average households (over 40% of all Ontario households) with their electricity needs for a full year. It cost ratepayers an average of 10.14 cents/kWh to generate that power which was sold for an average 2.36 cents/kWh, representing a cost of $1.3 billion to Ontario’s ratepayers.
Due to the highly intermittent nature of output from wind turbines, the IESO’s projections of long-term capacity use only 12% of the nameplate capacity for wind power installations when calculating their contribution to overall capacity. So for Nation Rise, the IESO is projecting that the useable contribution of the project will be 105,120 MWh — just .0765% of the IESO’s forecast power consumption of 137.4 TWh. That is a fly on the flank of an elephant, in my estimation.
Cancellation of Nation Rise would not affect the long-term supply of electricity for the people of Ontario.
Worse, adding more capacity, particularly from an intermittent source, could result in more spilling of hydro, more curtailment of wind power generation, additional nuclear shutdowns or steam-off, all of which would drive Ontario’s electricity bills rates higher.
Property value loss
The property losses in value caused by the presence of 33, 650-foot industrial wind power generators throughout the countryside in the Nation Rise project will be in the tens of millions of dollars according to a study which notes: “Using research completed recently by a land economist with the University of Guelph and published in Land Economics, Wind Concerns calculates that overall, the property loss for houses within 5 km of the 33 planned turbines could be $87.8 million. Using other research that is less conservative, however, the property value loss could be more than $140 million.”
A loss of either magnitude would impact North Stormont’s realty tax base leading to either significant drops in revenue for the township or realty tax increases as a multiple of the COL (cost of living).
And then there’s the water
One condition among many in the REA given to EDP/Nation Rise was related to identifying and mapping all water wells in the project area within a set range of any proposed equipment, meteorological tower or wind turbines. This was due to concerns about construction activities on the local aquifer. While EDP identified 444 wells, the community group says there are more than 800 homes within the immediate project. Water wells in other areas of Ontario and elsewhere have become contaminated allegedly due to drilling and vibrations from wind turbines. There is significant concern about contamination of the wells, and the assessment taking place.
North Stormont is dairy farm country, and each farm operation uses thousands of litres of water every day — what would be the effect on these businesses, and Ontario’s food supply, if suddenly, the water wells were not functioning?
Who is EDP?
EDP (parent of EDPR) is a Portuguese utility company partially owned by two of the Chinese government’s companies; China Three Gorges (23.27%) and CNIC Co., Ltd., (4.98%) and the former has been trying for several years to acquire the balance of the shares. That attempt is speculated to be off; however, a recent NY Times article suggested otherwise, based on discussions with Portugal securities regulator CMVM.
Where is democracy?
North Stormont, where the Nation Rise wind project is planned, declared itself an “unwilling host” in 2015, well before the award of the contract or the issuance of the REA. The people perhaps relied on promises made by former energy minister and Ottawa Liberal MPP, Bob Chiarelli, when in 2013 he declared: “It will be virtually impossible for a wind turbine, for example, or a wind project, to go into a community without some significant level of engagement”. Despite their council passing the unwilling host motion, and also joining the 117 Ontario municipalities demanding a return of local land-use planning for energy projects, the IESO still granted Nation Rise the contract.
There are many questions about this project and many reasons why it simply isn’t needed. Cancelling this contentious project is a perfect way to lower future electricity costs, directly.
*The Toronto Star reported in an article dated October 19, 2016 the next Ontario election would be on June 7th, 2018
Yesterday’s post in respect to honesty and energy policy examined a small city in Texas and how its mayor has been courted around the world by proponents of renewable energy — because his actions sit into their narrative. However, I also showed how incomplete information given to the media can lead to bad results for those directly affected, the people who have to pay the bills for the “virtue signaling”.
What follows is how the two parties (politicians and energy proponents) collectively stomped on Ontario’s taxpayers/ratepayers!
The Canadian Wind Energy Association (CanWEA) recently published an article that carried this claim: “The Pan Canadian Wind Integration Study – the largest of its kind ever done in Canada – concluded that this country’s energy grid can be both highly reliable and one-third wind powered.”
The annoying part of the “study” is that it was completed by biased parties and used considerable taxpayer funds!
Perhaps Ontario’s grid operator, IESO, did make wind generation reliable but at what cost? As it turned out, in 2017, wind turbines delivered only 24.9% (9.2 TWh) of their capacity and curtailed* over 26% (3.3 TWh) of what they could have actually delivered. That generation also caused hydro spillage of 5.9 TWh and nuclear steam-off of one (1) TWh!
IESO’s 18 Month Outlook Report also indicates they only rate the capability** of wind turbines to deliver generation 12.9% of the time it may be needed. Wind power generation also contributes to a reduction in the “real market” (HOEP) price, meaning we sell our surplus generation into the export market well below its cost.
Virtue signaling from former Ontario Premier Wynne
Just over three years ago Ontario’s Auditor General released her report that noted the billions of dollars in extra costs Ontario ratepayers had to pay for the Liberal government’s green energy. The AG’s report said consumers would pay $9.2 billion more for 20-year wind and solar contracts signed by the Liberals than they would have under the former procurement system.
Premier Wynne’s response was: “There’s a cost associated with getting out of coal, of putting more renewables in place, and we’ve got other jurisdictions looking to Ontario as a model for how to do that,” said Wynne. “I’m happy to defend the changes that we’ve made.” She went on to say: “You only have to look at other jurisdictions that are struggling with air quality, with particulate matter in their air, with families that don’t feel they can let their kids play outside,” she said. “I know we weren’t in those serious straits, but the fact is we have reduced our pollution in this province.“
Apparently lost on her was the concept of the costs her government later imposed on those “kids” when in an attempt to win the last election she kicked in the neighbourhood of $50 billion down the road for them to pay via the Fair Hydro Act.
Premier Wynne earlier (about five years ago) got a pat on the head from Al Gore the climate crusader, when the last Ontario coal plant was about to be shut down. In her speech she also referenced the children who will be paying back the above costs when she said: “And I would contend it’s our moral duty to take action to protect our children, our grandchildren, and our fellow citizens. We’re lucky today to be in the presence of a man who’s been fighting on these fronts for many years.”
In another announcement with Al Gore present she claimed: “Becoming a coal-free province is the equivalent of taking up to seven million cars off the road, which means we’ll have cleaner air to breathe, while saving Ontario $4.4 billion in health, financial and environmental costs”
It has now been four years since Premier Wynne said that so it would be nice to know, from a ratepayer and taxpayer perspective, what has happened to that $17.6 billion, we were supposed to have saved?
We should suspect Premier Wynne’s remarks was simply political spin meant to preserve her position as Premier while driving up our cost of living for a necessity of life. Our health care system has not improved in the last four years and the province’s financial situation has only become worse!
The self-evident virtue signaling has simply resulted in increasing a future cost for “our children, our grandchildren and our fellow citizens”.
*Those 3.3 TWh of curtailed wind cost Ontario ratepayers almost $400 million or more than all of the curtailed wind in the UK which was estimated as costing them more than £100 million in 2017 to switch off their turbines and NOT produce electricity. The equivalent of the UK’s cost was about $174 million Canadian!
**Forecast capability of capacity for other major generating sources are: nuclear 81.9%, hydroelectric 68.4%, gas/oil 81.4% and solar 10%.
NB: If one wants to view what former Minister of the Environment and Climate Change, Glen Murray knew about the Ontario energy sector have a look at his interview at the COP 20 Conference in Lima, Peru here. You will see that Minister Murray gave many incorrect answers and even wrongly cites the Atikokan (200 MW) coal station as the largest in North America. It was Nanticoke (3,964 MW!
After seven years, the Ontario Energy Board has determined that a move by the McGuinty government to shift the burden of electricity costs to smaller ratepayers was “complicated and non-transparent.” What took them so long to find out that out, when it cost Ontario citizens billions?
Back in 2011, the Dalton McGuinty government introduced the Industrial Conservation Initiative (ICI) with the idea of changing the way Global Adjustment (GA) costs were allocated to different classes of consumers. “The stated purpose of the ICI is to provide large consumers with an incentive to reduce consumption at critical peak demand times. The resulting reductions in peak demand were expected to reduce the need to invest in new peaking generation and imports of electricity from coal-reliant jurisdictions.”
The government had been lobbied hard by the Association of Major Power Consumers of Ontario (AMPCO) who had been feeling the effects of climbing power rates brought on by the Green Energy Act (GEA) and the resulting FIT (feed-in-tariff) contracts for renewable energy (wind and solar).
Needless to say, the Liberal government caved, the ICI was born and officially started September 2011.
Just over a week ago the Ontario Energy Board released a report titled: The Industrial Conservation Initiative: Evaluating its Impact and Potential Alternative Approaches. What struck me immediately was this sentence in the Executive Summary: “In the Panel’s view, the ICI as presently structured is a complicated and non-transparent means of recovering costs, with limited efficiency benefits.”
It took the OEB seven years to come to this conclusion. And they are supposed to be the regulators for the energy sector. Their vision is: “The OEB supports and guides the continuing evolution of the Ontario energy sector by promoting outcomes and innovation that deliver value for all Ontario energy consumers.”
So, it took seven years to determine the ICI wasn’t delivering value?
The ICI was created via a change in the Regulations* and was posted August 27, 2010 on the Environmental Registry with this statement: “As a result of the consultation, there was general agreement that the proposed changes would result in a net benefit to electricity consumers, the electricity system and the broader Ontario economy.”
The new OEB report noted the Class B to Class A shift commencing in 2011 “has shifted nearly $5 billion in electricity costs from larger consumers to smaller ones. In 2017, the ICI shifted $1.2 billion in electricity costs to households and small businesses—nearly four times greater than the amount in 2011.”
Wondering what 2018 would bring in respect to the B to A shift and, knowing IESO now posts both consumption and costs of the GA by customer class on their website, it was worth an exercise to determine if the $1.2 billion shift of 2017 would increase or decrease. Using IESO’s data it appears the subsidy for the first 11 months was about $35.4 million per TWh (terawatt hour). Based on 36.9 TWh consumed by Class A ratepayers the cost shift is $1.306 billion. The 4,665,000 residential ratepayers who use 9 MW of electricity annually will absorb approximately 30% of those costs — in other words, it represents an annual subsidy to Class A customers of almost $100 from each ratepayer.
Small and medium sized businesses will pay a lot more absorbing the remaining 70%, or about $900 million!
Now you know why the price of that hamburger and everything else went up!
Electricity price increases have hit all classes of ratepayers in the province and now that we see the shift of costs, it is helpful to look at the cause!
Renewable energy in the form of wind and solar** power generation has played a big part in rising electricity bills, so it is an interesting exercise to do a simple calculation to determine what wind generation and curtailment have cost in the first 11 months of 2018. My friend, Scott Luft posts actual wind generation and curtailment for grid-connected (TX) and distributor-connected (DX)*** wind. Calculating the TX, wind generated (9.655 TWh) and curtailed (1.940 TWh) for the 11 months indicates costs were $1.305 billion for grid-accepted generation and $230 million for curtailed (paid for but not used) wind.
That brings total costs of intermittent and unreliable wind to more than $1.5 billion. ****
What this simple exercise really does of course is demonstrate how our costs would be much less without intermittent wind power generation, which is produced out-of-phase with demand in Ontario. Considering first-to-the-grid rights for wind power operators means it also results in spillage or waste of hydro (5.9 TWh in 2017) and nuclear steam-off (1 TWh in 2017) and must be backed up with gas generation — all of which we pay for — wind power simply increases our electricity bills without any significant benefit to the environment or power system.
If solar costs were also included in these calculations, we would be in the $3 to 4 billion range.
Short story: Without all that waste, all classes of Ontario ratepayers would have reasonable and cost-competitive electricity rates.
Conclusion The OEB should have stood up for consumers a lot sooner and called out the government for NOT delivering the “outcomes and innovation that deliver[d] value for all Ontario energy consumers.” Instead, the OEB simply watched while billions of dollars were removed from ratepayers’ pockets for foreign-owned wind power developments and stood by for seven years while residential, small and medium sized businesses provided increasing subsidies to large industrial companies for a program “with limited efficiency benefits.”
* Class A was limited to very large consumers with an average monthly peak demand of more than 5 MW (primarily large industrial consumers). Since then, the government has expanded eligibility such that Class A now includes all consumers with an average monthly peak demand of more than 1 MW, as well as consumers in certain manufacturing, industrial and agricultural sectors with an average monthly peak demand of more than 0.5 MW.
**IESO do not disclose solar generation until early the following year ***Estimated for grid connected but generally very close to actual generation.
****Generated wind at $135/MWH and curtailed at $120/MWh.
Ontario Power Generation (OPG) released its 3rd Quarter report in mid-November, and it was impressive!
Revenue was up $156 million to $1,373 million (+12.8%) and after-tax income was 113% higher, increasing from $131 million to $279 million. For the first nine months of 2018, OPG reports RoE (return on equity) of 10.8% and will easily generate record after-tax profits for the full year of well over $1 billion. Nine-month profits sit at $948 million, up 84% or $433 million—that’s a record.
Revenue is also poised to crack the $5 billion-dollar level (nine-month revenue is $4,062 million) as it has many times in the past; however, after-tax profits have never been this high since the creation of OPG in 1999 when Ontario Hydro was broken up into several different entities.
What’s interesting about those record profits? OPG is record profits despite a substantial decline in generation.
Look at year-end December 31 2000: OPG generated and sold (into the grid) 139.8 TWh (terawatt hours) and earned revenue of $5,978 million for an after-tax profit of $605 million. What that means is, back in 2000, OPG’s approximate cost to generate 1 TWh was $42.7 million (4.3 cents/kWh). In 2018 (so far) the cost has jumped to $74.8 million (7.5 cents/kWh) for the 54.3 TWh delivered in the first 9 months.
The 54.3 TWh delivered so far in 2018 is down from the comparable 2017 period by 1.7 TWh or 3% and from 2000 (9 months) by 49.4 TWh* or 46%! Comparing the first nine months of 2018 to 2000, net income is up $405 million or 74.6%
With such significant drops in generation one would expect net income to drop so what happened?
Some five years ago (December 4, 2013) an article I wrote for Energy Probe was headed up: “OPG-whipping boy for the Ministry of Energy” and it outlined how the GEA (Green Energy Act) had a detrimental effect on OPG’s electricity generation and its revenue, which resulted in declining profits.
I noted how their many “unregulated hydro” assets received only the HOEP (hourly Ontario energy prices) which produced revenue of just over 2 cents/kWh, and how they had been instructed to build “Big Becky” (cost of $1.5 billion) and the Mattagami run-of-river project (cost of $2.6 billion). Falling out of the GEA also was the rise in prices caused by wind and solar generation with first-to-the-grid rights and had resulted in declines in consumption. That meant much of OPG’s power generation was called on less and less.
OPG were also instructed by the Liberal Minister of Energy to convert power plants such as Atikokan and Thunder Bay from coal to biomass and to close the remaining coal-fired plants, one of which required a multi-million dollar write-down for prior expenditures on “scrubbers” to eliminate emissions.
As all this was happening, over the subsequent years, OPG applied for rate increases such as being paid “regulated prices” for all of their hydro assets and for revenue when they were forced to spill hydro. Those were eventually approved along with other increases to cover pension contribution shortfalls, increases in operational management and administrative costs (OMA), and for refurbishment of some nuclear plants.
OPG’s capacity has fallen from 25,800 MW in 2000** to 16,218 MW today, yet in 2000 they generated electricity at a capacity level of almost 62%. So far in 2018, they are operating at a capacity level of just under 51%.
OPG power could have eliminated excessive costs for wind and solar
If OPG were granted the rights to operate at the 62% level of capacity as they did in 2000, they could have generated 65.8 TWh easily, replacing all the generation produced by industrial wind turbines and solar panels. That generation would have resulted in a cost of electricity of less than 7.5 cents/kWh and eliminated the excessive costs for wind and solar under those 20-year contracts!
Today, OPG seems to no longer look like the “whipping boy” but still produces power at prices well below the costs of contracted generation under the GEA and should earn over $1 billion for 2018!
*Enough to power all of Ontario’s 4.9 million households for a full year with over 5 TWh left over. **Staffing levels have dropped from 12,250 (including 650 under contract) in 2000 to 7,700 in 2018 meaning the ratio of employees to capacity has remained static at 2.1 employees per MW.
IESO wants residential ratepayers to “Set the mood”
It’s true! Ontario’s Independent Electricity System Operator (IESO) in a recent posting on their SaveOnEnergy site suggested we “Cut the lights and light some candles to set the mood for a cozy evening.”
IESO spends approximately $400 million annually on conservation initiatives, and they come up with this? They even go so far as to describe the event as a “Hygge, a Danish word: (pronounced hue-guh not hoo-gah) used when acknowledging a feeling or moment, whether alone or with friends, at home or out, ordinary or extraordinary as cosy, charming or special.”
I personally find it ironic that the word chosen by IESO is Danish. Denmark is where electricity prices for residential homes is the most expensive in Europe* at EURO per kWh of 0.3126 or Canadian 0.48 cents per kWh. Doesn’t that make all Ontario residents feel cosy!
Denmark is home to VESTAS and their product line is exclusively wind turbines. Vestas employs over 24,000 people which makes them one of the 10 largest employers in the country. Vestas’s website claim they have installed 97 GW (97,000 MW) of industrial wind turbines (IWT) globally. All those noise-emitting, bird- and bat-killing, intermittent and unreliable wind turbines might make the Danes “cosy” but somehow I doubt it, with the price they are paying for electricity.
The IESO post suggests we: turn off the phone, unplug appliances and devices, eat comfort food and use energy-efficient cooking methods like a pressure cooker! ** The message to the reader goes on to suggest pulling on wool socks and using our favourite blanket to get cosy and then to “get lost in the moment” by reading our favourite book!
IESO should stop the wasted spending on conservation efforts of this ilk. Does IESO not understand we are all billed monthly for our cost of electricity usage and have been doing our best to “stay cosy”? For many it has been an effort to simply avoid energy poverty.
Stop lecturing us, stop wasting our money and focus your efforts on managing the grid in a manner that will reduce the costs of electricity.