Canada Missed the Boat Thanks to Our Prime Minister and “The Sky is Falling” Environmentalists

Someone needs to tell Canadian taxpayers:

 1.Why we taxpayers paid for over 300 politicians and bureaucrats to attend the Paris COP21 Conference

 and

2.Why we committed at that time to reduce our GHG emissions by 30% by 2030 below 2005 levels (since revised to 40/45% by 2030) without a cost/benefit analysis or a little foresight?

Had the politicians and bureaucrats done either (without just listening to the “climate change” eco-warriors) they may have possibly seen future events we are now experiencing around the world! 

To wit:

European Energy Prices are Breaking Records

A colder and longer winter depleted gas supplies which have not recovered so prices have climbed as availability from Europe’s gas fields have fallen and Russia’s Gazprom is focused on restoring their own gas storage as winter approaches.  Other events such as much less generation from industrial wind turbines have affected demand to the point that even coal plants had to be fired up.  Both of those commodities are either at record highs or closing in on them.  As a recent article in Aljazeera noted; “Europe has the world’s most ambitious climate plan, but political will is being tested by soaring energy costs. As countries take steps to ease the blow on consumers, Spain warned the European Union that measures to reduce emissions “may not stand a sustained period of abusive electricity prices,”. To make matters worse, Norway, famous for its hydro power said they are “pressed” due to low water inflows so interconnections with the UK, Germany and Denmark means those countries cannot count on any supply from them during the high demand winter.

India sees Petrol, Diesel and Coal Prices at Record Highs

A article on October 2, 2021 stated both diesel and petrol prices in India reached record levels.  It should be noted India is dependent on imports to meet 85% of its oil needs so the effects on the economy will be significant. India is also dependent on coal for electricity generation with about 70% of it’s generation provided from that source and a Reuters article from October 1, 2021 noted “Over half of India’s 135 coal-fired power plants have fuel stocks of less than three days, government data shows, far short of federal guidelines recommending supplies of at least two weeks.“ Interestingly enough India competes with China for coal imports and they are the world’s largest coal consumer. The Reuters article goes on to note: “Coal prices from major exporters have scaled all-time highs recently, with Australia’s Newcastle prices rising roughly 50% and Indonesian export prices up 30% in the last three months.

China Experiences a Myriad of Blackouts

Recently a very observant contact sent me a seventeen-minute video dated September 30, 2021 and it was fascinating to watch as it contained numerous blackout scenes from Chinese homes and businesses mainly in North-East China where many of the larger manufacturers are located. Those companies have been told to either reduce energy usage during peak demand periods or cut the number of days they operate. One of the reasons for the blackouts is that approximately 57% of electricity in China is generated from coal which has increased in price. Those coal-fired plants are unable to increase prices due to government price controls of electricity so they have reduced their output in an effort to reduce losses. The shutdown of factories will affect the global supply chain and as one example, that has been noted in the press as both Apple and TESLA have been affected.  The latter is interesting as the push is on in Canada and around the world to limit sales of ICE vehicles and eventually banish them in order to reduce emissions. China has been a major supplier of batteries and other materials for EV manufacturers and additionally about 50% (4.7 million) of all EV in the world are owned by Chinese citizens.  Needless to say EV charging stations have been shut down by the blackouts so the enthusiasm to purchase EV by China’s citizens will surely diminish as they will in other parts of the world!

Energy Lawsuits may make COP 26 to be a Breakup of the Paris Accord

What looms ahead for Boris Johnson, the UK’s Prime Minister as host of COP 26 in Glasgow later this month is unknown but he should be concerned.  Beyond the recent events affecting so many countries around the world including the UK, in respect to fuel shortages and their negative effects on inflation and the global supply chain there is yet another one looming! A Reuters article published just a couple of days ago may cause the Paris agreement on climate change to be (appropriately) tossed in the garbage.  Specifically, what the article references is: “The Energy Charter Treaty (ECT) was originally drawn up to protect energy firms as the Soviet Union crumbled, but new analysis suggests it could allow coal plants in 54 signatory states to keep belching carbon dioxide for more than a decade.“ The article went on to say: “What they never thought about is that the treaty could be used against the EU countries themselves,” added Saheb who is now working as the lead author of a U.N. Intergovernmental Panel on Climate Change working group on climate mitigation.“  Saheb went on to suggest the suits could reach 1.3 trillion euros.  There are apparently a number of lawsuits that have already started totaling $18 billion with the largest being TC Energy’s $15 billion suit against the US under NAFTA (North American Free Trade Agreement) for cancellation of the Keystone Pipeline. Canada is also being sued under NAFTA by oil and gas company Lone Pine over a fracking moratorium by Quebec.

We are Not Back

Terry Glavin in an article in the National Post on March 15, 2017 noted PM Justin Trudeau went to the Paris Climate Summit in 2015 weeks after winning a majority and said: “Canada is back, my friends”. Trudeau and the other 299 plus politicians and bureaucrats he took with him simply gave away Canada’s prosperity which the Liberal Party inherited. He committed to reduce emissions and to basically shut down the fossil fuel sector.  His commitments are now biting us negatively.  If he had not been totally swayed by his buddy and puppet master, Gerald Butts, Canada might now be the best performing developed county in the world but instead we are scraping the bottom of the G7 and G20 barrels in terms of our GDP and our employment and inflation rates.

Had he reduced regulations, allowed pipelines to be built, mines (coal and others) to expand, etc. Canada would be prospering instead of contracting.  Our natural resources would be in demand around the world and Canadians would be reaping the financial benefits of foresight but alas the unelected eco-warriors won and now we are paying for the consequences! Should Trudeau decide to attend COP 26 let’s suggest he travel alone and when speaking in public he declares: 

Canada is at the back of the pack!

Gas Plants Saved Ontarians from Rolling Blackouts During Peak Demand Month

While the month and year are not over yet it appears that August 2021 will win the prize for most peak hours. Despite being a few days away from the arrival of September, August looks set to dominate as eight (8) of the ten (10) peak demand hours have occurred in August. Based on weather forecasts; demand should fall over the balance of the month and into early September.

August 26, 2021 peak demand hour (ending at hour 15) looks set to be the second highest at 22,740 MW but may be subject to minor adjustment by IESO. August 24, 2021 ending at hour 17 currently stands as the highest (22,956 MW) peak demand hour so far this year.

It is interesting to pull together some of the data for those eight “peak demand” August hours to examine how we made it through without experiencing rolling blackouts or brownouts!

Cumulatively the eight August peak demand hours show total Ontario demand was 178,645 MWh and the bulk of that was provided by nuclear and hydro which we tend to think of as “baseload” power although hydro is flexible (we can simply spill it) and some nuclear (Bruce) can be steamed off.

Those familiar with the electricity system in Ontario and the GEA (green energy act) will recall industrial wind turbines (IWT) were granted “first to the grid” rights treating them as ranking higher than baseload power.  That changed as we were frequently flooded with excess power (particularly from IWT) due to their intermittent and unreliable output and had to pay our neighbours to take the excess! The ability of IWT and solar to produce power when it was actually needed escaped the politicians (McGuinty/Wynne) thought processes so eventually IWT generators agreed to be paid for “curtailing” their generation. Their tendency is to generate power in the low demand periods of the Spring and Fall!

So, the question is, how did IWT and solar perform during those (8) August “peak hours”?

As it turns out wind and solar managed (on a combined basis) to only produce 5,593 MWh (an average of 872 MW per hour) over the 8 peak hours which represented a mere 4.9% of demand.  Ontario gas plants which are referenced as “peaking plants” were thankfully at the ready and generated 47,808 MWh or 26.8% of “peak demand”.

What the foregoing highlights is that without gas plants Ontario ratepayers would have experienced both rolling brownouts and blackouts for those 8 peak hours along with many other August hours and days that were devoid of meaningful “renewable” (IWT & solar) generation.

Based on the foregoing we ratepayers would appreciate those thirty (30) municipalities and their elected representatives to explain exactly why they endorsed the OCAA’s (Ontario Clean Air Alliance) push to tell the Provincial Government to shut down all of Ontario’s gas plants.  As an alternative they should simply rescind their council motion(s) directing the Ontario Minister of Energy to shut the gas plants!

Do those municipalities have a solution for rolling blackouts and brownouts that would be caused by the lack of “peaking power” or are they simply delusional politicians?

You be the judge!

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.

Hey, Premier Ford, did Michigan Governor Whitmer at least say “Thanks” for the Free Electricity we gave her April 30th?

Several days ago, a friendly contact alerted me to some facts about electricity generation on April 30th, 2021.  He noted wind exceeded hydro in 5 of the hours and as much as 81% of wind generation was curtailed in a single hour. He also pointed out the HOEP (hourly Ontario electricity price) market price was zero or less for 22 out of 24 hours and the two hours it was positive it climbed all the way up to 41 cents per MWh* (megawatt hour)!  The foregoing is a frequent occurrence in the Spring and Fall as Ontario demand is generally low and when the wind is blowing it must be both curtailed and exported.

With curiosity piqued it led to a review of IESO data for actual wind generation, its curtailment and exports for the day.  As it turned out wind generation accepted into the grid by IESO was just shy of 56,000 MWh and curtailed wind was very close to 34,000 MWh. What that meant is owners of the approximately 4,800 MW of grid connected wind capacity will be paid $7.560 million ($135.00** per MWh) for the accepted wind generation and $4.080 million ($120.00 per MWh) for the curtailed wind.  That implies the cost per MW of grid accepted wind generation was almost $208/per MWh versus about $56/MWh for hydro and $80/MWh for nuclear.  It also appears nuclear was steamed off by Bruce Nuclear and we should suspect hydro was also spilled.  Both of those are paid for so their costs would clearly be caused by wind’s propensity to generate power when it’s not needed.

To make matters worse IESO were forced to offer surplus generation via the market and needless to say our neighbours were happy to get it for free.  We exported almost 68,000 MWh to our neighbours in New York, Quebec and Michigan presumably to avoid possible grid failure. The state of Michigan received 24,000 MWh for free.  We basically supplied about 800,000 average Michigan households (approximately 20% of Michigan households) with free electricity for the day!

Ontario has been selling Michigan our cheap electricity exports for years and since we added intermittent and unreliable wind and solar to our grid the amount, we sell to them for pennies of its cost (what Ontario’s ratepayers pay for it) has increased. 

Michigan should recognize what nice neighbours we are! Instead, Governor Whitmer wants to shut down the Enbridge Line 5 pipeline which supplies them, several neighbouring states, as well as Quebec and Ontario with oil for refineries, propane for winter heat, aircraft fuel, etc. etc.

Perhaps the time has come for Premier Ford to give Governor Whitmer a call and tell her if she shuts down Line 5, she will need to fire up more of those (current) 9,300 MW (approximate capacity) of coal plants Michigan has; versus Ontario’s zero coal plant capacity.  

The time has come for Governor Whitmer to recognize and admit Michigan ranked # 8 in 2018 by the US EIA (Energy Information Administration) in respect to CO2 emissions from coal generation and 10th overall for total CO2 emissions.  Once she solves that problem, she can consider shutting down Line 5!

*One MWh is equivalent to 1,000 kWh (kilowatt hours) or what an average Ontario household would consume in a month and a half.

**The contracts signed with those industrial wind generation companies also included a maximum COL (cost of living) allowance of 20% so were presumably paid more than the $135/MWh.

Net-Zero by 2050 Seems Destined to Reference Money Left to Buy Food for Most of Canada’s Population

Robert Hornung, CEO of CanREA (Canadian Renewable Energy Association), recently finished a three-part series about the wonders of wind, solar and storage and indications (based on his verbiage) are; he is delighted with how the Trudeau led government are committed to achieving “net-zero” emissions by 2050.  The final sentence in his last article “Cape diem, Canada” tells the reader: “We have a fleeting opportunity to avert a catastrophe for our children and grandchildren. We need to seize it. Today.”  As one can imagine Hornung believes the world can be saved from the “changing climate” which he tells us is causing events showing: “our permafrost is melting, our coastal sea levels are rising, our snow-cover patterns are changing, and our weather is becoming more extreme, with floods, droughts, and intense storms on the rise.”  As one would expect he says the foregoing can be stopped as our electricity needs “can easily be supplied by Canada’s massive untapped renewable energy resources”.

All Canadians should realize we are now all being asked/told to relive what Ontarians were told by the McGuinty led government back in 2009 when they ushered in the GEA (Green Energy Act). The GEA caused electricity rates to more than double due to the push for renewable wind and solar generation. Ratepayers and taxpayers in the rest of Canada should take Hornung’s gloomy prognostications and concern themselves about the “net-zero” aspirations he exudes!

Hornung goes further and touts “A Healthy Environment and a Healthy Economy,” the report released by Jonathon Wilkinson, Minister of the Environment and Climate Change (MECC) in December 2020 bringing us the $170/tonne carbon-tax.  Hornung also seemed enamoured by another report from the Canadian Institute for Climate Choices whom I devoted four articles to in early 2020.  The CICC was a creation of Wilkinson’s predecessor Catherine McKenna using $20 million of our tax dollars.  The report Hornung referenced from the CICC is “Canada’s Net Zero Future” and it is 132 pages full of the fabrications Wilkinson and his boss, PM Trudeau, presumably ordered!  Doing a word search in the report for “net-zero” provides only 14 hits but one for “net zero” (without the hyphen) provides 588 hits. The word “tax” only appears twice-ie: 2 mentions, and it’s not in respect to the $170/tonne carbon-tax as it is referred to as a “carbon price”!

The report breaks down the various existing “safe bets” and possible “wild card” technologies that will purportedly allow us to meet Canada’s 2030 and 2050 emissions reduction targets. The “safe bets” include renewables such as wind, solar, biomass, hydro and also include storage (battery) and nuclear and of course transformation of our transportation modes via conversion of personal vehicles to EV. The report claims using those technologies along with increased insulation and heat pumps for buildings limited carbon capture, etc. etc. will easily allow us to meet the emissions reductions by 2030.  The “wild card” technologies include hydrogen, CCUS (carbon capture, utilization and sequestration), direct air capture, small modular reactors and a myriad of other technologies including changing our diet to consume less meat and dairy products and those will allow us to reach net-zero emissions by 2050.

Naturally they reference the UNIPCC (United Nations Intergovernmental Panel on Climate Change) several time as well as the UNFCCC (UN Framework Convention on Climate Change) in a favourable fashion as well as utilizing their reports to augment their views and recommendations.

The report also uses scary references and their reputed costs such as suggesting air pollution causes 20,000 annual deaths in Canada: “Harmful air pollutants that increase the risk of disease and premature death—pollutants such as particulate matter and ground-level ozone—are common by-products of GHG emissions. Globally, air pollution represents the single largest environmental threat to human health, according to the World Health Organization (2016), and it also takes a significant economic toll. In Canada, estimates suggest that air pollution kills around 20,000 Canadians annually, with more than 17,000 of those deaths attributable to fossil fuel use (Lelieveld et al., 2020). The direct welfare costs of fine particulate matter and ground-level ozone in Canada is estimated at as much as $46 billion per year (IISD, 2017), while Health Canada (2019a) estimates the total annual economic damage to public health from air pollution is approximately $114 billion.”  I should note Health Canada’s recent report echoed the same scary stuff and used the same reference perhaps to prepare us for the next pandemic and accompanying lock-downs.

Needless to say, the CICC report suggests the move to lower levels of carbon emissions coupled with the recommendations on using “safe bets” and evolving “wild card” technologies will not only help to reduce “global warming” and presumably reduce air pollution; but it will also reduce our expenditure on energy as a share of income. 

We should view the graph above, suggesting energy expenditures as a share of income will drop as pure unadulterated fabrication!  Not even the Ontario Liberal Government during the McGuinty/Wynne era promised our electricity costs would drop due to the adoption of clean energy from wind and solar.  They suggested rates would increase one percent (1%) but Ontario’s ratepayers and taxpayers know we were lied to and the actual cost increase was well over 100% and we must live with that for 10 more years!  One should doubt the CICC report has provided us with anything close to actual outcomes!

Some of those at the CICC, such as Bruce Lourie patted themselves on the back for being instrumental in getting the Ontario Liberals to buy into the renewable energy push. He and others* have played a big role in getting the CICC established and have continued to successfully push their agenda.

We should all suspect the Hornung forecast of the “catastrophe for our children and grandchildren” will be related to the unaffordable costs of just trying to survive a Canadian winter with those “baseboard”** electric heaters the CICC sees in our future!

*Rick Smith, a Lourie cohort has just been named as the new President of CICC

**Reminds me of the early sixties adds about how we could “live better electrically”.

Tom and guest Parker Gallant discuss the economics of “green” energy

Tom Harris invited me on his Exploratory Journeys podcast on i Heart radio and we spent about 1/2 hour discussing the economics related to “green” energy. We cover a fair amount of ground related to the electricity sector in Ontario particularly on the costs of renewable energy.

You can listen to the podcast with Tom Harris here but please note there are a couple of commercials before our chat:

Wind, Solar and Storage are cheap and will get us to net-zero emissions by 2050

Oh, and by the way, pigs can fly!

Should one visit CANREA’s (Canadian Renewable Energy Association) website you will be bedazzled by the braggadocio in their posts and the disasters that will befall us should we not heed their warnings.

Their latest post titled “Carpe Diem, Canada” concludes with this scary note: “We have a fleeting opportunity to avert a catastrophe for our children and grandchildren. We need to seize it. Today.” As one would expect averting the disaster is summed up in the secondary headline where the author, Robert Hornung, President & CEO of CANREA states we can do so: “only by putting wind, solar and energy storage at the centre of a comprehensive clean-energy transition, starting today.”  Reading the article is a bit like listening to Greta Thunberg speak as the article claims: 

Canada’s average temperature is increasing twice as fast as the global average and the signs of a changing climate are everywhere: our permafrost is melting, our coastal sea levels are rising, our snow-cover patterns are changing, and our weather is becoming more extreme, with floods, droughts, and intense storms on the rise.”   

and                                        

We are already seeing serious impacts on our ecosystems, communities, infrastructure and economies, and things are currently on track to get much worse.

What they are proclaiming is we need wind, solar and energy storage to achieve the “net-zero” 2050 emissions target. After having read the article and knowing wind capacity in Ontario is the highest in Canada enticed me to have a look at those IWT (industrial wind turbines) and their recent performance on a couple of IESO’s daily Generator Output and Capability Reports.

The first one I looked at was the March 27th report and in reviewing the hourly output I noted that hour 10 indicated the 4,786 MW of grid connected wind capacity generated only 18 MWh (0.4%) of their capacity and 12 hours later at hour 22 they generated 1,326 MWh (27.7%).  Deciding to look back to the same hours on March 26th IESO data indicated at hour 10 they generated 3,836 MWh (80.5%) of their rated capacity but by hour 22 they eked out only 360 MWh (7.5%) of rated capacity.                          

The foregoing bad habits of generation from IWT with their stop and start attitude serves to convolute grid management causing; water spillage at hydro plants, steam-off at Bruce Nuclear and ensuring gas plants are at the ready to supplement the on/off nature of their generation!  Often their generation is delivered when unneeded and causes them to be curtailed.  All of the foregoing are layered costs and ratepayers pay up to ensure grid stability.  Wind and solar, in particular, have been one of the principal reasons our rates in Ontario skyrocketed by over 100% since those IWT and solar panels have been sprinkled around our rural landscape. Now it appears the bright lights at CANREA want to add the costs of storage to the mix in order to keep the costs climbing and their members happy.  

The Ford led government have failed to stem the tide of climbing costs in the electricity sector and instead have saddled taxpayers with more than $6 billion in annual costs to keep electricity prices from doubling again!  Hopefully they ignore this latest misguided push by CANWEA or our rates will escalate further and drive away businesses who will move to provinces and U.S. states with lower cost electricity prices.

What the foregoing demonstrates is no one should believe a word coming from the mouth of CANREA and the claims that “wind, solar and storage” are cost competitive unless they can prove to all of us that  “pigs can fly”! 

Wind, Solar and Biomass Continue Soaking Ontarians

The OEB just released the “Ontario’s System-Wide Electricity Supply Mix: 2020 Data” report and it provides information beyond what the IESO had in their mid-January report: the 2020 Year in Review  and the subject of an earlier article.  The OEB report includes generation occurring within the DX (distributor connected) sector in addition to what is TX (transmission connected)* generated and the basis of the IESO report. 

The OEB reported DX generated electricity in 2020 was 7.3 TWh (terawatt hours) or about what 810,000 average Ontario households (approximately 18% of all Ontario households) would consume in one year. DX generation in 2020 was up by 5 GWh (Gigawatt hours) compared to 2019 but the increase came from what is described as “Non-contracted” generation defined in the report as “a variety of fuel types that the IESO is unable to categorize due to a lack of information from Local Distribution Companies (LDCs).”

As it happens the three renewables classified as wind, solar and biomass actually had a decline in DX generation falling from 5.1 TWh in 2019 to 4.9 TWh with solar producing an identical 3 TWh compared to 2019, while wind declined from 1.7 TWh to 1.6 TWh and biomass from 4 GWh to 3 GWh.  If one adds what IESO stated was curtailed wind of 2.6 TWh in 2020 to what those three renewables generated it comes to 20.6 TWh or 2 GWh more than our gross exports were! 

Those exports** of 20.4 TWh (sold at an average price of $13.9*** million per TW) generated about $284 million. That’s $3.8 billion less than we paid for them had they consisted of the three renewables.  The latter is derived from the individual costs of wind at $135 million/TWh accepted, plus $120 million/TWh for curtailed wind which collectively cost us $2.3 billion.  Adding solar’s 3.8 TWh at $449 million/TWh  ($1.7 billion) and biomass at $150 million/TWh ($100 million) brings the costs of all three renewables to $4.1 billion. If all of those renewables were exported, they would have returned the estimated $284 million as noted costing Ontario ratepayers $3.8 billion.

What that means is; as ratepayers pick up the loss of the $3.8 billion it would represent a cost of 2.72 cents/kWh or $244.80 to the average household consuming 9,000 kWh annually. The annual cost would be much higher for small and medium sized businesses.

In Ontario we continue to suffer from the perils of the McGuinty/Wynne push for renewable energy brought to us via the GEA. It appears we will continue to suffer the consequences until those outrageous 20 year contracts for wind and solar expire or the Ford led government is inspired to actually do something to correct the Liberal endowment!

*The OPG’s annual report disclosed they were instructed to spill 4.3 TWh of hydro due to surplus baseload generation (SBG) conditions over the 2020 year which IESO did not disclose.

**The actual makeup of exported generation is not available as it depends on many factors.

***The average market price referred to as the market price ie; HOEP (hourly Ontario energy price) averaged 1.39 cents/kWh in 2020.

OPG’s on a roll and Ontario’s ratepayers and taxpayers are paying the price

OPG released their 2020 Annual Report about a week ago and despite profits increasing, during the pandemic, by $235 million (up 20.9%) from $1,126 million in 2019 to $1,361 million, the media didn’t seem to notice. Gross revenue, net of fuel costs, increased $1,118 million over 2019.  Based on total generation of 82.1 TWh, (up 5.5% over 2019) the cost to produce a MWh (net of fuel costs) jumped from $68.70 in 2019 to $78.72/MWh in 2020 for a 15.5% increase!

The increased gross revenue came from, nuclear, up $700 million, gas and other generation up $300 million and higher hydro costs of $40 million. The latter doesn’t include 4.3 TWh* of spilled hydro costing ratepayers about $220 million in 2020 nor does it include the “fuel costs” of water which were $347 million up slightly from 2019 despite a small drop (2 gigawatt hours [GWh]) of actual generation.

The increased revenue from nuclear and hydro came as a result of the OEB finally blessing rate increase applications submitted by OPG.  In the case of the nuclear rates the OEB took an inordinate amount of time to approve rate increases, so much of this jump was associated with some catching up by OPG as well as a slight increase (3 GWh) in actual generation. The jump in gas costs is due to the acquisition by OPG of the “portfolio of combined-cycle natural gas-fired plants in Ontario from TC Energy Corporation (TC Energy) for approximately $2.8 billion, inclusive of customary closing adjustments. The portfolio included the Napanee GS, the Halton Hills GS, and the remaining 50 percent interest in the Portlands Energy Centre.” As a result of the acquisition, OPG’s gas generation operations in 2020 represented 26.8% (2.6 TWh) of all grid connected gas generated (9.7 TWh) whereas in 2019 the 0.6 TWh they generated was only 6.3% of grid connected gas generation.  The acquisition didn’t close until the end of April 2020 so we should expect OPG will have an even larger percentage of gas generation in 2021.

It is worth noting OPG’s total generation of 82.1 TWh added to Bruce Nuclear’s generation of 44 TWh provided 95.4% of all grid connected Ontario demand in 2020. If one includes the 4.3 TWh of spilled hydro OPG was paid for and the 1 GWh of steamed off nuclear at Bruce the combination of the two could have provided 98.7% of Ontario’s grid demand.  The grid shortfall of 1.7 TWh could have been easily provided by OPG’s hydro units.  Without the costs of over $2 billion dollars for the 13 TWh generated by grid connected wind, solar and bio-mass generation, ratepayers and taxpayers would have been much better off.  Additionally as Scott Luft recently noted that surplus generation only served to reduce emissions for our neighbours in US states such as Michigan, Ohio, Indiana, etc.

Another point worth expounding on is, in addition to the water “fuel costs” of $347 million paid to the provincial government OPG is required to pay them what is referenced as PILT (payment in lieu of taxes). The PILT jumped up 103.9% from 2019 when they were $190 million to $387 million in 2020. So, the province received $734 million in 2020 from us ratepayers which should help to pay a good chunk of the estimated cost of $6.5 billion of the “Ontario Electricity Rebate” that now appears on our monthly hydro bills and is allocated to taxpayers.

While previous Ontario governments have made the electricity ministry as complex as possible the current Ford led government has gone on to exacerbate its complexity rather than trying to undo the mess!  It’s time they actually studied the sector and generate changes to simplify it and reduce the burden on ratepayers and taxpayers but perhaps that is too much to hope for!

*The 4.3 TWh of spilled hydro was equivalent to what almost 480,000 average households (over 10% of all Ontario households) consume annually.

Laurentian Elites and the Circular Economy

A very recent article in the Financial Post caught my jaundiced eye not so much for what it said but who it was about.  The article noted: “Brookfield Infrastructure Partners LP launched a $13.5-billion hostile takeover bid for Calgary-based midstream company Inter Pipeline Ltd. to take the company private.” The striking point of this opening sentence seemed odd in that Brookfield with over $500 billion in assets under management had announced back in August of last year that none other than Mark Carney former Governor of the Bank of England had been appointed, “Vice-Chair and Head of Environment, Social and Governance, known as “ESG,” as well as impact fund investing.”

The attempt at a hostile takeover of Inter Pipeline Ltd by Brookfield seemed incongruous with Carney now ensconced in his new position. Did he bless this “fossil fuel” related hostile acquisition bid under his new ESG “accounting” rules?  Wasn’t he recently all preachy on BBC about us all having to exit fossil fuels or we will all die of “climate change”?

 Anybody who has had a serious look at Brookfield and its numerous entities dating back to it’s founding 120 years ago, will be impressed at the international reach it commands and gain a rough understanding of how it has created numerous multi-millionaires and billionaires along the way. An article from February 2020 in the FT partially highlights its organizational complexities!  

One of Brookfield’s offshoots; Brookfield Renewable Partners has investments in hydro. wind, solar and storage in Canada and elsewhere. Back in 2016 they sold one of their subsidiaries; Great Lakes Power transmission lines to Hydro One for $373 million.  That inspired Hydro One to apply to the OEB for a revenue increase which they were granted.

Brookfield Infrastructure Partners already has investments in significant oil and gas storage and processing infrastructure in Alberta and Inter Pipeline Ltd. operates oilsands pipelines connecting northeastern Alberta with the Edmonton and Hardisty oil storage   So, one should wonder why would Brookfield add Carney to their roster when he is reputedly anti fossil fuels?  Will he execute an ESG report on their behalf thereby blessing these investments?  Stay tuned!

Coincidently Brookfield Renewable Partners just held its fourth quarter conference call and the CEO Connor Teskey was excited! “The company generated a market-mashing 91% total return in 2020 and has now produced annualized total returns of 20% since its formation two decades ago.”  Teskey went on to say; “We look forward to a multidecade opportunity to advance decarbonization and assist with the transition of global electricity grids to a more sustainable future,” he said. “Advancing the transition to a lower-carbon future will require substantial capital, in excess of $100 trillion over the next three decades.”  Teskey suggests wind and solar generation as a means to achieve the transition!

One should suspect this will spawn the creation of more “Laurentian Elites” while increasing energy poverty?  

Pure speculation on my part but, with the expansion of the Trans Mountain pipeline in process and utilizing billions of taxpayer dollars one should ask, has our Prime Minister, Justin Trudeau, struck some kind of deal with Brookfield to sell them the pipeline once its finally completed and at what price?

Don’t be surprised if and when that happens, Trudeau will simply wave an ESG report Mark Carney will happily provide to assert the claim; it is contributing to Canada reaching “net-zero” emissions by 2050 and supports the Circular Economy.