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!

Another Peak Demand Hour and Wind is Missing

As we have come to expect in Ontario, “peak demand” generally occurs on hot summer days and the hour ending at hour 17 on August 20th was the most recent occurrence coming in at # 8 of “peak demand hours” so far this year.

Demand at the above hour reached 21,569 MW and the bulk of that needed demand was supplied by Nuclear, Hydro and Natural Gas generators. At that hour gas plants supplied 25.9% (5,587 MW) of demand while wind generators managed to produce only 0.45% (98 MW) of demand and the bulk (53 MW) of that came from the Greenwich Renewable Energy Project a 99 MW station located Northeast of Thunder Bay so none of their generation was useful in the well populated areas of the province. The other 40 plus wind turbine generating stations scattered throughout the province produced only 45 MW which probably didn’t even cover their consumption during that hour.

The foregoing fact is something you will not hear from the OCAA (Ontario Clean Air Alliance) whose push is to close out gas plants. The OCAA’s push to close gas plants has reputedly been endorsed by 30 Ontario Municipalities representing over 50% of the province’s population. 

In an effort to push the alarm button further the OCAA has called for all their followers to: “Please contact Ontario’s new Minister of Energy, Todd Smith, and ask him to direct the IESO to develop and implement a plan to achieve a complete phase-out of our gas-fired power plants by 2030.”

What Jack Gibbons the Chair and CEO of OCAA doesn’t seem to understand is that the events of hour 17 are frequent during the very hot days of summer and the very cold days during the winter.  If Minister of Energy, Todd Smith, followed through with the OCAA’s recommendations Ontario’s ratepayers would be faced with numerous brownouts and even full blackouts during the dead of winter and the heat of summer.

I would suggest the ratepayers of Ontario should write a letter to the councils of the 30 municipalities informing them of the above facts and recommending they rescind their endorsement to shut down Ontario’s gas plants by 2030 as proposed by the OCAA.

You can find the full list of the municipalities that have endorsed the closure by simply clicking on the following.

Ontario Municipalities that have endorsed gas power phase-out

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.

No Peaking Without Gas

As summer in Ontario finally arrived temperatures rose over the past few days and resulted in IESO reporting, so far in 2021, hour 18 of June 28, 2021 is the #1 peak hour with demand reaching 22,258 MW (megawatts).  While that is the highest demand hour so far in 2021 it is by no means the highest peak over the past three years with September 5, 2018 at hour 18 reaching 23,240 MW.

Nuclear was operating at close to 100% capacity at hour 18 generating just over 47% of peak demand and hydro 22% of demand and operating at almost 69% of capacity. Our gas plants thankfully were at the ready generating slightly more than 26.5% of our peak demand and operating at 63% of their capacity.

The remaining generation capacity consisting of wind (4,500 MW), solar (438 MW) and biomass (238 MW) managed to only produce 13.9% of their capacity (just over 3% of demand) or a miserly 716 MW during the peak hour. In other words, they weren’t performing when we actually needed them!  As a result, IESO imported power from Michigan and New York when prices hit their peak for the day of $232.79/MWh.  Those two states regularly buy Ontario’s surplus power and in 2020, on average, they purchased it for $13.90/MWH.  Interestingly according to the US IEA; “Natural gas accounted for 33% of the state’s (Michigan) net generation, while coal’s share declined to 27%.” What that means is we were importing fossil fuel generation.  That should upset the eco-warriors and the Federal Liberals under Trudeau who want to eliminate all usage of fossil fuels and reach net-zero emissions by 2050 or perhaps they think the pain should only be inflicted on Canadians?

Looking to the future one wonders what will happen should Ontario see those 27 municipalities; (who have signed on to the Ontario Clean Air Alliance’s [OCAA] push for all gas plants to be shut down) get what they asked for.  Where is the peaking power going to come from as it won’t come from intermittent and unreliable sources like wind and solar?  Perhaps all the Ontario EV drivers will agree to provide all the power that gas generation previously did as envisaged by the OCAA.  We can anticipate those same EV car owners will be told, as they were very recently in California, when they can’t charge their batteries or we will experience brownouts and/or blackouts.  

Also, what happens if a peak demand day comes on a cold winter day in January (one did on January 21, 2019) after the 67% of homes currently using natural gas as a heating source are forced to convert to electric heat?  Where will that additional electricity generation come from as EV lose a large percentage of their power in cold weather?

From all perspectives it seems the eco-warriors and our Federal government aim to punish all low and middle-income households in the province in their efforts to deliver on their religious beliefs.

Mankind cannot control the sun or Mother Nature so why is it so difficult for them to understand!

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”.

The Canadian Version of “Dumb & Dumber”

Having just read the press release from the Canada Infrastructure Bank (CIB) on how they are partnering up with ITC Investment Holdings Inc., and using $655 million of our tax dollars to build a 117 kilometre underwater transmission line connecting Ontario with the PJM Interconnection, the 1994 movie, “Dumb & Dumber” immediately came to mind.

ITC is a Michigan based company (subsidiary of Fortis Inc.) and they will own 60% of the project with the balance owned by the CIB.  As a bit of an oxy-moron Michigan Governor, Gretchen Whitmer, is planning to shut down the Line 5 pipeline which supplies oil to Ontario refineries (includes aircraft fuel, etc.), chemical plants etc. in Sarnia, and where propane is produced and supplies Ontario and Quebec farms and households. Line 5 also supplies refineries in the US and homes and farms in Michigan with propane.  Interestingly enough, Line 5’s entry into Michigan is also underwater and is the reason Gov. Witmer wants it closed. What this implies is if Whitmer is successful, it will cause job losses in Ontario while our tax dollars will create jobs in Michigan.  That suggests those in Canada making the decision on this project are “dumb”!

The time estimate to complete the Lake Erie underwater PJM connection is 4 years which would mean it should be operative in 2025,  That year happens to be the same year the Pickering nuclear plants will be taken out of service. Those plants currently provide 2,500 MW of capacity and generally run at their maximum so closure will remove 2,500 MWh (megawatt hours) of supply to Ontario’s ratepayers almost every hour of the day.  Additionally, Ontario’s grid operator, IESO, forecasts the closure will create a supply deficit in the summer months when Ontario demand peaks. One wonders if IESO were consulted or involved in the discussions leading to the CIB jumping on board and if not then it adds “dumber” to the announcement.

The “Endorsements” contained in the CIB press release serve to make the reflections of those quoted look “dumb and dumber”.  Here are a couple of their quotes with some observations! 

First, we will start with Ehren Cory, CEO, Canada Infrastructure Bank who stated: “This project will allow Ontario to export its clean, non-emitting power to one of the largest power markets in the world and, as a result, benefit Canadians economically while also significantly contributing to greenhouse gas emissions reductions in the PJM market. The project allows Ontario to better manage peak capacity and meet future reliability needs in a more sustainable way. This is a true win-win for both Canada and the U.S., both economically and environmentally.”

Had Mr. Cory actually done some research with IESO he may have learned Ontario will be facing a shortfall from the time Pickering Nuclear is closed in 2025 until new reliable power is added, meaning Ontario will not have any of “its clean, non-emitting power” available to export.  How then could it contribute to any “greenhouse gas emissions reductions”? Dumb?

Second, here is what Greg Rickford, Minister of Energy, Northern Development and Mines, Minister of Indigenous Affairs had to say: The Lake Erie Connector demonstrates the advantages of public-private partnerships to develop critical infrastructure that delivers greater value to Ontarians. Connecting Ontario’s electricity grid to the PJM electricity market will bring significant, tangible benefits to our province. This new connection will create high-quality jobs, improve system flexibility, and allow Ontario to export more excess electricity to promote cost-savings for Ontario’s electricity consumers.”

Three years into the portfolio and from the basis of his comments he has still more to learn! Similar to Mr. Cory above it appears Minister Rickford also didn’t speak with anyone at IESO as he suggests the $655 million in Federal tax dollars used to build the Lake Erie underwater transmission line will “allow Ontario to export more excess electricity to promote cost-savings for Ontario’s electricity consumers “.  Had he spoken to IESO they would have perhaps explained we will be potentially facing an energy shortage once the Pickering Nuclear plants are closed. What that infers is we will not have “more excess electricity” to export! Dumb?

Third, this is what Catherine McKenna, Minister of Infrastructure and Communities apparently said: With the US pledging to achieve a carbon-free electrical grid by 2035, Canada has an opportunity to export clean power, helping to reduce emissions, maximizing clean power use and making electricity more affordable for Canadians. The Lake Erie Connector is a perfect example of that. The Canada Infrastructure Bank’s investment will give Ontario direct access to North America’s largest electricity market – 13 states and D.C. This is part of our infrastructure plan to create jobs across the country, tackle climate change, and increase Canada’s competitiveness in the clean economy.”

As one will note Minister McKenna, also famous for attending an illegal cock fight and eating dog pretty well maximizes the fallacies of the prior two quotes illustrated above and expands on them.  Once again, a call to IESO or perhaps a chat with Minister Rickford should have disclosed in 2025 when this project may be complete it would have spelled the end of “an opportunity to export clean power, helping to reduce emissions, maximizing clean power use and making electricity more affordable for Canadians.“  It will do none of those things!  If this is part of their “infrastructure plan to create jobs across the country, tackle climate change, and increase Canada’s competitiveness in the clean economy“ we are in big trouble!

Throwing our tax dollars at a plan that cannot be justified in any way is a total disservice to all Canadians or to summarize, this is both “dumb and dumber” than perhaps anything we have seen before aimed at wasting our taxes.

To paraphrase Mr. Corey; this a true economic loss for Canada and our taxpayers.

Wow! January and February 2021 show declining Ontario electricity costs!

For the first time in a decade Ontario experienced a reduction in the costs of grid generated electricity for two months in a row so the question should be; who should we thank?

As it turns out the Ontario demand for electricity in the first two months of 2021 were actually up slightly (1.3%) from 2020 or just under 300,000 MWh (megawatt hours) and about what 200,000 average households would have consumed in two months.  The costs of generation for January 2021 including both the HOEP (hourly Ontario energy price) plus the GA (Global Adjustment) dropped from $116.24/MWh to $99.83/MWh and for February it dropped from $127.31/MWh to $82.94/MWh.

So, why did costs decline?                                                                                                                                              

Was it because the Ford led Government took action and passed an Act to reduce the rates paid to wind or solar* generators or the OEB (Ontario Energy Board) decreed they would reduce rates or because IESO (Independent Electricity System Operator) suddenly contracted for low-cost generation?

The answer is none of the above!  As it turns out we can thank “Mother Nature” for a big part of the cost reduction as wind generation fell by 17.2% or almost 438,000 MWh (what almost 300,000 households would consume in two month). That drop in output by those IWT (industrial wind turbines) saved $60 million in costs alone and additionally the slight increase in consumption noted above coupled with the fact that one of the Darlington nuclear units was shut down for refurbishment meant we had much less surplus generation that had to be sold to our neighbours in NY or Michigan.  Our net exports (exports less imports) sold in 2021 were only 1.007 TWh (terawatt hours) versus 2.694 TWh in 2020. The drop in sales of the surplus power of 1.687 TWh was also sold for a higher price (less suplus generation results in higher prices) which resulted in a reduction in our loss on those sales of $221.2 million year over year.  In 2020 the cost of our exports added $289.8 million to the costs of electricity but that cost dropped to $68.6 million in 2021 for those two comparative months.

To account for the reduced wind and nuclear generation Ontario’s natural gas plants stepped up to meet our needs generating an additional 522,000 MWh at prices reflecting only fuel costs and a small margin.  Most of those gas plants were added to ensure our grid reliability after the Green Energy Act was legislated back in 2009 and the OPA (Ontario Power Authority), since merged with IESO; contracted wind and solar generation they knew required backup due to their intermittent and unreliable nature.

No doubt the eco-warriors will be up in arms when they notice natural gas generation increased in January and February 2021.  Those eco-warriors should take a few moments to reflect on the fact that without electricity from natural gas generators many Ontarians may have died from the cold.

This is just another demonstration of the wasted cost Ontarians are continually forced to pay due to the GEA (Green Energy Act) and the contracts granted to wind and solar generators.

*Solar produces little power during the Ontario winter months and 2021 saw generation of only 0.071 TWh in January and February 2021 but it’s cost added about $32 million for very little generation.

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.

Michigan Governor Gretchen Whitmer—How Dare You!

Back in mid-November 2020 Michigan Governor, Gretchen Whitmer announced her plan to shut down Line 5 by revoking and ending a 1953 easement that allows Enbridge Energy to run a dual pipeline through the Straits of Mackinac.  Revoking that easement would mean thousands of job losses in Michigan, Ohio and Ontario and raise the price of gasoline, jet fuel and propane for citizens in those locations and elsewhere. In the case of propane many rural areas in those three locations as well as Quebec are dependent on it as a source of heat during the winter.

The fightback from Ohio, various companies and unions and of course Enbridge has been significant however from the perspective of Canada’s Justin Trudeau’s government it has been “wimpy”! Pushback from Ontario has been what most would perceive as benign! Minister of Energy, Northern Development and Mines, Greg Rickford simply claimed he was “profoundly disappointed”! 

What Minister Rickford should have done is to tell Governor Whitmer he would use his responsibility for the Ontario electricity sector to push back and advise Governor Whitmer that he would order IESO to shutdown the intertie line with Michigan.  That action would cut them off from receiving our emission free, and very cheap electricity which they enjoy buying at subsidized prices.

Thanks to my friend Scott Luft, one is able to look back to 2008 on his data (extracted from IESO) and see how much cheap surplus power we have exported and what we received in payment for it.

It should first be understood Ontario’s gas plants (and coal plants when they operated) are only called on to generate power when demand cannot be met by our cadre of nuclear, hydro and renewables (wind and solar) so surplus energy is almost always caused because demand is low but the wind is blowing and/or the sun is shining. What that infers is most of Ontario’s exported and surplus power is considered almost emissions free! Alerted to the above; if one reviews Scott Luft’s chart it is easy to calculate information Minister Rickford could use in a chat with Governor Witmer or our Prime Minister. 

He would note Ontario exported 186.6 TWh over the ten years from 2011 to 2020 and further examination would allow him to determine Michigan received approximately 50% and New York (approximately 35%).  Adding the revenue generated he would note total revenue on those sales was $4.8 billion indicating Ontario sold each kWh for 2.57 cents. Going further he would see during the same timeframe IWT generated 93.7 TWh, solar 25.8 TWh and additionally Ontarian’s were obliged to pay the cost of curtailed wind, spilled hydro and steamed-off nuclear which totaled 49.4 TWh meaning ratepayers picked up the costs.  If one adds the three together, they come to 168.9 TWh which is more than we would consume in a year (in 2020 we consumed 132.2 TWh) and is very close to what we exported to our neighbours with Michigan getting about 93 TWh at a cost to them of just under $2.3 billion whereas those same 93 TWh cost Ontarians approximately $15.5 billion.

What the foregoing implies is Ontario ratepayers subsidized our electricity exports to Michigan to the tune of $12.2 billion in contravention of the USMCA Trade Agreement which clearly states:

To not use export subsidies or World Trade Organization (WTO) special agricultural safeguards for products exported to each other’s market.”

For some reason I suspect the State of Michigan will not raise this issue with the Biden Administration as they are quite happy to take our clean subsidized electricity and avoid having to fire up their numerous coal plants to obtain what amounts to approximately 10% of their annual consumption.

In the event Minister Rickford doesn’t want to shut down the “intertie” lines (recently upgraded) that delivers cheap power to Michigan he should at the very least demand Michigan issue Ontario “carbon credits” that are salable or can be applied to offset other emissions in the province!

Hopefully Minister Rickford will recognize the costs of our electricity exports to Michigan and how they negatively affect Ontario’s ratepayers and taxpayers and will run with the foregoing suggestions to ensure Line 5 is not cancelled by Governor Whitmer!