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

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

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

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

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

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

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

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

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

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

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

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

Only time will tell!

Four Years Later and I Repeat: “If I were Ontario’s new Minister of Energy …”

Back on May 30, 2018 an article I penned, just prior to the last provincial election, listed ways in which the incoming ruling party could reduce electricity costs by $2 billion annually.  Electricity costs had more than doubled in Ontario under the reign of the McGuinty/Wynne led Liberals due to their enactment of the GEA (Green Energy Act) when George Smitherman was the Minister of Energy.

Ontario’s voters were expected to respond when casting their vote in early June 2018 and they did!  The ruling OLP (Ontario Liberal Party) were decimated turning them into what many referred to as the “mini-van party”.

My prior advocacy work had focused on the “electricity sector” and the cost of wind and solar generation. My efforts included frequent dialogue with the Conservative appointed “energy critics” so, at that time, I and many Ontario ratepayers in rural and urban communities had hopes the Doug Ford led Ontario Conservative Party would deal with the mess the Liberals had created. Potentially the savings would have amounted to around $8 billion over the past four years.

The Ford led government based on a recent report from the Ontario Financial Accountability Office seems to have simply transferred $6.9 billion in electricity costs for the 2021-2022 year and $118 billion to taxpayers over 20 years, even though taxpayers are also ratepayers!  In quickly reviewing recently released platforms for the OLP, the NDP and the recent OPCP budget it sure appears they all have plans aimed at “global warming” and want to spend billions continuing the push to jump on board with “The Great Reset” advocated by the WEF and our Prime Minister, Justin Trudeau.

The only dissenting voice amongst the political parties seems to be the newly formed “New Blue Party” whose “BLUEPRINT” states they will take “down wind turbines to reduce electricity costs”!

Following are the recommendations put forward in the article four years ago and I will leave it to the reader to pontificate as to whether or not, any of them were acted on!

“Green Energy Act

Immediately start work on cancelling the Green Energy Act

Conservation

Knowing Ontario has a large surplus of generation we export for 10/15 per cent of its cost I would immediately cancel planned conservation spending. This would save ratepayers over $433 million annually

Wind and solar contracts

I would immediately cancel any contracts that are outstanding but haven’t been started but may be in the process of a challenge via either the ERT (environmental review tribunal) or the court system. This would save ratepayers an estimated $200 million annually

Wind turbine noise and environmental non-compliance

Work with the MOECC Minister to insure they effect compliance by industrial wind developers both for exceeding noise level standards and operations during bird and bat migration periods.  Failure to comply would elicit large fines. This would save ratepayers an estimated $200/400 million annually

Change the “baseload” designation of generation for wind and solar developments

Both wind and solar generation is unreliable and intermittent, dependent on weather, and as such should not be granted “first to the grid rights”.  They are backed up by gas or hydro generation with both paid, for either spilling water or idling when the wind blows or the sun shines.  The cost is phenomenal.  As an example, wind turbines annually generate at approximately 30 per cent of rated capacity but 65 per cent of the time its generation is at the wrong time and not needed. The estimated annual ratepayer savings if wind generation was replaced by hydro would be $400 million and if replaced by gas in excess of $600 million

Charge a fee (tax) for out of phase/need generation for wind and solar

Should the foregoing “baseload” re-designation be impossible based on legal issues I would direct the IESO to institute a fee that would apply to wind and solar generation delivered during mid-peak and off-peak times.  A higher fee would also apply when wind is curtailed and would suggest a fee of $10/per MWh delivered during off-peak and mid-peak hours and a $20/per MWh for curtailed generation. The estimated annual revenue generated would be a minimum of $150 million

Increase LEAP contributions from LDC’s to 1 per cent of distribution revenues

The OEB would be instructed to institute an increase in the LDC (local distribution companies) LEAP (low-income assistance program) from 0.12 per cent to 1 per cent and reduce the allowed ROI (return on investment) by the difference. This would deliver an estimated $60/80 million annually reducing the revenue requirement for the OESP (Ontario electricity support program) currently funded by taxpayers

Close unutilized OPG generation plants

OPG currently has two power plants that are only very, very, occasionally called on to generate electricity yet ratepayers pick up the costs for OMA (operations, maintenance and administration). One of these is the Thunder Bay, former coal plant, converted to high-end biomass with a capacity of 165 MW which would produce power at a reported cost of $1.50/kWh (Auditor General’s report) and the other unused plant is the Lennox oil/gas plant in Napanee/Bath with a capacity of 2,200 MW that is never used. The estimated annual savings from the closing of these two plants would be in the $200 million range.

Rejig time-of-use (TOU) pricing to allow opt-in or opt-out

TOU pricing is focused on flattening demand by reducing usage during “peak hours” without any consideration of households or businesses.  Allow households and small businesses a choice to either agree to TOU pricing or the average price (currently 8.21 cents/kWh after the 17% Fair Hydro Act reduction) over a week.  This would benefit households with shift workers, seniors, people with disabilities utilizing equipment drawing power and small businesses and would likely increase demand and reduce surplus exports thereby reducing our costs associated with those exports. The estimated annual savings could easily be in the range of $200/400 million annually

Other initiatives

Niagara water rights

I would conduct an investigation into why our Niagara Beck plants have not increased generation since the $1.5 Billion spent on “Big Becky” (150 MW capacity) which was touted to produce enough additional power to provide electricity to 160,000 homes or over 1.4 million MWh.  Are we constrained by water rights with the US or is it a lack of transmission capabilities to get the power to where demand resides?

MPAC’s wind turbine assessments

One of the previous Ministers of Finance instructed MPAC (Municipal Property Assessment Corp,) to assess industrial wind turbines (IWT) at a maximum of $40,000 per MW of capacity despite their value of $1.5/2 million each.   I would request whomever is appointed by the new Premier to the Finance Ministry portfolio to recall those instructions and allow MPAC to reassess IWT at their current values over the terms of their contracts.  This would immediately benefit municipalities (via higher realty taxes) that originally had no ability to accept or reject IWT.

If one does a quick addition of the foregoing one will see the benefit to the ratepayers of the province would amount to in excess of $2 billion dollars which co-incidentally is approximately even more than the previous government provided via the Fair Hydro Act.

Hmm, perhaps we didn’t need to push those costs off to the future for our children and grandchildren to pay!

Now that I have formulated a plan to reduce electricity costs by over $2 billion per annum I can relax, confident that I can indeed handle the portfolio handed to me by the new Premier of the province.”

Are Premier Ford and PM Trudeau Aware of the Big Stick they Hold to Stop Michigan Governor Whitmer Shutting down Line 5?

   

Lorrie Goldstein of the Toronto Sun wrote a great article about how Premier Doug Ford is sucking up to Trudeau’s “woke” followers in order to win their vote in the upcoming Ontario election. The article described ways Ford and Trudeau have agreed on several different issues. One of those was to fight the efforts of Michigan Governor, Gretchen Whitmer and her push “to shut down Enbridge’s Line 5 pipeline under Lake Michigan and Lake Huron, which carries light crude oil and natural gas liquids, the closure of which would damage both the Canadian and Ontario economies.”

The fight with Michigan has been going on since November 2020 when Governor Whitmer ordered it shut down.  Enbridge, supported by the Trudeau and Ford led governments successfully fought the order, pointing to a long-standing agreement between the US and Canada in respect to cross-border pipelines.  Despite the prior win by Enbridge, Governor Whitmer has recently decided to try again using a different tactic which on the surface looks wimpy.  We should all find it humorous that even our past and present “net-zero” advocates; Wilkinson and Guilbeault as Ministers of the Environment and Climate Change, support Enbridge, according to an interview reported by SARNIA News Today!

What is not understandable is why the Ontario Ford led government didn’t use the big stick at their disposal. If Doug Ford looked at IESO’s “Annual Imports and Exports by Destination” he would see that Ontario over the past ten (10) years has supplied Michigan with about 10% of their annual consumption according to the Michigan energy profile. That (approximately) 10% is supplied at prices that would make Ontario’s ratepayers and taxpayers jump for joy if they could keep it!  During those 10 years we have supplied Michigan with 87,174 GWh (gigawatt hours) at bargain basement prices. Over those 10 years in almost every hour we provide them with 1,000 MWh or more of our “non-emitting” electricity allowing them to both save money and reduce emissions while we Ontarians are forced to absorb the subsidy.

As an example the HOEP in 2021 reported in IESO’s Year in Review  was 2.85 cents/kWh and that year we exported 8,482 GWh to Michigan (49.3% of all exports). In 2020 we exported 9,835 GWh or 48.4% of all exports (about what 1.1 million average Ontario households annually consume) to Michigan when the HOEP was 1.39 cents/kWh. The cost to Michigan for 2019 was just under $137 million for our power resulting in Ontarians absorbing costs of approximately $1.026 billion.  

Another very recent example was April 30th and May 1st when Ontario demand was relatively low with demand on April 30th peaking at 14,446 MW and on May 1st peaking at 15,255 MW.  Nuclear and Hydro would have had no problem providing most of that power for either peak.  What happened on both those days was atypical of our Spring and Fall seasons when the wind blows. On the 30th IESO reported IWT (industrial wind turbines) grid connected generation of 40,185 MWh and on May 1st it was 31,115 MWh. Additionally, it appears IESO also curtailed about 8,300 MWh on April 30th and 28,700 MWh on May 1st!    

The combined cost of the two days for grid accepted IWT generation plus the cost of the curtailed IWT generation was approximately $14.065 million. Needless to say, with low demand we were busy exporting power and 68,890 MWh of it went to Michigan.  Michigan had to ante up $146,000 on April 30th paying 0.0425 cents/kwh and 0.0823 cents/kWh ($284,000) on May 1st resulting in us generous Ontario ratepayers/taxpayers picking up a subsidy of $13.9 million over the two days.

It is also worth noting that approximately 65% of Michigan’s electricity generation is produced with fossil fuels and coal generation represents almost half of that generating about 30% or 30,000 GWh annually!

So, the question is, do we blame it on the senseless IWT contracts the McGuinty/Wynne government signed with “first-to-the-grid” rights or the Ford government for doing absolutely nothing to amend those contracts since being elected? 

Without the latter Governor Whitmer’s Michigan ratepayers are simply enjoying the benefits so; why doesn’t the Ford Government instruct IESO to stop using the intertie lines with them until she agrees to stop pushing for closure of Line 5. Paying for all the unneeded wind and curtailing it might actually cost us Ontario ratepayers/taxpayers a little less! 

The time has come for Ford and Trudeau to use the Big Stick!

NB: It is worth pointing out that Michigan has 320,000 households who use propane for heating and other purposes and they laid out a plan that will ensure their supply is not impacted if and when the Line 5 pipeline is shut down.  The plan doesn’t mention how others like Ontario, Quebec and neighbouring states will handle the loss of propane however.  The plan is dated November 3, 2021 so it is obvious Whitmer is determined to shut Line 5 down.   Link to plan: https://www.michigan.gov/mpsc/-/media/Project/Websites/mpsc/consumer/propane/MI_Propane_Security_Plan_Overview.pdf?rev=90d4da17bbfb482a96fec64e2201b6c9

Bits and Pieces Related to the “Net-Zero” Push

There were a few recent announcements and events that should have caught the attention of the general population over the past couple of weeks so let’s look quickly at a few of them!

Largest private storage battery in North America’ to help Imperial Oil cut emissions in Sarnia

This one was in the Financial Post back on February 16, 2022 and stated an Italian company would build a 20 MW battery storage unit for Imperial Oil that would reputedly reduce “their energy expenditures by millions of dollars per year.” They would download cheap energy in the middle of the night to charge the battery storage unit and then use it during peak hours. Many of the “Class A” customers in Ontario already take advantage of this using gas generating units firing them up during peak hours saving millions.  Scott Luft noted in a post a couple of years ago; since the ICI (industrial conservation initiative) inception in late 2011 through to the end of 2019 the cost to Class B ratepayers was approximately $1.4 billion (average of about $170 million per annum) paid to reduce the GA for those large industrial ratepayers. One should assume the Ford government could have changed the way the burden is put on Class B ratepayers to subsidize Class A ratepayers but they have done nothing. The burden continues to fall on Class B ratepayers and part of that has been transferred to taxpayers first by the Wynne led government and then increased by the current Ford led government. Hmm, wondering, would it be cheaper for Imperial Oil to buy those Clean Energy Credits (CEC) Minister Smith is considering instead of using that battery storage unit?

Wind Turbine Setback Promises Not Kept

Before and during the last election campaign the Ford led Ontario Conservative Party promised if elected they would review the setbacks for industrial wind turbines (IWT) as well as the contaminated well water in the Chatham/Kent region.  In the almost four years they have been in power they have done nothing related to either of the two foregoing promises.  WCO (Wind Concerns Ontario) have recently (for the umpteenth time) pointed out the 7,000 complaints filed about IWT noise levels and also posted an article from four years ago about the Chatham Kent well water problems which have also been ignored.  Sure, looks to be almost one of those “Promise Made, Promise Missed” sayings which Premier Ford loves to cite except for that final word.

OPG Year-end 2021

OPG released their 2021 year-end results March 10, 2022 and despite a 4.5 TWh drop (5.5%) in generation they still managed to generate $1,325 million a slight (2.6%) fall from 2020.  Forgone generation due to SBG (surplus baseload generation) dropped from 4.3 TWh in 2020 to only 1.9 TWh in 2021 meaning “water rental payments” declined by $30 million. Currently two of the Darlington nuclear units are down for refurbishment with Unit 3 scheduled to be returned to service in the first quarter of 2024 and Unit 1 in the second quarter of 2025. With both those units undergoing refurbishment we should expect greater dependency on our gas generation plants meaning both OPG’s Napanee and Lennox plants should benefit by supplying more peak generation and maintain profitability for OPG without driving costs up.

Bitcoin mining data centre opens in Sarnia

It seems back in yesteryear, mining referenced; “the business or process of working mines” and extracting ore! In recent years it seems all about setting up an elaborate data centre with complicated math problems which when solved supposedly create a “bitcoin”!   One of those bitcoin mines has recently started operations in Sarnia.  Established by “Bitfury Group, an Amsterdam-based Bitcoin mining and crypto tech company” it will start with a 16 MW capacity and expand by 12 MW by May end. It may eventually expand to 200 MW.  To put the latter number in context; a plant capable of generating 200 MW per hour is about what 200,000 average Ontario households would consume annually. The power to support the “mine” will be provided by TransAlta’s Sarnia Cogeneration Plant, a 499 MW capacity natural gas-powered plant. The TASarnia plant is also under contract to IESO and several other Sarnia located companies. Curiosity piqued about how much energy “bitcoin” operations consume globally led to an almost one year old article in the Harvard Business Review. The article suggested, at that time, it was 110 TWh (terawatt hours) which is equivalent to about 80% of Ontario’s annual consumption.  One should assume all of that 110 TWh was/is provided by reliable fossil fuels or nuclear power as intermittent wind and solar could never be relied on to ensure those mining data centres continued to operate.

As one should assume from the foregoing “bits and pieces” the path to net-zero is full of pot-holes eco-warriors and inane politicians seem unable to visualize!

PS:  I was called out on the following “(Scott Luft noted in a post a couple of years ago; since the ICI (industrial conservation initiative) inception in late 2011 through to the end of 2019 the cost to Class B ratepayers was approximately $1.4 billion (average of about $170 million per annum) paid to reduce the GA for those large industrial ratepayers.)”.  I would point out I always have a lot of faith in what Scott posts so I must assume it related to something as simple as a misplaced period “.”!  It turns out the OEB, Market Surveillance Panel back in December 2018 evaluated the ICI and in their report stated:  “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. In 2017, the ICI increased the cost of electricity for households and small businesses by 10%.”

Promise Made, Promise Missed by a Country Mile

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

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

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

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

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

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

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

Wind and Solar forecast to Cost Taxpayers a tiny bit Less

The Province of Ontario just released the Third Quarter Finances report and seem happy as their press release noted they are “now projecting a deficit of $13.1 billion in 2021-22 – an improvement of $8.4 billion from the deficit forecast in the Fall Economic Statement.”

Revenue Surprise

In looking over the highlights from the report it appears one of the reasons for the improvement is they note revenue from OPG and Hydro One is now forecast to be $1,535 million versus the original forecast of $670 million so that alone produced $865 million or slightly more than 10% of the “improvement”!  Hmm, that presumably came from us ratepayers and the 129% contributed to the improvement was made without any appreciable increase in consumption!

Expense Shortfall

The other issue one should note is the costs contributed by taxpayers is forecast to come in at $112.3 million less or 1.7% below their forecast.  The original forecast for this expense suggested it would cost taxpayers $6,493.6 million but the revised forecast is now $6,381.3 million.  As most readers know the Ford government transferred responsibility for absorption of much of the costs of renewable energy (principally wind and solar) contracts to taxpayers. That move’s intent was to reduce the burden on ratepayers and presumably to also make Ontario’s electricity rates somewhat competitive with our neighbours!  The fact that the past year has seen slightly less output from wind and solar while some nuclear reactors were down for maintenance resulted in less curtailed wind generation and less hydro spillage saving taxpayers those costs.

The ups and downs of generation by IWT (industrial wind turbines) play a major role in the cost shifts from ratepayers to taxpayers and that is evident by simply comparing just two recent hours of IESO data.

Hour 9 on February 15, 2022 as the first example has IESO reporting IWT generated 384 MWh and the HOEP (hourly Ontario energy price or market price) which is what IESO sold our surplus power to our neighbours (NY, Michigan and Quebec) at that hour, was $111.64/MWh whereas at the same hour on February 16, 2022 the price we were selling surplus power dropped to  $43.23/MWh.  On February 16th those IWT were generating 4,387 MWh and we were exporting considerably more at that hour than we were the prior day!

If we then compare hour 12 those IWT on the 15th were generating a miserly 56 MWh and the HOEP price was $46.12 but on the 16th that price was only $14.36/MWh when those IWT were generating 3,566 MWh and another 400 MWh were curtailed.

Obviously, the hour of the day, if it’s a workday along with outside temperatures play a significant role in demand but IWT are insensitive and deliver power ONLY when the wind is blowing and also ignore seasonal swings which significantly affects demand.

Gas plants must be at the ready for our variably demand and they were; as at hour 9 on the 15th they were generating 6,610 MWh and at hour 12 they produced 5,606 MWh.    At hour 9 on the 16th, they delivered 3,108 MWh and by hour 12 only 1,733 MWh were needed.

What the foregoing points out is that without gas plants being at the ready on hour 9, as one example, we may been close to experiencing a rolling blackout or a brownout experience with low voltage power. 

Not only are Ontarians paying above market prices for contracted wind and solar generators but we are also obliged to pay for their penchant to fail.  What the latter means is, we pay for gas plants regardless of whether they are simply sitting at the ready or actually generating power due to the failure of IWT or solar to provide needed power!

Gas plants ensure we can keep the lights on.

Which is it Minister of Energy, Todd Smith, a Surplus or an Emerging Supply Need?

Minister of Energy, Todd Smith, was the featured speaker at the prestigious Empire Club of Canada’s “Zoom Event” on January 28, 2022.  Smith was coincidently introduced by the VP of LiUNA (Laborers International Union of North America) who back in 2018, just prior to the last provincial election, changed their support from the Ontario Liberal Party to the Ontario PC Party!

Smith’s 20-minute speech included much of what was also outlined in his January 26th and January 27th directives to IESO.  The first directive was associated with the “Lake Erie Connector Project“ which would reputedly provide some “intertie enhancements” and “the creation of new opportunities to sell Ontario’s surplus electricity to the benefit of Ontario ratepayers by lowering electricity costs“!  As noted in an article penned back on April 24, 2021 with the scheduled closure of the Pickering Nuclear Plant and it’s 2,500 MW capacity in 2025 it is apparent Ontario will not have the surplus power available for export.  That suggests the Lake Erie line will provide only a marginal benefit associated with the “intertie enhancements” but ratepayers will be saddled with the full costs even though a large part of funding will come from the federal taxpayers via a $655 million investment from the CIB (Canada Infrastructure Bank). While Minister Smith includes some caveats in his directive about the connector project it seems strange that he even bothers to instruct IESO to push ahead with examining it further.

The second directive of 17 pages (English/French) of January 27th includes a “Background” which amongst other strange claims has a conflicting statement of the directive issued the previous day related to selling “Ontario’s surplus electricity”:

 “After more than a decade of stable electricity supply, and at times, a surplus, IESO has forecasted an emerging supply need that grows through the latter part of the decade. This is a result of the upcoming closure of the Pickering Nuclear Generating Station, refurbishment schedules of other nuclear facilities, expanding electrification and increasing business investment in the province. Fulfilling this forecasted supply need will require IESO to procure electricity products and services from both existing and new resources.

The foregoing comments seem ironic coming, as they do, from the Conservative Minister considering most of the prior decade the electricity file was misdirected by the Ontario Liberals under Premiers McGuinty and Wynne and drove energy prices up by well over 100% indicating an unstable supply from wind and solar that created the huge jump in ratepayer costs. Why would Minister Smith suggest his predecessors provided a “stable” supply; almost patting them on the back for increasing costs by well over 100%?

We should also take issue with the comment “at times, a surplus,” as the “surplus” has been significant since the addition of those reputedly “green” non-emitting IWT and solar panels. Ontario’s net exports (exports minus imports) soared averaging well over 10 TWh (terawatt hours) for the past several years and were sold for pennies of their actual costs.

Another worrying issue raised in just that first paragraph is the reference to “expanding electrification” and later on it mentions acquiring “storage facilities” presumably meaning batteries or pumped storage both of which will add costs.  In Minister Smith’s speech at the Empire Club, he mentioned “electrification” several times suggesting he or Premier Ford has bought into the concept of ridding the province of gas- and diesel-powered transportation along with reliable gas plants.

When Minister Smith gets into the actual Directives, we should view 1. (related to 4.) and 3.e.as concerning!  

Looking first at 3.e.; associated with MT RFP (Medium-Term Request For Proposal) note it states: “IESO shall offer contract extensions to contract counterparties whose facilities are successful in the MT RFPs, and whose existing contracts with IESO have expiry dates that occur before the start date of the respective facility’s MT RFP Commitment Period.”

Does the foregoing suggest he is in favour of extending expiring contracts for wind and solar or allowing them to be refitted?  The implications of the foregoing are profound as they had promised to rid the province of IWT due to the harm they do to the rural human population and nature itself by killing birds and bats as well as negatively affecting aquifers in certain areas of the province!

The directives 1. And 4. are obviously about either battery storage or pumped storage or both but # 1. doesn’t reference either as the script is about; “Unforced Capacity (UCAP) basis, calculated in accordance with IESO’s published methodology for calculating such value for different electricity resources.“ UCAP was the subject of a IESO May 28,2021 Resource Adequacy Engagement and based on its 74 pages I was able to discern UCAP seems to be the ability to provide (on demand) a maximum of four (4)  hours of power during peak demand periods. That clearly signals Minister Smith will be blessing the Oneida battery storage project and either or both of the two proposed pumped storage projects. One of the “pumped storage” projects is proposed by Northland Power for Marmora and an article penned about it back in late 2013 can be found on the Energy Probe website.  Another article about the Oneida Battery Storage and the TCE pumped storge was written just over a year ago. Needless to say, those reviews on the three “storage” projects were not positive.

It sure appears while Minister Smith, in his speech at the Empire Club, claimed the Ford led government had reputedly resolved the electricity mess created by the McGuinty/Wynne leadership team they haven’t and want to make it worse.  Minister Smith has declared a moratorium on any new gas plants as part of the “electrification” process and is seeking ways to close them down.

Should he have bothered to simply look at the mess the energy system is in the UK and the rest of Europe where electricity prices are skyrocketing to astronomical heights due to their dependence on renewable energy and their move to non-emitting “electrification” sources he might remember some of the chats we had back when he was simply the “critic” on the energy file!

How times have changed and does he not recognize taxpayers are now picking up about $6.5 billion annually just in an effort to not increase ratepayer costs further!

NB: When Minister Smith’s speech at the Empire Club became available, I reached out to several individuals with skill sets far surpassing mine seeking their views. I will bring those thoughts out in a separate post in a few days without naming names.    

Ontario Ratepayers Blinked, and Nothing Happened

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

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

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

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

Water tax allocation etc,                                                                                             

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

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

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

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

Wind Hammers Ontario Ratepayers and Taxpayers

Yesterday (January 5, 2022) Ontarians were once again battered by gusting winds approaching 90 km at times and those with ownership of industrial wind turbines (IWT) in the province were loving it!  Our neighbours in Michigan, New York and Quebec, etc. also were pleased as they collectively took 59,242 MWh (megawatt hours)) of the 90,146 MWh generated by those IWT and only had to pay an average of $17.33/MWh (1.7 cents/kWh).

The 90,146 MWh ($135/MWh) added to the 7,800 MWh ($120/MWh) of curtailed wind generation drove the total cost of wind generation for the day to $13,106,000 or $145.39/MWh (14.5 cents/kWh).

Those IWT generated an average of just over 85% of their rated capacity throughout the day (including the curtailed MW) and 58% of their generation was exported for those very cheap prices.  I’m confident the trading companies buying and selling our surplus generation for our neighbours also enjoy the benefits we bestow on them too by creating the trading revenue.  

So, we generated approximately $1,027,000 from the sale of those 59,242 MWh but they cost us Ontario ratepayers and taxpayers about $8,613,000. That means we subsidized the sale with $7,586,000 or $128.00/MWh of our after-tax dollars!  We hope our neighbouring states and provinces are very appreciative of our continuing generosity!

We Ontario taxpayers and ratepayers should appreciate the very recent “mea culpa” expressed by our former Premier, Kathleen Wynne, in her interview with MacLean’s magazine when asked about issues she didn’t feel good about stated: “Well, I score myself very low on the electricity price,” Wynne said.“

Hey, Kathleen, we ratepayers and taxpayers score you and your predecessor, Dalton McGuinty and those minions like Gerald Butts, Katie Telford and Ben Chin who pulled your strings very low too. Perhaps your handling of the electricity file is why the Ontario Liberal Party became the EV (electric vehicle) minivan party. 

The unfortunate part of your party’s demise is Butts, Telford and Chin now pull the strings of the Liberal Party of Canada and seem intent on perpetuating your low scores on all of Canada’s energy security!

Industrial Wind Turbines Once Again Demonstrate their Unreliability

The unreliability of those industrial wind turbines (IWT), touted as a key ingredient to save the world from “global warming” by eco-warriors and obtuse politicians, once again demonstrated their uselessness!

Here in Ontario on December 28, 2021 at 4 AM (the middle of the night) they were cranking out power (when demand was low) generating 69.4% (3,072 MWh) of their rated capacity but by 4 PM in the afternoon when demand was much higher their output was a miserly 1.5% (65 MWh) of their rated capacity.  To add further context to the foregoing at 4 AM IWT were generating about 22% of total Ontario demand but by 4 PM when demand was much higher those IWT were generating 0.004% of Ontario’s demand.

IWTs bad reliability habit means our grid operator, IESO, has a much more complex system to operate with a transmission grid connecting all of those IWT and requiring gas plants to remain “at the ready” when the wind dies down or picks up.  Those manipulations add costs to our electricity system thereby helping to create energy poverty by driving up the per kWh (kilowatt hour) costs for households.  It also serves to drive our manufacturing companies to other provinces and U.S.A. states with lower electricity prices meaning job losses are one of the outcomes.

As if the foregoing isn’t bad enough if one looks at just 9 hours starting at 10 PM (when Ontario demand falls) December 27th through to 7 AM (when electricity demand starts its daily increase) on December 28th we learn we exported 23,514 MWh to our neighbours in Michigan, NY, Quebec, etc. as that IWT generation was surplus to our needs.  We sold those 23,514 MWh for the average price of $17/MWh (1.7cents/kWh) during those 9 hours.  Co-incidently those IWT generated 22,617 MWh during the same timeframe and it also appears we curtailed another 1,100 MWh meaning Ontario’s ratepayers picked up the costs for 23,717 MWh of wind which highlights them as the cause of the exported power at the miserly price of 1.7cents/kWh.

The all-in costs (including curtailed) for the IWT generation over the 9 hours was approximately $3.2 million but we received only $400K in payment for selling a like amount of their generation to our neighbours so; Ontario’s ratepayers and taxpayers picked up the loss of $2.8 million ($311K per hour).  Please note the foregoing loss is from only 9 hours out of 8,760 hours in a full year.

Perhaps as a UK website “Net-Zero Watch” recently suggested to the UK’s Prime Minister, Boris Johnson, Ontario’s Minister of Energy, Todd Smith should take heed and do as they recommend and; “compel wind and solar generators to pay for their own balancing costs, thus incentivising them to self-dispatch only when economic.”

Ontario’s electricity sector needs to rid itself of the costs of IWT’s unreliable and intermittent supply so now is the time to bring in some new regulations to stop the bleeding!