As many know should you fly a propellor driven aircraft you need a fossil fuel engine to make that propellor spin and keep you flying! That analogy also applies to using wind to create electricity utilizing those IWT (industrial wind turbines). If the wind isn’t blowing, we need either fossil fuel generation, hydroelectricity (water flowing through turbines) or nuclear generation to keep the lights on! Nuclear and most of hydroelectric generation are considered baseload power as is evident on an hourly, daily and annual basis whereas some hydro and natural gas generators stand at the ready to ramp UP or ramp DOWN. In years past that ability allowed it to respond to the hourly electricity demand throughout the day but since the addition of wind and solar generation it is also required to be at the ready for times when the wind isn’t blowing and the sun isn’t shining.
Evidence of the foregoing is obvious from the following screenshot from IESO late on May 6th, 2023, for the six days starting April 30, 2023, up to hour 20 on the 6th! The green (sprinkled with a little yellow) depicts the generation from wind with the occasional spot of yellow being solar generation.
As the expression goes; “a picture is worth a thousand words” and the foregoing does that as wind generation was quite in evidence during the first three May days but suddenly almost disappeared as we traversed into the 4th and 5th of May. Thankfully our natural gas plants were available to fill in for the missing wind and solar generation and the Spring Freshet supplied water for our rammable hydroelectric generation sources.
What wind and solar generation do is basically layer additional costs on to what we pay for electricity in the province with their first to the grid rights. Ontario’s ratepayers/taxpayers are therefore forced to pickup approximately $6.5 billion of annual costs associated with their; “on again, off again” generation to pretend we are actually having a positive effect on reducing emissions.
Highly unlikely emissions have been reduced considering the emissions generated by the mining and manufacturing processes required for those IWT and solar panels! Ah, but our politicians here in Canada know those emissions were created in another country so will blatantly ignore that latter fact!
As Walter Scott is credited with saying hundreds of years ago; “O, what a tangled web we weave when first we practise to deceive!“
Well, the wind wasn’t blowing quite as much as April 11th but what was actually consumed by Ontario’s ratepayers April 14th set a new record cost; to the best of my knowledge, per MWh!
On April 13th the 4,900 MW of grid connected capacity in Ontario of those IWT (industrial wind turbines) were forecast by IESO to generate 62,063 MW (52.8% of capacity) but only 53,317 MWh or 45.3% of its capacity was accepted meaning about 8,746 MW were curtailed.
The math on the above meant total costs to Ontarians (ratepayers and taxpayers) for IWT generation was $6,722,325 for grid accepted generation at $135/MWh plus $1,049,520 at $120/MWh for curtailed generation so it totaled $7,771,845.
Just like two days earlier we didn’t need what those IWT generated as demand, while somewhat higher, throughout the day, peaked at 16,488 MW at Hour 19 (hour ending at 7 PM) and was only slightly over 16,000 MW for three hours (hour 18 to hour 20) of the whole day.
As it was on April 11th, IESO were busy selling the surplus power off with most of it going to Michigan, New York, and Quebec. The average market price or HOEP (hourly Ontario export price) over the 24 hours was only $10.74/MWh and net exports (exports minus imports) were 93.4% (49,795 MW) of the grid accepted IWT generation. Total net exports (exports minus imports) were 53,317 MW resulting in us ratepayers only receiving $534,798 (49,795 MW X $10.74 = $534,798) for the exported IWT generation.
As previously noted, we should assume most of the surplus we sold to our neighbours was either all IWT generated power or caused by it meaning Ontarians consumption of IWT generation was only 3,522 MW of the IESO accepted 53,317 MW generated by them.
Taking the foregoing logic to the next step we can easily calculate the cost of the 3,522 MW of IWT generation we consumed! The math is simple; The total cost of IWT generation (grid accepted and curtailed) of $7,771,845 minus the $534,798 generated from their sale to our neighbours divided by the 3,522 MW we consumed in Ontario i.e., $7,237,047/3,522 MW = $2,054.81/MWh.*
Wow, the $2,054.81/MWh it cost us on April 13, 2023, for IWT generation is rather mind-boggling and who knows, it may well have happened in the past but unless you examine IESO data on a daily basis one would never know, although the $6.5 billion taxpayers absorb annually to keep rates at current levels may be why we don’t notice.
In the process of putting together this information a quick glance at generation today on April 14th disclosed IWT generation had dropped to the point where they generated 84 MW for Hour 17 and Hour 18 clearly disclosing why IWT are labelled intermittent and unreliable. The 84 MW could well be less than they are actually consuming to keep that light blinking on and off at the top of their towers!
We clearly don’t need them for grid connected generation and it is so disappointing our politicians won’t accept that obvious fact and rescind their “first-to-the-grid” rights!
Back in April 2018, Vic Fedeli, who, at that time, was Interim Leader of the Ontario PC Party wrote a 130 page document titled: “Focus on Finance, A Look Into Ontario’s Finances”. Needless to say his review had much to say about the mess of the electricity sector from the privatization of Hydro One to the Fair Hydro Plan. Naturally it dwelled on how the Liberal governing party had driven up electricity prices backing it up with reports from both the Ontario Auditor General as well as the FAO (Financial Accountability Office).
At that time Ontarians will remember both residential and business rates had climbed extensively during the Liberal reign with residential rates having jumped over 100% (74% from just generation costs) and companies such as Maple Leaf Foods; whom he quotes in the report with a Sr. VP stating: “our electricity price increased by 18% in 2016 … I think anyone would agree that 18% is a large increase.” He added, “If we had operated in Manitoba instead of Ontario it would have been a 65% saving on our electricity bill.“
MPP Fedeli also had a lot to say about the “Fair Hydro Plan” introduced by the Wynne led government noting: “there are four major components: refinance the Global Adjustment (GA), adding an additional accumulated debt of about $28 billion; enhance consumer rebates, at a cost of $905 million, plus the $1 billion required from the tax base to pay for the 8% HST rebate; lower the Industrial Conservation Initiative threshold, with the cost to the ratepayers yet to be calculated; and find efficiencies in the market, to save at least $200 million per year, starting in 2021. As outlined earlier, the government has co-opted OPG into their scheme, so these liabilities don’t show up on the province’s books. This is inappropriate and risky for OPG.“
Needless to say MPP Fedeli not only criticized the actions of the OLP (Ontario Liberal Party) on the energy sector but all other aspects including those with fiscal implications! Following are a few key examples contained in his Focus on Finance report with current updates.
Debt to GDP
Then: MPP Fedeli Report: “Ontario’s debt-to-GDP is up by half a percent, from 37.1% to 37.6% this year.”
It appears the Debt-to-GDP ratio has increased to 41.4% since the Ford Government came to power.
Net Debt
Then: MPP Fedeli Report: “In 2016-17, Ontario’s net debt reached $302 billion, or approximately $21,500 per Ontarian.“
Now: From the 2023 Budget: Net Debt Interim 2022–23 $395,785 (hundreds of million or $396 billion). So the current Net Debt is approximately $94 Billion higher then 2016-17 which represents an increase of 31% in those six years or about $27,200 per Ontarian; an increase of 26.5%!
Budget Spending
Then: MPP Fedeli Report: “Since 2003, the current government has doubled spending from $71 billion to $141 billion.“
Now: From the 2023 Budget: 2023 Budget Total Expense Outlook $202,572 (hundreds of million or $203 billion) an increase of $62 billion or 44%!
Energy Critic
MPP Fedeli when first elected to Ontario’s parliament was named as the energy critic and frequently plied yours truly with questions and sought information/perspectives related to the electricity sector which I was happy to provide. The Focus on Finance report contained a reference and material related to an article I had written in late March 2017 titled: “Found! Where the Wynne government spent $36 billion!“ posted on my blog.
Fedeli started off the section with the details from my article with the following: “What did $50 billion get us? Recall the Premier stated the government spent $50 billion on the cost of the rebuild. But her own Energy Minister issued a news release claiming Ontario had “invested more than $35 billion” in new and refurbished generation. So, between them, their talking points differed. My retired banker friend and frequent National Post energy columnist Parker Gallant beat me to the punch and has created a comprehensive list. His findings are here:“!
He went on to highlight my findings stating: “This is indeed shy of the $50 billion the Premier says was spent, but the number lines up with the Energy Minister’s claim. Nonetheless, this proves that the bulk of the money did not go towards “the cost of the rebuild.” It went to intermittent and unreliable wind and solar projects (like the AG said it did), which are unable to deliver generation when the wind isn’t blowing and the sun’s not shining. The second largest category created no generation, nor improved transmission, nor reduced blackouts or brownouts.“ My estimates came to over $36 billion and included several spending categories most of which simply increased our electricity costs and as he noted most of the costs went to “deliver generation when the wind isn’t blowing and the sun’s not shining”.
While I appreciated MPP Fedeli referencing me as his “retired banker friend” at the time I would note since the Ford led OPC Party gained a majority he and others including our local MPP Todd Smith, Minister of Energy no longer call me for input and will not respond to my calls or e-mails much like those who were in the McGuinty or Wynne led governments when they were in power!
As noted above, in respect to some of the macro details MPP Fedeli noted in his 2018 report one of the issues not mentioned is any reference to either the costs of provincial employment or the number of provincial employees appearing on the notorious “Sunshine List”!
Sunshine List:
2018: A search disclosed back in 2018 before the Ford led government won the election there were 151,400 employees who made the list collectively earning $19.3 billion or an average of $127.5K per employee.
2022: The list for 2022 was recently released and it disclosed there were now 266.900 provincial employees who made the Sunshine List and their collective costs to us taxpayers was $$33.3 billion which works out to $124.5K per employee.
Conclusion:
It appears we can give the Ford government some credit (minor) for having reduced the provincial employee’s annual average earnings but the impact on increasing the number of employees earning over $100K per year increased by over 76%. Adding that 76% to the number of employees earning over $100K in just four years obviously has had a negative affect on Ontario taxpayers.
Reflecting on the above simply confirms the Ford led government has done an incredibly bad job at managing Ontario’s economy even considering the Covid 19 costs over the two years!
Further, Ontario has nothing to show of any beneficial change made in managing the electricity portfolio! Taxpayers now have to absorb in excess of $6.5 billion annually associated with the ongoing costs of the $36 billion identified in 2018 as being wasted by the former Liberal government.
The expression “water under the bridge” is an idiom implying “something that happened in the past and cannot now be changed”! The November 2022 report by Ontario’s Auditor General, Bonnie Lysyk, titled “Ontario Power Generation: Management and Maintenance of Hydroelectric Generating Stations“ clearly shows that expression to be true.
The following chart from the report outlines how OPG’s baseload hydro reputedly generated SBG (surplus baseload generation) for seven years starting in 2015 up to and including 2021:
“From 2015 to 2021, OPG could have generated approximately 269 million megawatt hours (MWh) of electricity but only generated 226 million MWh, meaning about 43 million MWh of generating capacity went unused. In 2021 alone, OPG could have generated an additional 4.6 million MWh of electricity, or enough to power over 540,000 Ontario households for a year.“
The chart from the OAG’s report depicts annual OPG water spills that could have generated the 43 million MWh (43 TWh [terawatt hours]) and also highlights the annual cost which, for the seven (7) years, was collectively $730 million. Needless to say Ontario’s ratepayers were obligated to pick up those costs which also included about $43 million for wasted water fuel costs that went into the province’s revenue base.
The AG’s report also noted how SBG in 2013 was only 1.7 million MWh. In 2013 the grid connected IWT (industrial wind turbines) generated 5.2 TWh whereas by 2021 they generated 11.8 TWh. Higher IWT generation (13.8 TWh in 2022) will increase SBG particularly when some of our nuclear plants (currently under refurbishment) are back in service meaning costs to ratepayers/taxpayers will increase further.
It is worth recounting the GEA (Green Energy Act) was passed in 2009 and as contracts were let to those IWT companies they were granted “first-to-the-grid” rights meaning they got preference over all other grid connected generation capacity with the exception of nuclear. What that meant is during lower demand hours of the day other capacity such as hydro became surplus capacity relegated to having to dispatch. The result is ratepayers pay for not only the cost of what OPG was paid for the power but also for the water NOT running through the turbines as well as the annualized capital costs for other peak power supplies such as natural gas and biomass plants! The foregoing layering effect has driven up prices wherever IWT and solar panels have been installed not only increasing energy costs but also the energy poverty they create!
Additionally it is worth pointing out the cost of hydro generated power is less than $50/MWh whereas IWT generation is priced at $135/MWh due to their “first-to-the-grid” rights and even if curtailed cost $120/MWh. So when those IWT or solar panels are responsible for producing surplus power we ratepayers and taxpayers are burdened with not only the costs for the surplus baseload power but also for grid accepted power at the much higher costs of wind and solar generation.
When demand is very low and baseload nuclear and hydro can fully satisfy demand, we frequently sell off surplus power (often generated by wind and solar) to our neighbours in Michigan, NY and Quebec for pennies of what we ratepayers and taxpayers paid for it! Just another added burden to our daily living costs!
The Ford led government promised to fix the electricity system when in opposition but all they seem to have done is transfer more costs to both ratepayers and taxpayers.
Conclusion
We now are left to wonder why the Ford led government haven’t passed legislation to amend those FIT (feed in tariff) contracts removing the “first-to-the-grid” rights granted to them by their predecessors?
Perhaps they simply consider their original aspirations as simply “water under the bridge”!
Canada’s Federal Minister of the Environment and Climate Change, Steven Guilbeault has in the past consistently regarded nuclear power in a derogatory fashion. For the foregoing reason it is surprising the recently released 2023 Federal Budget proposed to “introduce a 15 per cent refundable tax credit for eligible investments in Non-emitting electricity generation systems: wind, concentrated solar, solar photovoltaic, hydro (including large-scale), wave, tidal, nuclear (including large-scale and small modular reactors)“. That suggests; either Guilbeault wasn’t consulted, or he was beaten up in caucus during budget discussions! We should all wonder will he once again climb the CN Tower to protest the inclusion of nuclear for the “refundable tax” or has he suddenly realized closing nuclear plants in the electricity sector is a dumb idea?
On Canada’s west coast the David Suzuki Foundation was excited about the budget allocation as suggested in their article stating: “Overall energy costs will go down for everyone as we move away from fossil fuels and instead use electricity sources like wind and solar, all while creating millions of jobs and bringing real benefits to communities,” said Stephen Thomas, the Foundation’s clean electricity manager.” It would appear Stephen Thomas is unaware of the damage moving away from fossil fuels has imposed on the UK and most EU countries driving up energy poverty by inflating energy costs! Needless to say the David Suzuki foundation is not a nuclear fan as many articles/reports on their site disparage them stating things like: “Canada could reach zero-emissions electricity by 2035 “without relying on expensive and sometimes unproven and dangerous technologies like nuclear or fossil gas with carbon capture and storage.” They believe wind, solar and storage could do the job! It is somewhat comforting to see some divisions are now developing between the ENGO and the Trudeau led government but with him and his team in power we shouldn’t expect much more to happen!
Ontario Launches the Clean Energy Credit Registry
Mere days after the Federal Budget was released the Province of Ontario issued a Press Release announcing they are launching a Clean Energy Credit (CEC) Registry they reputed would not only “fund the construction of clean electricity projects” but would also “boost competitiveness and attract jobs”. The Press Release went on to state: “Proceeds from the sale of CECs held by the IESO and Ontario Power Generation (OPG) will be directed to the government’s Future Clean Electricity Fund. This new fund will help keep costs down for electricity ratepayers by supporting the development of new clean energy projects as the province builds out our grid to meet the demands of a growing population and economy, as well as the electrification of transportation and industry
From the above one would surmise they have discovered how to create a utopia as the release brags about the upcoming Stellantis–LGES battery plant as well as a recent announcement about Volkswagen’s planned first overseas gigafactory. No mention is made as to how much “provincial or federal” taxpayer funds are being thrown at either factory. The Federal government let it slip they are throwing $500 million at the battery plant but neither the provincial or federal government has disclosed what they are contributing to obtain the Volkswagen gigafactory but we should suspect it is well over $1 billion.
Coincidental or Collusion?
The provincial announcement was alluded to in the provincial budget (record spending plans) but few details were provided in its release on March 23, 2023 as to the specifics now contained in the recent press release about the CEC Registry. It appears the province was waiting for the blessing of nuclear as “clean” by the Trudeau led government perhaps due to its predominant supply of electricity in the province? According to IESO’s Year in Review for 2022, Ontario’s nuclear plants generated 58.2% of grid connected generation (78.8 TWh terawatt hours]) or 78,800 GWh (gigawatt hours). If one accepts the IEA (International Energy Agency) claim each GWh of nuclear displaces 5.9 MT of CO2 of coal generated electricity; in 2022 the 78.8 TWh of nuclear generated electricity in Ontario would have displaced 464.9 MT!
As of April 1st here in Canada the tax levied per tonne of emissions will be $65/tonne so the 464.9 MT would represent a value of $30.2 billion if there are willing buyers at that price! We should seriously doubt the province will be lucky to generate $160 million from their sale which would be about $2/tonne so won’t go very far in either creating jobs or keeping costs down in an Ontario budget of over $200 billion for the upcoming year. Interestingly the Provincial budget projected the “Electricity Cost-Relief Program” would increase by over $500 Million ($5,946 million to 6,516.8 million) suggesting either; costs are anticipated to increase by 10% or there is little faith in the CEC generating much additional revenue.
What was missed?
Ignored in the concept proposed in the Registry creation is the fact that Ontario’s electricity sector is already 90% plus emissions free so purchasing those CEC will not be top of mind for many Ontario based companies.
Suggested Conclusion
Perhaps Ontario should attempt to sell the CEC to China or India where coal generation plays a major role in keeping their energy costs low and their manufacturing base humming whereas our Federal Government seems determined to undermine our manufacturing and fossil fuel-based economies and turn Canada into Canezuela!
The winds were once again blowing strong in Ontario on March 25th resulting in electricity costs rising and the Provincial government forced to absorb their excessive costs by using taxpayer dollars.
Reviewing the IESO data for the day discloses those IWT delivered more electricity to the grid than hydro for ten (10) of the 24 hours. IESO also seemed to have messed up on their forecast of peak demand which resulted in it occurring at Hour 11 (hour ending at 11 AM) when it reached a meager 17,340 MW for the day versus their forecast of 16,841 MW.
IESO forecast over the 24 hours, IWT would generate 92,283 MW but, the output reported was 83,330 MW suggesting 8,843 MW were curtailed meaning we ratepayers/taxpayers were forced to eat those costs of $1,061,160 ($120/MWh) for the curtailed generation. When the foregoing is added to the costs of the accepted IWT generation ($135/MWh) the costs of wind power for the day rise to $12,325,560. It is interesting to note total grid accepted hydro for the day was only 86,032 MW suggesting IESO undoubtedly directed them to “spill” some generation which we ratepayers/taxpayers are also obliged to pay. In the latter case IESO don’t disclose those spills so there is no way of knowing how much was spilled or the costs associated with it!
If we look further at IESO data, we discern we exported 52,259 MW over the day (about what 1.7 million households consume daily) and for most of the 24 hours we were paid peanuts for it. For two of the hours (Hour 10 and Hour 16) we were paid $166.58/MWh and $148.87/MWh principally because IESO’s projections were less than demand so for those two hours the sales generated $1,125,275. If we then deduct the 7,121 MW sold in those two hours the balance (45,138 MW) sold paid us $11.52/MWh (0.1cent/kWh) so generated a miserly $533,531.
Going further, we should safely assume the surplus energy sold was either generated by those IWT or their generation caused the sale of other cheaper electricity. The foregoing raises the costs of the generated IWT power utilized by Ontario residents to $342.08/MWh or 0.34cents/kWh.
(The equation is simply: $12,325,560 minus $1,658,806. ($1,125,275 + $533,531 = $1,658,806) divided by 31,181 MW (IWT output [83,440 MW] minus total exports [52,259 MW]) = $342.08/MWh!)
This clearly identifies why the “Electricity Support Program” paid by taxpayers is projected to cost $6.5 Billion annually and the effect those first-to-the-grid overpriced contracts for renewable energy have on us Ontarians. It also has had a detrimental effect on making the province attractive for industries who look for investment locations with competitive energy prices.
The time has come to eliminate March Madness which arrives in Ontario every Spring when the wind blows hard but our energy demand falls!
Most Canadians from coast to coast look forward to Spring arrival as we get excited about warmer weather and watching mother nature show her stuff. Those Canadians living in Ontario however can be both happy and sad about Spring arrival as it has the bad habit of generating increased costs for one of life’s necessities which is energy with an emphasis on the cost of electricity.
Two recent happenings on March 19, 2023, bring the focus on the sad part of Spring arrival. The first is more sunshine which creates more energy from those solar panels which under the McGuinty led government received contacts at ridiculous guaranteed rates as high as 0.80/cents a kWh. Now apparently, they have embarked on more hits to our pocketbooks as the first six (6) hours of March 19th suggests they can now produce power even when the sun isn’t shining as this screenshot from IESO demonstrates!
Solar Panel Generation When the Sun isn’t Shining?
As if the foregoing wasn’t enough weird news, on the same day as solar power was generated in darkness, we note IESO data supplied more bad news. Normally at this time of year as the snow melts and water flows Ontario benefits from more generation from our hydro facilities which are also our cheapest and cleanest source of generation. As it turns out IESO data disclosed more bad news as the first three (3) hours of March 19th (two days before spring arrives ) those IWT (industrial wind turbines) generated more electricity than our hydro plants as evidenced in the following two screenshots.
Wind Generation Beats Hydro Generation!
To accentuate the foregoing those IWT did the same thing in the last three hours of the day as the following screenshots clearly show!
IWT Generation Hours 22, 23, 24!
Hydro Generation Hours 22, 23, 24!
Over the full 24 hours IWT generated a total of 92,447 MW or approximately 78.6% of their capacity and only slightly less than hydro which generated 94,511 MW but could have easily produced more. Ontario was busy selling off the unneeded power which we (logically) should attribute to IWT generation to our neighbours at an average price of $14.86/MWh. We exported 53,308 MW so generated revenue of around $792K while we paid $135/MWh for it, so it cost Ontarians about $6.4 million for unneeded power. We should also suspect IESO were busy telling OPG to spill hydro (we are obliged to also pay for) as demand was low and only peaked at 17,057 MW at hour 20.
The ups and downs of those intermittent IWT and solar panels are in the bad habit of generating lots of unneeded power during the spring and fall seasons when Ontario demand is low. They are the principal reason the Province of Ontario stiff taxpayers with annual additional costs of $6.5 billion in an attempt to hide the mess our electricity system is actually in.
Just one day’s data makes it obvious both of the foregoing sources of intermittent and unreliable electricity generation should be tossed in the garbage!
Yesterday, Ontario’s IWT (industrial wind turbines) were humming and supplied the Ontario grid with 81,736 MW despite IESO appearing to have curtailed another 5,600 MW of their potential generation!
Due to the fact it was a Sunday with businesses shut for the weekend coupled with a mild winter day, demand was light so the peak reached at Hour 19 was only 16,478 MW. Because of those factors, IESO were busy selling off our surplus power to our neighbours in Michigan, New York and Quebec for pennies of its cost to Ontarians. Total exports were 69,070 MWh or 84.5% of the accepted IWT generation and the sale price averaged $5.45/MWh or just over a half a cent per kWh (kilowatt hour).
To put the foregoing in perspective the 69,070 MWh is about what 2.4 million Ontario households consume daily and represents around 46% of all Ontario households.
Based on the foregoing data from IESO it is obvious that generation by the IWT were fully responsible for the 69,070 MW that was exported. What that illustrates is with the guaranteed contracted prices of $135/MWh that generation cost Ontario ratepayers/taxpayers $9.324 million and adding the cost of the 5,600 MW of curtailed generation (at a cost of $120/MWh) it brings the additional costs to $9.996 million.
Oh yes, and we exported those 69,070 MW for the HOEP market price of $5.45/MWh, so we earned $376K (3.8% of their costs) reducing the overall costs to $9.620 million.
So one might ask, so how much did it cost us per MWh for the 12,666 MWh we didn’t export, and they would be shocked to find out it works out to $759.51/MWh or 0.76 cents/KWh.
Going “green” sure hurts the ratepayers and taxpayers in Ontario but our neighbours are surely delighted we are providing them with our highly subsidized “emissions free” electricity!
Now, try to imagine if we did the foregoing every day of the year and shake your head at the $3.5 billion it would cost us!
In fact, the taxpayers in Ontario are actually burdened with an annual cost of $6.274 billion for “Electricity Cost Relief Programs” associated with those renewable energy contracts as outlined in the very recent 2022-2023 Third Quarter Finances update from the Provincial Ministry of Finance.
From the Update:
Now try to imagine how that money could have benefited our health sector or built out some needed infrastructure!
Southern Ontario is currently experiencing what the eco-warriors would call “global warming” with lots of wind so it led to a IESO DATA look and it was a bit shocking to see what was going on. The wind was doing a great job at generating intermittent and unneeded IWT (industrial wind turbines) generation that wasn’t needed but with their “first-to-the-grid” rights IESO were forced to accept both lots of it on February 14th and 15th as the following highlights.
As a co-incidence a Provincial press release about the provinces 2022-2023 finances hit the in-box and in in it they disclose the province was projecting a deficit of $6.5 billion for the year. In a quick look at the financial information it was interesting to note that $6.6 billion in expenses for the Energy base ($327.6 million) plus $6.274 billion allocated for “Electricity Cost Relief Programs” brought the total to the $6.6 billion of expenses in the press release. Imagine, without the latter the province would be forecasting a small surplus of $100 million and that would have been something to brag about!
As many Ontarians may not know the Electricity Cost Relief Programs were established by the Ford led government to absorb the above market costs of the pricy wind and solar contracts signed by the McGuinty/Wynne governments. Those governments; in the push to “green” the electricity sector; was what they bought into when eco-warriors were demanding the world must stop using fossil fuels due to the “global warming” (now referenced as “climate change”) scare.
The IWT generation for all of Tuesday and part of today (Wednesday) makes it obvious why the almost $6.3 billion of costs for the “Relief Programs” exists!
February 14, 2023
IESO’s wind generation forecast for the full 24 hours was 44,037 MWh but they cut the output to 41,251 MWh suggesting about 2,700 MWh were curtailed. That resulted in a total cost for the IWT generation and curtailment of $6.279 million for the day ($135/MWh for accepted generation and $120/MWh for curtailed). Total exports to our neighbours throughout the day were 46,938 MWh so one could easily suggest all of it was either IWT generation or caused by it! The average market price (HOEP) over those 24 hours was $10.74/MWh meaning it earned a miserly $504K reducing the cost of IWT generation to $5.775 million.
February 15, 2023
IESO DATA for the first 18 hours disclosed they forecast generation of 75,648 MWh but the output recorded was 54,881 MWh meaning 20,767 MWh were curtailed. That suggests the first 18 hours of the day cost $9.901 million and as the average HOEP over those 18 hours was a tiny $2.22/MWh the exports of 49,095 MW returned only $109K of those costs paid to the owners of the IWT.
Results
The taxpayers/ratepayers of Ontario were forced to absorb $15.567 million to provide our neighbours in NY, Michigan and Quebec with those 93,255 MWh over those 42 hours. Those MW we basically gave away is about what 3,2 million average Ontario households would consume in one day!
Conclusion:
Hopefully the foregoing brings to light why the Ford government allocates the $6.274 billion for “Electricity Cost Relief Programs”. It also suggests we should all wonder why they haven’t cancelled those IWT contracts instead of now indicating they will extend their contracts. They recently extended the Transalta Melancthon 200 MW IWT development near Shelbourne, Ontario which stands out for having a long and controversial history.
We should wonder as taxpayers if that $6.274 billion cost will only get larger in the future as the past 42 hours suggests it won’t diminish!
The Ford led government had a chance to balance the budget but instead seems content with burdening Ontario taxpayers in supporting our neighbour’s electricity costs! Not sure how that will attract jobs to the province?
The past couple of days in Ontario have demonstrated the ups and downs of energy demand both from those of us in Ontario and our neighbours tied to us via the intertie grids.
February 2, 2023
Starting with February 2, 2023, examining IESO data, clearly demonstrates the ups and downs of demand for electricity coupled with the market price variation (HOEP) of overproduction of IWT (industrial wind turbines). The wind was blowing hard all through the day but with baseload nuclear and hydro providing most of the demand what wasn’t needed was most of the power being generated by IWT. IESO forecast IWT would generate 94,503 MW over the full day (80.3% of capacity) but it wasn’t needed. Recorded output was 72,115 MW (61.3% of capacity) meaning IESO instructed IWT owners to curtail almost 22,400 MW. As most Ontario ratepayers know the IWT contracts provides them with “first-to-the-grid” rights and also pays for curtailed power at the rate of $120/MWh and $135/MWh for the accepted power. For the full 24 hours on the day the price allocated for accepted and curtailed IWT generation amounted to over $12.4 million in costs to Ontario’s ratepayers/taxpayers and about $172/MWh in costs for the accepted power.
Coupled with the foregoing; as demand was low for most of the day, the market price (HOEP) averaged $3.12/MWh so IESO were busy disposing of unneeded power for pennies of its costs. Even at the daily peak hour (Hour 19) the HOEP was only $5.18/MWh. For the full day exported power was 41,911 MW representing 58.1% of the generation IESO accepted from IWT. If one assumes the unneeded power from IWT represented all of the exported power or caused it, the cost added to the 30,200 MW of IWT generation consumed by Ontario ratepayers is another $7.1 million bringing the cost of the 30,200 MWh, added to the grid, to $11.2 million or $370/MWh (.37cents/kWh).
The happenings on February 2nd once again demonstrate how we Ontarians continue to provide cheap power to our neighbours. We do that by absorbing the costs of those intermittent and unreliable IWT sprinkled throughout the province allowing our neighbours to buy our surplus energy for pennies on the dollar while we eat the costs.
February 3, 2023
February 3, 2023, turned out to be a “Top 10” Ontario peak demand day reaching 21,388 MW and 24,821 MW for the “market peak” at Hour 19! The result was the HOEP for the full day averaged about $41.70/MWh. While that represents a large jump from the prior day those IWT were still costing us a lot more then the aforementioned HOEP average.
To put the foregoing in context, IESO data in the first 5 hours forecast IWT generation would be 18,795 MW but they only accepted 13,838 MW meaning about 5,150 MW were curtailed and the HOEP over those 5 hours was a piddly 0.62 cents/MWh. If one, then calculates the HOEP for the remaining 19 hours in the day it becomes $56.60/MWh so, much higher than the first 5 hours! Continuing to look at those 5 hours it becomes apparent we Ontarians absorbed the costs of almost $2.5 million to generate those 13,715 MW. Hopefully our neighbours in NY, Michigan and Quebec appreciate our generosity for those MW which was very close to the IESO accepted IWT generation.
Looking at the full day, IWT were forecast by IESO to generate 69,174 MW but their output was 62,940 MW meaning we paid for around 6,200 MW of curtailed generation but as noted in the preceding paragraph only about 1,000 MW more were curtailed in the following nineteen hours. Over the day IESO were busy selling off approximately 87,000 MW to our neighbours in Michigan, NY and Quebec with the latter taking well over a third of them. The last point should be no surprise as Quebec is a winter peaking province and on February 2nd Hydro Quebec asked their customers to reduce their electricity consumption due to the anticipated cold starting late Thursday night.
The other interesting happening related to generation on February 3rd was how much gas generation there was over the day. Ontario’s natural gas plants produced 88,172 MW which coincidently was only slightly higher than our total exports. It is worth pointing out when a MWh of natural gas is generated ratepayers are only paying the raw costs of the natural gas plus a small markup as the capital costs and the approved ROA (return on assets) have been included in the price of electricity since those plants were originally commissioned. In other words once a gas plant is operating it generates power that is very much cheaper compared to both wind and solar.
Quebec Support
About 60% of households in Quebec heat with electric furnaces or electric baseboards so are dependent on electricity to stay warm during cold winter days. For that reason we should suspect Ontario’s natural gas plants may have played a key role in ensuring those Quebecers were able to avoid a blackout on the recent very cold days we have just experienced.
The other thing Ontario’s natural gas plants may well be doing is allowing Quebec EV owners to recharge their EV batteries. Approximately 10% of all new cars registered in Quebec* are EV possibly due to the large $8,000. grant the province provides to purchase them. Interestingly, while Hydro Quebec tells households to turn down their heat and avoid using certain appliances during peak hours, they say nothing about when you should or shouldn’t charge your EV.
The generosity of Ontarians is astounding due to the treatment of IWT and the contracts in place providing those “first-to-the-grid” rights. On top of that, if we are subsidizing the sales of our IWT surplus power to other markets where it may be used to charge EV it just doesn’t seem quite right!
Maybe the Ford Government should ask Quebec to provide Ontario with carbon credits to offset the “emissions” of our natural gas plants that keep their people warm in the winter!
*A September 22, 2022 New York Times article stated the following about EV in Quebec: “Quebec has 150,000 electric vehicles on the road, compared with 113,000 in New York State, an indication of how ubiquitous charging can encourage ownership.“
Parker Gallant Energy Perspectives 