Industrial Wind Turbine Owners Love the “Gales of November”

Having looked at IESO data for November 30th, 2022 and several other days in the month, Gordon Lightfoot’s great song; “The Wreck of the Edmund Fitzgerald” came to mind as it references the “Gales of November” several times in the lyrics. A “gale” is reputedly when winds reach at least 34 knots or almost 63 kilometres/hour and we have had quite a few days this November when they reached those levels.  Yesterday was no exception as they were over 90 kilometres/hour on several occasions in many parts of the province spinning those IWT and generating unneeded power while extracting ratepayer dollars.  No doubt they probably also killed lots of birds and some bats too who were heading south during the migratory season.

To put context on the preceding paragraph about the “gales of November”; IESO data for the first 12 hours of the day forecast IWT would generate 52,228 MW or 88.8% of their rated capacity but they had them curtail about 6,700 MW which meant they operated at 77.4% of capacity.  Over those 12 hours the market price (HOEP) averaged a miserly $4.12/MWh and IESO were busy selling surplus power to Michigan, New York and Quebec.  Exports over the 12 hours were 22,366 MW or almost 50% of what those IWT delivered to the grid. As a result, the export sales returned only $92,371 of their costs which (including the curtailed power at $120/MW) was just over $3.8 million meaning Ontario ratepayers and taxpayers picked up the missing $3.7 million of the contracted costs over those 12 hours. The costs may have been more, as an example, if OPG was forced to spill water but data doesn’t allow us to determine those additional costs.

For the following 12 hours of the day the HOEP averaged $39.45/MWh and we continued to export power totaling 18,907 MW which amounted to 47.5% of IWT generation (39,755 MW or 78.2% of capacity) during those hours.  If we rightly assume the exported MW were either caused by unneeded IWT generation or were all IWT generated power we ratepayers picked up the difference on what we paid ($135/MWh) for the power and what our neighbours gave us in return.  That would represent an additional cost of $1.8 million meaning ($3.8 million for hours 1 AM to 12 PM + $1.8 Million for hours 1 PM to 12 PM) exports over the full 24 hours resulted in costs of $5.6 million without any benefit to Ontarians.

Putting aside what the cost to ratepayers was for the exported power it is important to note the IWT owners earned a total of $12,317,000 for the day including what they were paid for the curtailed power. The foregoing was a cost of $146.15/MWh to ratepayers and represented revenue to the IWT owners of about $2,514.00 per MW of capacity so a 100 MW wind farm would have generated $251,400 for just one day’s output.  Not too shabby!

Perhaps Michigan and New York didn’t have to fire up their coal plants yesterday, so our contribution helped them reduce their emissions while increasing our inflation rate and adding costs to households and businesses experiencing energy poverty.

It appears our elected politicians are unable to see how they are destroying our economy and bringing harm to all Ontarians; much like the “gales of November” destroyed the Edmund Fitzgerald and their crew!

PS: Grid connected solar only generated 78 MW over the day!

Once Again, Ontario Ratepayers and Taxpayers are Being Told to Hand Over More Money

A recent rate application before the OEB (Ontario Energy Board) brought back memories of when Bob Chiarelli was Ontario’s Minister of Energy and when queried about the costs of cancellation of the planned Oakville TransCanada gas plant stated:  “It’s less than a cup of Tim Hortons coffee a year“!

What brought the foregoing to mind was an OEB application from Wataynikaneyap Power LP for transmission rate increases that (it appears) would apply to all of Ontario’s ratepayers not just those 16 First Nations and their 14,000 residents that will eventually be connected to the power grid.

The announcement made in March 2018 with great fanfare by Ontario Premier Kathleen Wynne and Federal Minister of Indigenous Services, Jane Philpott, concerned a $1.6 billion dollar Federal Government grant to build an 1,800-kilometre transmission line(s) to connect those 16 communities. The application submitted to the OEB seeks .20 cents monthly from all Ontario’s residential ratepayers which equates to $2.40 annually so is very close to the cost of an extra-large “timmies”. Over the 40-year estimated life of the transmission lines the total amount paid by all residential households would be approximately $400 million for this application which is a lot of “timmies” coffee. We should suspect the cost will increase as the transmission lines reach further to connect with the 14 other First Nations.  Oh, and an unknown portion of the .20 cents will go to Hydro One. 

The OEB also recently ruled on a significant application from Hydro One related to both their transmission and distribution connected customers. The OEB labeled it as; “the largest and most complicated rate case to come before the OEB.“ The reasoning behind the foregoing comment was because it was “a combined proposed revenue requirement of approximately $20 billion and a proposed investment plan of about $13 billion over the 2023-2027 rate period“ The result of their review and ruling is; all ratepayers will see an increase in rates associated with transmission costs and those who are Hydro One distribution customers will be slapped with an additional rate increase.  

The bill impacts noted by the OEB stated “on the transmission portion of the application, it is estimated that for a typical Hydro One residential customer with a monthly consumption of 750 kWh, the total bill impact averaged over the 2023-2027 period will be an increase of $0.69 per month“. Once again that doesn’t sound like much and will amount to only $8.28 annually but with 4.2 million households it totals around $35 million for the year and over five years becomes $175 million without factoring in the costs to businesses and other large consumers. 

The rate increase for Hydro One’s distribution customers approved was; “ for a typical residential distribution customer of Hydro One with a monthly consumption of 750 kWh, the total bill impact averaged over the 2023-2027 period will be an increase of $2.43 per month or 1.5%.“ For a residential customer consuming 750 kWh monthly the annual cost comes to $29.16 but will be more for businesses, farmers and other larger consumers.  For the approximately 1.4 million Hydro one residential customers alone the costs will be north of $41 million annually and for businesses will be much higher than the $29.16 for the “average” residential customer. 

As is obvious from the OEB announcements electricity rates are going up but, those increases are not because Ontario has added new generation it’s simply to help build new transmission lines to First Nations, upgrade existing ones and their associated infrastructure for the planned “full electrification” of the electricity sector. One should wonder is it meant  to ensure you will be able to charge your EV during our cold winter days.

Hydro One customers may well be forced to reduce their “timmies” intake over the upcoming years!

Electric Vehicles Demonstrate Inept Governments via Grants, Mandates and New Taxes

Developed countries around the world are literally throwing money at trying to electrify the transportation sector (passenger cars and light trucks). Canada is no exception as at both the Federal and Provincial levels many announcements and articles have displayed how they have handed out grants to manufacturers of the vehicles, batteries to power them as well as charging stations. Depending on where you are around the world EV buyers receive a variety of incentives, including direct grants, tax breaks (no sales or VAT taxes), low-cost charging stations, etc. all  with taxpayer dollars.

Surprisingly despite all the billions of our tax dollars being handed out Canadians are not buying those EV at the same pace as the rest of the world as an article a few days ago noted: “Statistics Canada data show EVs made up one in 14 new vehicles registered in the first half of this year, compared with one in 20 a year earlier.“ The article went on to state China was responsible for 56% of global sales and for Canada to achieve the 60% sales target for 2030 they would have to grow from 55,600 to about 480,000 over six months to hit that target. Perhaps it has something to do with the fact the Canadian Automobile Association lists 80 EV models with an average sales price of $82,000 and, EV lose considerable range in our cold winters?

Two of Canada’s taxpayers smaller handouts

Lion Electric Company: Back onMarch 15, 2021 a joint announcement made by PM Trudeau and Quebec Premier Legault handed Lion Electric $100 million of our tax dollars and labelled it as an “investment”!  The grant they handed out was 54% of the cost ($185 million) of building a “battery assembly plant” in the Laurentians but labelling it as an investment seems a stretch as, if, and when, Lion Electric generate a profit we taxpayers will not be recipients of dividend payments or appreciating shareholdings.  On the latter note it is an interesting exercise to see how the shares have performed since the grant announcement.  Shares in the entity appear to have had an initial value on the NYSE of US$16.31/share on March 1, 2021, and as of November 18,2022 were valued at US$3.01 a drop of 81.54%! Interestingly Lion recently announced their third quarter 2022 results and stated their revenue was up 244% but losses increased by 316%! Quite the investment!

Taiga Motors Corporation: On July 12, 2021, the Mayor of Shawinigan and the Federal and Quebec Governments announced forgivable loans and grants to Taiga which would allow them to manufacture electrically  powered “personal watercraft, snowmobiles, electric motorization systems and battery packs.“ The collective amount was $50 million (40%) towards the $125.17 million cost of the new plant. Car and Driver tested one of the Taiga snowmobile models in March 2022 and while they didn’t disparage it, they suggested you better not stray too far from your base due to their limited miles range (62 miles for the one tested).  The price was also rather startling with the “Nomad” priced at US$19,490 whereas a Ski-Doo or Polaris model would be in the US$10/12,000 range with much higher mileage. Taiga’s initial share price after their launch in April 2021 was $13.25 and it now sits at $4.00 meaning it has dropped 70% and if one looks at their year over year results their losses as of the 9 months ended September 30th were down from $88.8 million to $35.9 million. Can we really trust politicians to create wealth using our tax dollars to electrify our transportation and other sectors?

As noted, the foregoing handouts were small ones, but we Ontarians have been subjected to handouts by the Ford and Trudeau led governments totalling in the billions aimed at the same goal of electrifying the transportation sector (automobiles and light trucks). They handed out $1 billion to Stellantis, $590 million to Ford $518 million to GM and $260 million to Honda meaning $2.368 billion of our tax dollars were committed to ensure we retain some of the jobs we have had for decades in the auto sector. The province and the feds have also been trying to attract battery manufacturers and will supply LG Energy with $1 billion of our tax dollars as well as an unknown amount to Umicore, a Belgian global metals refiner who will build a battery materials facility.

In addition to the foregoing taxpayer grants, the Federal Government also have the ”Zero Emission Vehicle Infrastructure Program aimed at handing out $680 million to entice people and companies to build “charging and refueling stations”. They apparently see this as “one of the key barriers to ZEV adoption“ but we taxpayers should suspect its related to the average sale price of those EV as noted above and our concern about them losing range during our cold winter days.

What’s happening elsewhere? 

Norway: A recent article; “Norway Became an EV Paradise, Now It’s Imposing a Weight Tax and Bringing  Back the VAT“ noted upcoming legislation in Norway will rescind most of the favourable benefits that have made it the country with the highest EV sales per capita. The new legislation will remove the many perks granted to EV buyers displayed in a graft posted in an article a few months ago. The VAT in Norway alone will add 25% to the purchase price of an EV and the weight tax another 2/3%.  As that occurs, we would expect, the 78 % EV sales have so far represented in 2022, will fall, as they will cost considerably more than a new ICE vehicle once those new taxes become legislated.

United Kingdom:  It appears the UK has recently become  concerned  the net zero target may well lead to “five fuel taxes: fuel duty, vehicle excise duty, landfill tax, the carbon price floor and the emission trading schemedrying up according to an article in the Financial Times!  As a result of that concern a “tax vacuum” will be created during a time when the country is running significant deficits so, as a start, they plan to charge EV owners with the vehicle excise duty.  Grants being handed out are also on a downward trail as purchase grants for new EV have been reduced from £5,000. to £1,500.

Targeted EV sales in Canada

The 2022 Federal budget expanded the push to electrify the transportation sector in Canada requiring 20% of all vehicles sold in Canada to be EV by 2026, 60% by 2030 and 100% by 2035. In addition, the budget extended the $5,000 per vehicle grant to help achieve those targets. Annual new auto sales in Canada vary between 1.5 million to 2 million so by 2035 at the low end $7.5 billion of our tax dollars will possibly wind up supporting those “mandated” sales. The other issue relates to lost sales taxes etc. from ICE vehicles as outlined in a January 17, 2022 article, published by the CPA (Canadian Professional Accountants), noting: “The federal government collects nearly $6 billion per year in gas and diesel excise taxes, not including the GST or HST on those purchases. Add in provincial fuel taxes and over $16 billion in annual government revenue that will disappear once Canadian drivers are weaned off the gas pump. It’s enough to rip a large hole in public finances.“ It is worth pointing out the CPA article was using 2021 data and the price of both diesel and gasoline have climbed considerably since then meaning the revenue lost added to government grants will increase taxpayer costs to over $30 billion annually.

Conclusion:

Looking only at the Trudeau led government’s plan to electrify the transportation sector in Canada demonstrates their inept ability to govern the country responsibly due to their insane belief Canada’s emissions reduction from the transportation sector will impact the climate. Not a chance!

High Carbon Prices sure Appear to Create Energy Poverty

A recent chart was posted by the OECD (Organization for Economic Co-operation and Development) whose membership consists of 38 “high income” democratic countries. The chart lists countries around the world with a “carbon pricing instrument” for the year 2021 with the lowest (Brazil) at the top and the highest (United Kingdom) at the bottom.  Canada was ranked as the sixth (6th) highest and four of the top six were European countries (Germany, France, Italy, and the UK) and the only other one in the top six slightly outranking Canada was South Korea!

The chart coincidently popped up when doing research on how countries were reporting on “energy poverty” amongst their households/populations.  All energy costs have risen considerably higher than they were even a year ago as we; in the Northern Hemisphere, face the upcoming winter so we should be concerned about how those higher energy costs will affect the general population.  Viewing the chart suggested a look at the six (6) countries, who have imposed the highest “carbon price”, to see what their “energy poverty” data disclosed. Data was not readily available in all cases but what was available told the story that “energy poverty” certainly affects a large percentage of the population in all six of those countries except for South Korea where no specific “energy poverty“ data could be found!

 Energy poverty country by country NB:

Korea:  A search demonstrated no articles or studies defining the percentage of households suffering from “energy poverty” but it is worth noting South Korea imports 95% of its energy needs so we should suspect “energy poverty” is high.  Korea’s overall poverty rate is estimated to be 15.3% by Statista as of the end of 2021 so we would expect a similar percentage of their population would be at or close to that level in respect to “energy poverty”!  

United Kingdom: There are many articles and research papers related to “energy poverty” in the UK and a recent report from the University of York states: “More than three-quarters of households in the UK, or 53 million people, will have been pushed into fuel poverty by January 2023, according to a new report authored by York academics.“ The article about the report goes on to note: “On 26 August Ofgem (Ofgem is the energy regulator for Great Britain) announced the energy price cap will increase to £3,549 per year from 1 October 2022. The electricity and gas price cap will rise again in January 2023. The size of the January increase has not yet been announced, but it is expected to take bills to £4,200 per year, with some sources predicting even larger increases.“  It’s worth pointing out the OECD chart claims the UK has the highest “carbon pricing instrument” which currently is 136% higher than Canada’s. With our rates scheduled to rise by $15/tonne annually it won’t be long before our rates surpass those of the UK. 

Italy: The above chart indicates Italy has the second highest carbon price in the world but there seems to be relatively scarce recent information reported about “energy poverty”.  One article from September 3, 2022 did disclose “One in six Italians, or up to nine million people, could sink into energy poverty due to soaring bills across the EU, Italy’s ANSA news agency reported on Saturday, citing the Italian General Confederation of Crafts.“ The foregoing suggests 15.3% of Italy’s current population will be or are now suffering from energy poverty. The article also notes: “Italy’s Ecological Transition Minister Roberto Cingolani planned to ask the entire population to turn the heating down, starting from October. Italy has already introduced some limits on the use of central heating in public buildings and apartment blocks, and these are expected to be tightened under the new measures.“  The article goes on to say: “Italy’s Serie A football league announced plans to put a four-hour limit on the use of floodlights in stadiums on match days, as part of energy-saving measures“. Does that suggest future games will be played partially in the dark or only during daylight hours?

France: France shows up on the chart as the country with the third highest carbon price and there is a fair amount of data about “energy” and “fuel poverty”!  One study titled “Energy Poverty in the EU” notes “the inclusion of transportation increases the energy poverty rate in France from 18% to 21%. This is particularly relevant as CO2 prices and thus fuel prices are expected to further increase to protect the environment and combat climate change.“  The foregoing indicates as many as 14.3 million people in France are experiencing “fuel poverty” whereas another article suggests in 2019 there were 3.5 million households facing “energy poverty”. Residents per household in France is lower than most countries with only about 2.4 residents per household suggesting, at that time, about 8.4 million were experiencing “energy poverty”!

Germany: A very recent article about “energy poverty” in Germany contained the following rather disturbing statement: “One in four Germans (approximately 21 million) are currently energy impoverished, up from one in six in 2018. The poor and disenfranchised are far more likely than others to slip into energy poverty. A member of Germany’s lower-middle class is now twice as likely to fall under the “energy poor” category compared to only one year ago. The German government is scrambling to ease the pressure of increasing prices for suppliers and consumers. “  The article says Germany is doing the “scrambling by various means such as: “One of Germany’s efforts to curb energy poverty is through reducing the use of natural gas, through both energy-saving measures and switching to different fuels. Most public buildings are lowering their thermostats, and monuments will no longer be lit at night. Heated swimming pools are banned. Germans are being encouraged to take cold showers. The government is also reducing taxes on other forms of fuel, giving discounts to people who switch to public transportation, and reopening old coal power plants.

Canada: Once again it is difficult to locate recent reports or articles related to how many households or individuals in Canada are experiencing “energy poverty” though yours truly has tried on numerous occasions over the past many years.  Natural Resources Canada published a 145 page “2021-2022 Energy Fact Book” which has one page (#37) providing a chart for 2019 suggesting “energy poverty” affected just 6% of Canadian households.  The foregoing would mean 1,060,000 households and with 2.9 people per household would be, 3.1 million Canadians (8.5% of our population) who experienced “energy poverty” in 2019!  One should suspect; as the data is from 2019, it came before energy prices from natural gas, electricity, furnace oil, propane, etc. jumped to current levels as pointed out in a very recent article.  Amusingly the NRCan report on page 38 notes “Canada’s energy prices in 2019 are relatively low” with comparisons to [surely coincidental to the OECD chart] France, Germany, Italy, and the United Kingdom. The only outlier was the USA and the latter beats Canada except for “electricity” costs possibly due to Quebec’s low hydro prices.  

It is interesting to note countries with the highest “carbon pricing instrument” in the G20 are those countries where energy poverty is the highest and Canada seems to be quickly heading in the same direction under the policies of Prime Minister Justin Trudeau and his minions such as Ministers, Freeland, Guilbeault and Wilkinson.

Surely with our carbon price scheduled to rise to $170/tonne by 2030 and the push to shut down fossil fuel extraction and generation it won’t be long before Canada’s “energy poverty” rates surpass those of the UK, Germany, etc. and Canada will be able to claim the title for both “highest carbon price” and for highest percentage of people living in “energy poverty”. 

Quite the legacy PM Justin Trudeau will leave our children and grandchildren!

NB: The data found in some cases specifically was related to “energy poverty” but in other cases it was referenced as “fuel poverty” which presumably includes fuel travel costs in addition to energy required by households.

Ontario Ratepayers are Back Helping Michigan Keep their Electricity Bills Low

A recent article described how Ontario’s nuclear plants were slowly coming back online after having all of the Pickering units (3,100 MW capacity) out for VBO (vacuum building outage) and two others out for refurbishment!  Yesterday, as an example IESO reported at Hour 1 our baseload nuclear power generated 7,333 MWh and by Hour 24 they had ramped up and generated 8002 MWh.

The good news about the foregoing is, as we approach those cold winter days when Ontario’s daily peak demand is higher than spring and fall days, we will have sufficient capacity to meet the needs of our households and businesses.

The bad news is those IWT (industrial wind turbines) are still humming as yesterday demonstrates even though peak demand at Hour 18 only reached 15,428 MW.  IESO’s forecast over the 24 hours suggested IWT would generate about 71,400 MW (61% of their capacity) but they only accepted 54,700 MW to the grid meaning they curtailed approximately 16,700 MW. As a result, we ratepayers/taxpayers paid $135/MWh for grid accepted generation and $120/MWh for the curtailed generation. The combined cost of what IESO accepted therefore cost us $9,388,500 or $171.64/MWh (17.2 cents/kWh).

If one then examines our net exports (exports minus imports) we see that we were exporting our surplus power to Michigan, NY, and Quebec and for the full day those net exports were almost 42,100 MWh and Michigan were the beneficiary of most of them.  It would be good if that unneeded IWT generation was in demand but that wasn’t the case as the market price or HOEP (hourly Ontario energy price) over the 24 hours averaged a piddly $3.94/MWh.

To put the foregoing in context, the average Ontario household consumes 9 MWh annually so if that price was the standard it would amount to $35.46 for a household’s yearly energy costs. Wouldn’t that be welcomed during this period of high inflation!

So, lets look at the benefits to our neighbours in Michigan, NY, and Quebec in respect to the low HOEP price caused by surplus intermittent generation from those IWT!  We ratepayers are required to pay IWT generators under their contracts for both what is grid accepted as well as what is curtailed so the combined cost yesterday for both as noted above was $171.64 MWh.  If all the net exported power (42,100 MWh) came from the grid accepted IWT the cost of that to Ontario ratepayers and taxpayers would amount to $7,226,044 (42,100 MW X $171.64/MWh) and generated only $165,874 (42,100 MWh X $3.94) from their sale meaning; we were forced to absorb over $7 million in costs for just one day! 

While we did import some power from Michigan, NY, and Quebec during the approximately four weeks of the nuclear outage we were paying for it at prices over ten times what we sold our power to them for yesterday.

Stop the Bleeding

It seems hard to understand why the Premier Ford Ontario led Government hasn’t passed legislation to stop the bleeding of ratepayer dollars going to the owners of those unreliable and intermittent IWT generators.  At the very least he should work to obtain “carbon credits” for those “emissions free” cheap generation we sell to our neighbours.  We could then sell the “carbon credits” in the market to help reduce the costs of electricity to Ontario’s ratepayers.

PS: Today (November 7, 2022, looks to be even more costly based on the first 13 hours of IESO Data.

Avoided Blackouts! Is IESO a Great Weather Forecaster or Simply Using Historical Climate Cycles?

In case you missed it, Ontario was without almost 5,000 MW of “baseload” power over the past month and to the best of my knowledge we didn’t suffer from even one blackout, nor did we receive appeals from our local distribution company to reduce our use of electricity!

As the headline implies; IESO (Independent Electricity Supply Operator) is either a superlative weather forecaster OR they examined Ontario’s climate cycles to determine when Ontario’s electricity demand is at its lowest levels over the year?  Did they also examine when those “intermittent and unreliable” renewable energy sources such as IWT (industrial wind turbines) generate power at higher levels than they commonly do on hot summer days?

Coincidently, IWT grid connected capacity is about 4,900 MW so very close to what the nuclear capacity shut down was. The shutdown included the capacity of all of Pickering Nuclear (3,100 MW) plus a Bruce unit (830 MW) and a Darlington unit (870 MW).

Reviewing the Past Four Weeks

It has now been 28 days since Pickering Nuclear was shut down for the VBO (vacuum building outage); a process done every 12 years and requiring approximately four weeks to complete.  The Pickering units have commenced coming back online and most should be up and running by the start of next week.  The Bruce unit has also restarted and is ramping up as I write this article.

Looking back over the 28 days (October 6th to November 2nd) at data is an interesting exercise and demonstrates IESO chose an excellent time to allow the nuclear shutdowns as Ontario’s peak demand only occasionally was more than 16,500 MW and far below (5,000 MW) what we often see during summer months.  As examples; the 10th highest Ontario peak demand day in 2022 (so far) was 21,379 MW at Hour 17 on July 21st and the highest was Hour 18 on July 19th  at 22,607 MW!

The other interesting fact about IESO’s choice of when to bless the shutdown is related to when IWT mainly generate their intermittent power and in Ontario it is during the spring and fall months. A quick review of the power generated over the 28 days demonstrates their highs and lows.  As examples IWT generation on October 10th and November 1st was only about 10,000 MWh representing a meagre 8.5% of their capacity but on October 12th they generated 80,000 MWh (68% of capacity) and on the 21st they produced 82,000 MWh or 70% of their capacity. Over the entire 28 days they generated approximately 1.2 TWh (terawatt hours) which represented about 37% of their capacity and 7% higher than their average annual capacity normally in the 29/30% range.  

During those 28 days our natural gas generation sources ramped up and down as required to ensure we avoided blackouts. As just two examples; related to those very low IWT generation days, of October 10th and November 1st, gas plants generated 42,000 MWh and 76,000 MWh respectively!  At the same time IESO also appeared to ramp up hydro generation and that may well be the reason the US Army Corp of Engineers report, as of yesterday stated; “Lake Ontario is below its long-term November monthly average level by 7 inches”. As noted in the preceding paragraph when those IWT were only generating 8.5% of their capacity on the two days hydro delivered 97,000 MWh on October 10th and 112,000 MWh on November 1st!  Additionally, IESO were also importing power from Quebec, Michigan and New York and on November 2nd IWT only generated 11,000 MWh and for 23 of those 24 hours we imported more than we exported due to Ontario peak demand reaching 16,636 MW at Hour 19!

Looking Ahead

As I pen this article my inclination is to visit IESO data and in doing so one discovers today (November 5, 2022) is apparently a great day for the IWT owners as they are reaping the benefits of lots of wind together with the fact over 2300 MW of nuclear base load power is back and generating at levels we haven’t seen for a month. With the wind blowing hard those IWT could have delivered about 65,000 MWh (including the 8,500 MW curtailed) in the first 18 hours of today, but they clearly weren’t needed. That fact reflected itself in the HOEP (hourly Ontario electricity price) market price which averaged only $6/MWh in those 18 hours.  Over those hours net exports were 33,500 MWh (51% of IWT curtailed and accepted generation) so income from the sale of those was a piddly $201K but if we assume the exports were all IWT generated we paid the operators $5.1 million so it cost us ratepayers/taxpayers $4.9 million! 

The foregoing suggests the good news evident from the nuclear baseload outage is the HOEP was generally in the $40/$50 range so by IESO scheduling the VBO for Pickering and the refurbishment for the other two units it appeared to save us ratepayers and taxpayers tens of millions of dollars over the 28 days.  Had they been scheduled for the summer or the winter when demand is higher, and IWT generation is frequently absent we would surely have had numerous blackouts or requests to stop or reduce our consumption from our local distribution company.

Conclusion

It seems obvious IESO simply looked back at their data and determined IWT have habitually generated unneeded power in the fall due to what are apparently normal repetitive climate characteristics in Ontario. 

Hydro One Signals Full Electrification May Be Just Around the Corner?

Hydro One Survey

Hydro One is surveying their customers throughout the province and the “survey questions” suggest they are trying to determine where grid upgrades will be required as the push by our politicians for “full electrification” gains speed.  The survey asks questions such as, are you planning on purchasing an EV or converting your gas or furnace oil heating system to electric in certain time periods. They require the supply of both your e-mail address as well as your area code which presumably will signal them as to where grid upgrades may be required.

When you purchase that EV you will need a 200-amp service electrical panel for the charger meaning the wires and associated transformers bringing electricity to our homes will need upgrading as well as your homes electrical panel and the latter will cost you a few thousand dollars. Upgrades will be required in places where several homes have purchased EV or added electricity demand to the system.

It seems as if Hydro One is planning for an upcoming future demand increase which will allow them to tell the OEB and the Ontario Ministry of Energy the costs associated with the “electrification” process.  In other words, they are reviewing cost/benefit attributes of the conversions mandated by our politicians because “fossil fuels”, in the politician’s minds, are evil and cause global warming!

One would have thought those shining lights we elected Federally and Provincially would have done a cost/benefit study before they considered “full electrification” but perhaps that is too much for us voting minions to expect. 

While the Hydro One survey appears directed to just their 1.5 million distribution customers, we should suspect they are also seeking input from all electric distribution companies such as Toronto Hydro, Hydro Ottawa, etc. etc. as electrification will also substantially impact their transmission business.  

It is worth noting the following from Hydro One’s 2021 annual financial statement reflecting their impact on ALL electricity ratepayers in the province due to their transmission monopoly:  “Hydro One Limited, through its wholly-owned subsidiaries, is Ontario’s largest electricity transmission and distribution provider with approximately 1.5 million valued customers, approximately $30.4 billion in assets as at December 31, 2021, and annual revenues in 2021 of approximately $7.2 billion.“  Net income (before financing charges and taxes) from Hydro One’s transmission business was $942 million and exceeded distribution net income by $248 million or 24.8%.

Hydro One owns and operates over 30,000 KM of transmission lines (98% of all transmission lines) in the province and delivers the power to 43 local distribution companies (LDC) and 88 large, connected companies.  They also operate over 300 transmission stations and 25 cross border connections.

Full electrification will entail billions of dollars of spending for upgrades to those transmission stations and transmission lines should the Provincial and Federal governments continue the push for electrification.

The spending of billions by Hydro One to upgrade Hydro One’s transmission system coupled with the billions spent by the LDC to upgrade their delivery of electricity to your household or business will obviously drive up the cost of each kWh (kilowatt) you consume.  At the same time try to imagine the costs of additional “emission free” generation NB: that will need to be added to the grid. The cost of storage (battery and pumped hydro, etc.) more wind and solar generation and perhaps new nuclear and electricity rates will climb even higher.

 All one has to do is look at the UK and Europe where spiraling inflation has been mainly driven by rising energy costs and taxpayer subsidies have become the norm in an attempt to keep household residents from freezing in the dark and businesses from closing while various countries run up huge annual fiscal deficits.

We should expect the same here in Ontario and the rest of Canada should our politicians continue on the path to save the world from “climate change”!

Hydro One’s survey should signal our politicians where we may be heading but perhaps that is too much common sense for them to appreciate.

NB: The following is from a recent exchange with the Ontario Ministry of Energy with my observation:  NREL, a national laboratory of the US Department of Energy, in their study stated, “Widespread electrification increases 2050 U.S. electricity consumption by 20% and 38% in the medium and high adoption scenarios, respectively and relative to the reference.” For Ontario let’s focus on the “medium scenario!  At the end of 2021 IESO reported total grid connected capacity in Ontario was 38,079 MW. If we assume Pickering Nuclear gets approval to extend its life that reflects the need to add 7,600 MW of NEW capacity (20% of 2021 capacity) or 10,600 MW (28%) should Pickering renewal not receive the green light! Please note the study states “consumption” which means both wind and solar plus storage would need to be at least triple that capacity level!

IESO, Great Weather Forecasting or Simply History Repeating Itself

We ratepayers and taxpayers must assume IESO, who control the Ontario electricity grid, look at weather forecasts daily as they post data with hourly forecasted generation we will get from wind and solar over the 24 hours. They don’t do that for baseload generation such as nuclear and hydro or even natural gas but do for the two intermittent and unreliable sources of electricity.

The question becomes did IESO look at longer term weather forecasts confident IWT (industrial wind turbines) would replace the baseload of the 3,000 MW capacity of Pickering Nuclear (related to the VBO [Vacuum Building Outage])?  Then again, on October 13th, did IESO bless Bruce Nuclear closure of their G8 unit with a capacity of 800 MW for maintenance (?) confident we ratepayers would have sufficient power? 

Suddenly Ontario is without baseload capacity of about 3,800 MW (about what 3 million average Ontario households consume daily) but no problems or worries about rolling blackouts or smart meter control to reduce consumption. IWT have apparently stepped in to fill the gap. 

Looking at the past three days clearly demonstrates how IWT are intermittent but not just hourly, as has been obvious from reviewing their generation since the first of them were planted in rural communities in the province.  Their proven habits in the past decade have shown their generation is skewed with lots of generation in the Spring and Fall when demand is low but come hot summer days or very cold winter days when peak demand is often well over 20,000 MW they hardly show up.

October 12th IWT generated over 74,000 MWh and had another 5,000 MWh curtailed meaning they could have operated at over 67% of capacity. Peak demand reached 16,290 MW at hour 19.  October  13th they generated about 42,500 MWh and had only about 500 MWh curtailed so combined; operated at over 36% of capacity.  Peak demand again occurred at hour 19 reaching 16,277 MW. On October 14th those IWT were still humming generating 55,500 MWh and had another 7,900 MWh curtailed so combined they operated at 53.9% of rated capacity. Ontario’s peak hour once again struck at hour 19 reaching only 15,444 MW.  Over those three days IWT operated at an average of 52.6% of capacity whereas over a full year they average in the range of 29/30%.

The positive outcome from the missing 3,800 MW of baseload was the HOEP remained at reasonable market levels whereas if one looks at past HOEP averages it was $13.90/MWh in 2020 and $28.50/MWh in 2021.  What that suggests is Class B ratepayers/taxpayers reduced their subsidization of our surplus exports and Class A customers.  This current lack of the 3,800 MW of baseload power will help to drive up the HOEP continuing the drop in our subsidies.  The negative is our manufacturing sector will experience higher costs for their electricity consumption.

In summary we should be confident IESO, by allowing the nuclear shutdowns, were not forecasting weather events over the next month or more.  IESO were simply looking at data from the past which consistently shows the large drop in demand during our Spring and Fall seasons and based on past bad habits were confident those IWT would do as they have done for most years. They also knew those natural gas plants were at the ready when the wind isn’t blowing.

We will need that baseload power back operating when the cold weather is upon us in the coming winter as those IWT will once again show us how they are missing in action when needed.

It sure appears IESO has looked back and is confident history will repeat itself!

NB:  The first 13 hours of October 15th indicate IWT generation plus curtailed power has them operating at 77.9% of capacity collectively showing 49,614 MWh.

Hey, Minister of Energy Smith, Clean Energy Credits Should Benefit Ratepayers

Many Ontarians were pleased Premier Ford recognized (sort of) inflation was harming us and gave us short-term (6 months) relief from the sales tax on gasoline of 5.7 cents a litre. In the interim with high inflation driving everything up we should be pretty sure the foregone taxes were or will be fully recovered from sales taxes applied to everything else we consume. The tax relief started on July 1st and ends December 31st, 2022.  Looking at the recently released 2021-2022 Public Accounts it is obvious why he did that. Sales tax revenue from April 1, 2021, jumped from $26.6 billion to $30.4 billion by March 31, 2022, an increase of $3.8 billion (14.3%) so, presumably, sales taxes played a role in driving up inflation while increasing the government’s coffers to allow them to achieve an unplanned surplus! 

It is interesting the Ford led government chose just one of the many sources of energy we regularly use for the gesture and ignored “electricity” which is consumed daily by almost all businesses and residents in the province. Perhaps he was of the opinion the Ontario Electricity Rebate (OER) was more than we deserve as the Provincial sales taxes on our electricity bills represent only 76.5% of the OER but it only applies to residential users! If that’s the case, he ignores the fact; those who pay the costs of that rebate are present and future taxpayers who will have to pay the accumulated debt from the OER.  Kind of “in one pocket but out of the other one” tax!

Worth considering and related to the foregoing is the recent announcement by OPG stating they will be selling “clean energy credits” to Microsoft in a “firstof-its-kind deal”! 

One should wonder, will Microsoft be charged sales taxes for something intangible that will serve to improve their ESG (environmental, social and governance) disclosure scores? Those will reputedly be OPG’s “carbon-free hydro and nuclear assets”.  That seems quite strange as Ontario ratepayers (residential and businesses) already purchase the power that OPG hydro and nuclear provide in addition to: those contracted parties of unreliable and intermittent wind and solar generation also claiming to be “carbon-free”.  We ratepayers pay for the power to keep lights on and our manufacturing base, offices, restaurants, etc. etc. operating. We are also burdened to pay the power bill for our hospitals, schools, etc. via our taxes and obliged to pay sales taxes on what we consume.

What is particularly annoying, as a ratepayer; was, what the article noted about the revenue generation from those “clean energy credits”: “OPG said revenue from the credits would also help OPG in its own commitment to achieving net zero as a company by 2040. The funds received will either go toward investments in new clean generation in Ontario, back to the ratepayer or back to the taxpayer through the province.”

From all perspectives the funds generated for the province by OPG are already substantial as OPG’s December 31, 2021 financial statements indicate. OPG’s water rental costs were $415 million (paid to the province) including $26 million for spilling water during SBG (surplus baseload generation) situations plus $239 million in pseudo income taxes. Collectively that was $654 million.  What is missing from the foregoing however is the 7% sales taxes we ratepayers paid for the 77.6 TWh (terawatt hours) OPG generated and produced gross revenue of $6.877 billion. When that OPG generated power was delivered to us ratepayers we paid the sales taxes, and the province earned another $481.4 million giving the province $1.135 billion for our (taxpayers) investment in OPG.

It should be recognized the foregoing $1.135 billion doesn’t include OPG’s “Net Income Attributable to Shareholder” ie: the Province of Ontario; which was $1.325 billion. That means the “Province” claimed $2.460 billion for the 77.6 TWh OPG generated and delivered. The combined revenue added 3.2 cents/kWh to what we ratepayers consumed. The $2.460 billion is about six (6) times more than the savings of 5.7 cents a litre (approximately $400 million) we will save for the six months of a slight reduction in costs when filling our ICE vehicles with gasoline.

The return on OPG’s equity (December 31, 2021 was $15.532 billion) and the RoE (return on equity) is set by the OEB (Ontario Energy Board) at 8.4% so at $1.325 billion it is very close to the setting, however, if one adds the additional revenue the Province generated it becomes a collective RoE of 15.9% and above what most private sector power companies would hope to achieve! Unfortunately, no one sets the allowed “return on equity” for the province and there is no competition to keep rates down!

One should hope the Ford led ruling party will finally recognize their role in the gouging of ratepayers and ensure any revenues generated by the sale of those “clean energy credits” by OPG finds its way to reducing ratepayer bills rather than further spending by OPG or the province.

Pickering Nuclear Vacuum Building Outage (VBO), a Look at the Future, or a Demonstration of Ontario’s Energy Vulnerability?

Many around Ontario are probably unaware all the units at the Pickering Nuclear plant have been shut down to perform an VBO.  A VBO is usually conducted on a periodic basis for the purpose of confirming the integrity of the equipment and infrastructure of the vacuum buildings.  In the past, VBOs have been cycled with one or two units out for three to four weeks in the Spring or Fall when Ontario’s “peak demand” is generally low, but the wind is frequently blowing.  On this occasion OPG has apparently shut down all the Pickering Nuclear* units for the VBO. 

The question becomes: is it the intention to demonstrate the viability of extending their life or to show the vulnerability of the energy system without the approximately 3,000 MW capacity of Pickering or both?

Since all the units have been fully shut down (the last units were shut early on October 6th), IESO data clearly shows even though Ontario peak hourly demand on October 6th was only 16,375 MW and 16,303 MW on the 7th we were importing significant power from Quebec. We imported the power despite the fact IWT (industrial wind turbines) eventually ran well above their annual average of about 30% of capacity and natural gas peaked at Hour 11 on the 6th at 3,147 MW while wind was on an upward move and generated 925 MW.

On the 6th, Quebec supplied 22,354 MWh and on the 7th we imported 26,731 MWh from them. As a matter of interest, the latter is about what 1,000,000 average Ontario households consume daily.  It is worth pointing out Quebec is a “winter peaking” province principally due to the fact most households in the province heat with electric powered furnaces or baseboard heaters. Hydro Quebec therefore asks their customers to reduce demand during cold winter periods. For that reason, Ontario may well find its neighbour unable to supply any power during the winter so it would be expected Ontario might experience rolling blackouts without the Pickering units up and running.

The other interesting fact is; the HOEP (hourly Ontario energy price) market price over the two days has averaged over $60/MWh which will presumably affect the ICI (Industrial Conservation Initiative) ie: even picking some or all the top five peak hours over the year may not generate the same savings as in the past for those companies using a minimum of 500 KW per hour or as much or more then 5 MW per hour should the HOEP climb further.

From all appearances it seems the intention of the Pickering Nuclear shutdown for VBO purposes is clearly to signal the necessity of retaining the 3,000 MW of their capacity or subject the province to potential rolling blackouts as California has experienced.

The full “electrification” of the province as advocated by the Ford led Ontario Conservative Party may not be looking like the shining star to make the eco-warriors happy while bringing grief to the rest of us Ontarians.  The Ford led government should remember we Ontario voters went through a similar experience under the Ontario Liberal Party and turned them into the “minivan” party and it was related to the “energy” file!

We should hope Ford and his Minister of Energy, Todd Smith have seen the light about the “net-zero” push and realize it may be the train in the tunnel heading for us Ontarians and will wipe out their current majority come the next election! 

*I was informed by two knowledgeable engineers the Pickering Units must all go through the VBO process at the same time.