Numbers don’t lie: intermittent wind and solar surplus to Ontario’s energy needs

The IESO (Independent Electricity System Operator) released 2017 data for grid-connected* generation and consumption and, surprise! The data reveal that power from wind and solar is surplus to Ontario’s  energy needs.

IESO reported Ontario’s consumption/demand fell 4.9 TWh (terawatt hours) in 2017 to 132.1 TWh. That’s a drop equivalent to 3.6% from the prior year.

Nuclear (90.6 TWh) and hydro (37.7 TWh) power generation was 128.3 TWh, making up 97.1% of Ontario’s total demand (without including dispatched power from either nuclear or hydro). The cost to Ontario ratepayers for the 128.3 TWh was approximately $7.6 billion or 5.9 cents/kWh.

Spilled hydro (paid for by Ontario’s ratepayers but not used) reported by Ontario Power Generation or OPG was 4.5 TWh for the first nine months of 2017. Out that together with 511 nuclear manoeuvres and the number is 959.2 GWh (gigawatt hours) wasted but paid for by Ontario’s ratepayers. Add in three nuclear shutdowns and it means Ontario’s nuclear and hydro generation alone could have easily supplied more than 136 TWh of power or over 103% of demand.

That doesn’t include spilled hydro in the last quarter of 2017 which will probably exceed at least one TWh.

Nuclear and hydro does it all

Nuclear and hydro could also have supplied a large portion of net exports (exports less imports) had all the generation potential actually been delivered to the grid. Net exports totaled 12.5 TWh in 2017.  Grid connected wind (9.2 TWh) and solar (0.5 TWh) in 2017 supplied 9.7 TWh and their back-up generation: from gas plants, supplied 5.9 TWh.  In all, the latter three sources delivered 15.6 TWh or 124.8% of net exports.  Net exports were sold well below the average cost of generation. Exports brought in revenue of about $400 million, but here’s the kicker: that surplus power cost Ontario’s ratepayers $1.4 billion, which is really a loss of $1 billion.

Grid-connected wind, solar and gas generation collectively cost approximately $3.5 billion for the 15.6 TWh they delivered to the grid, included curtailed (paid for but not used) wind power generation of 3.3 TWh. The cost of the wind power was more than $220 million per TWh, or 22 cents/kWh. That’s almost double the Class B average rate of 11.55 cents/kWh cited in IESO’s 2017 year-end results.

The 9.7 TWh generated by wind and solar was unneeded. If it had been required, it could have been replaced by gas power generation at a cost of only around two cents per kWh. Why? Gas generators are guaranteed payment of  about $10K per MW (average) of their capacity per month to be at the ready and if called on to generate power are paid fuel costs plus a small markup.

Price tag: $2 billion

In other words, if no grid-connected wind or solar generation existed in Ontario in 2017 the bill to ratepayers would have been about $2 billion** less! Grid-connected wind generation (including curtailed) cost ratepayers in excess of $1.7 billion and grid-connected solar added another $250 million!

That $2 billion, coincidentally, is about the same cost estimate of the annual amount to be deferred, and paid by future rate increases via the Fair Hydro Plan! In other words the current government could have easily saved future generations the estimated $40 billion plus cost of the Fair Hydro Plan by having never contracted for wind and solar generation!

The IESO results for 2017 sure makes me wonder: why hasn’t the Ontario Ministry of Energy canceled all the wind power projects that have not yet broken ground?


*   Distributor connected solar (2,200 MW) and wind (600 MW) added over $1.4 billion to the GA.

** The first 6 months of the variance account under the Fair Hydro Plan in 2017 was $1,378.4 million.



Ontario’s Fair Hydro Plan set to be less fair than ever

My latest, published in today’s Financial Post, here.

An excerpt:

When the province of Ontario in October announced its Fair Hydro Plan, which lowered electricity rates to current ratepayers by 25 per cent — by passing on costs to future ratepayers — the Association of Major Power Consumers of Ontario (AMPCO) had a problem. The group, representing companies in the province that consume significant energy in their production, took issue with a claim in the province’s revised Long-Term Energy Plan (LTEP) that stated: “Currently, the electricity price for industrial electricity consumers in Ontario is lower than the average price in the Great Lakes region as reported by the U.S. Energy Information Administration.”

Objected AMPCO at the time: “That statement sends the message that Ontario industrial prices are already competitive with surrounding jurisdictions. That is simply not the case.”

AMPCO had lobbied long and hard for special treatment under Ontario’s rising power rates. It got that several years ago when the provincial energy minister directed the Ontario Power Authority to develop and deliver a program that would bring relief to large industrial companies. The program — which required that the large industrial “Class A” ratepayers drive down peak demand — commenced in 2011 and has grown since then as more and more industrial clients were allowed to qualify with lower and lower consumption limits. Joining the Class A ratepayers can result in substantial savings, achieved on the backs of the rest of Ontario’s ratepayers who are the “Class B” group, made up of households and smaller businesses. …

Hydro One’s new electricity bills: so pretty, so empty

The Ontario government was recently questioned about advertising in electricity bills and got this response from the Energy Minister: “Hydro One has a pilot project under way in which they’re doing a new bill redesign, helping customers right across the province who are Hydro One customers understand their bills and some of the complexity of the bills. Knowing that they’re getting a 25% reduction on their bills is important.”

The Minister’s added, “It is important that all rate-payers in the province know what is on their bills”. 

The “pilot project” referred to by the Minister was the $15-million spend by Hydro One to design their new bill. This has recently received a lot of media attention with an emphasis on how Hydro One used “behavioural science”* in its design. The government has previously said it uses behavioural science research to “improve services and outcomes.” (See it here)

I’ve already noted the planned spending of $15 million by Hydro One last December in an article: “According to Hydro One they will have ‘A fresh new look to serve you better’. Hydro One appears to be in the process of spending $15 million dollars to make that happen, as explained on page 2032 of one of the dozens of documents filed with the OEB seeking several rate increases.”

The media reported that so far, Hydro One has spent $9 million reinventing their bill and are fully intent on spending the balance of $6 million. So the question is, do the changes add value, make our bills more easily understandable and tell us where all the money is being spent?

If you are curious as to what the new bills look like, Hydro One posted a sample bill (two pages) on their website. Compare your old bill to the new one — developed with the assistance of “behavioural science” — you will immediately notice it is much more colourful!   But finding new or meaningful information is virtually impossible unless you think the box on the right hand side of page one telling you how much Ontario’s Fair Hydro Plan saved you is important, even though it is already shown and highlighted on existing bills.

What’s not there? Plenty: the new bills don’t disclose your “service type” which has a significant bearing on what you pay for “delivery” costs, nor do they tell you your average daily consumption over the previous five months.  They don’t disclose the cost of subsidization of Class A ratepayers, how much it cost for curtailed wind or spilled hydro, or how much it cost to sell our surplus energy to our neighbours in New York, Michigan and Quebec, etc.  New understanding of the bills’ “complexity” as suggested by the government is sadly lacking.

Essentially what the new electricity bills demonstrate is “bad behaviour” on the part of Hydro One and the government by spending $15 million for colourful bills!

Parker Gallant

January 17, 2018


* “behavioural science” is defined by Merriam Webster as “A science that deals with human action and seeks to generalize about human behaviour in society”


Energy irony in Ontario

Anyone in Ontario who receives an electricity bill has seen the line 8% Provincial Rebate which appears just above “Total of your electricity charges” and refers to the provincial portion of HST charges.

There are millions of households in Ontario, however, that are not entitled to that rebate. In fact, 3.3 million households* depend on natural gas, oil or propane for heating or cooking are exempt.

Those households are not even told how much the “cap and trade” tax is. The latter is only available should you visit your supplier’s website where they may, or may not, offer you the opportunity to calculate what that tax is.  If you do the calculations you discover the cap and trade tax represents about 8.8% of your bill so that, together with the 13% HST (including the 8% provincial portion), total taxes on your heating bill are 21.8%!

What that means: if your annual heating bill is $1,000 you pay $218 in tax but if you heat with electricity for the same annual cost, you only pay 5% or $50.

If the 8% rebate granted to electricity ratepayers was aimed at reducing energy poverty, why weren’t households heating with natural gas, oil or propane accorded the same treatment?

Getting off fossil fuels might help combat climate change, but switching to electric heat the cost would suddenly zoom to well over $2,000!   A sure-fire way to reduce emissions while increasing energy poverty.

On December 12, 2017 Ontario’s energy minister responded to a question in the legislature from the leader of the third party about the Fair Hydro Act. He said:

“Again, some of them don’t have a choice between natural gas or electricity, so they’re using electricity. We’re working on that with the Minister of Infrastructure, rolling out a plan to get natural gas to these communities as well.”

More gas means more taxes, doesn’t it?

But I am confused about the direction the government wants us to take. Is climate change now on the back burner as they push to contain the deficit by getting us to pay more taxes by consuming more fossil fuels?

Ironic, isn’t it?

Parker Gallant,



* Based on a StatsCan 2013 report (census of 2011)

New info: energy poverty still deep in Ontario

It apparently took the Ontario Energy Board (OEB) a long time to put together the report on the low-income energy assistance program (LEAP) as the 2016 report was not posted until January 11, 2018.

(It was late:  OEB reporting regulations state “A distributor shall provide in the form and manner required by the Board, annually, by April 30, the following information related to the provision of LEAP emergency financial assistance in the preceding calendar year.”)

Actually, I looked for the reports for both the LEAP program and the OESP (Ontario Electricity Support Program) back in mid-December 2017, and still have not received a response.  Busy times at the OEB? Or is the release of the OESP report being delayed for some reason?

The LEAP report is just what we have come to expect. The leader by a wide margin in terms of the program, was Hydro One, which represented 52.4% of all recipients, despite only having about 25% of all residential ratepayers as clients. The dollar values from Hydro One also represented 57.4% of total available funds and 60.7% of total grants disbursed.   Hydro One’s budget was only $1,845,000 (41% of the CEO’s annual remuneration), but it had to be supplemented via donations of $2,250,000 from numerous corporate donors and social agencies.

Thirty-nine (39) LDC depleted their funds in 2016 and 12 more had less than the average grant amount available at year-end. Almost half of the LDC had run out of funds by the time summer arrived in June 2016.

Funds disbursed under the LEAP and Winter Warmth programs compared to 2015 increased in 2016 by $1,318,700 to $7,776,600 (up 20%) despite the fact the OESP (Ontario Electricity Support Program) started January 1, 2016 and offered significant relief to hundreds of thousands of low-income Ontarians. The OESP was estimated by the OEB to cost other ratepayers as much as $200 million annually.

It certainly appears “energy poverty” continues to increase in the province despite the recent claim by the Minister of Economic Development and Growth that “Ontario has now created more than 800,000 net new jobs since the depths of the recession.”

The assumption must be, those 800,000 jobs are all at the low end of the pay scale — otherwise there would have been no need to kick $25 billion (plus the interest [$15 billion]on the borrowed funds) of ratepayer bills down the road for future generation to pay.

Parker Gallant



A few dollars more: ordinary electricity customers pay for new conservation measures

Ontario’s Class B ratepayers will be digging deeper into their pockets to find more dollars to help universities, hospitals, court houses and other public buildings pay their electricity bills.

That fact has not been formally announced by the Ontario government; however, the IESO 18-month outlook said this about the Industrial Conservation Initiative or ICI.

“The changes to the ICI program this year have opened the door for participation from the commercial sector. Hospitals, office buildings, hotels, universities and other large commercial buildings with peaks greater than 1 MW can now minimize their electricity costs by shifting loads during the ICI peak day periods. The success of these changes from the perspective of the commercial sector comes back to their load flexibility and their ability to follow the system peaks. The commercial sector impacts are not visible to the IESO as all of these participants would be distributor customers. The ICI program is estimated to have reduced peak demand by about 1,300 MW in the summer of 2016 and with the changes to the program the expectation is that those savings will have increased in 2017.”

What does this change in the ICI program do? It allows public and private entities to pick the highest five peak demand hours in a year (or come close to the five highest) in order to receive subsidized electricity rates. The subsidy is basically a transfer of costs from the Class A ratepayers to the Class B ratepayers—Class B being ordinary folks like you and me.

Class B ratepayers are all residential households along with thousands of small businesses and franchised businesses (who are also struggling with how to manage the increase in the minimum wage which came into effect January 1, 2018).

In 2017, the ICI transfer added $1.2 billion to the costs of electricity for Class B ratepayers while reducing the Class A costs by the same amount. The addition of the business option to choose the ICI program is substantial and will increase the subsidy, but it doesn’t appear the Energy Ministry has bothered to provide that information, or completed a cost/benefit analysis to assess the effects.

Scott Luft noted the ICI cost shift for 2017 in a Tweet a few days ago:

Cold Air‏@ScottLuft Jan 6

yesterday I noted an ICI Hi5 hour being set – and noting the program shifted about $1.2 billion from large to small consumers in Ontario last year. Today’s hour 18 may also end up in the Hi5”

So, reducing “peak demand” by 1,300 MW for five hours is equal to 6,500 MWh and cost $1.2 billion, making the cost of reducing “peak demand” $184,615 per/MWh! ($1.2 billion divided by 6,500MWh).

We should expect this Class B to Class A shift to increase substantially in 2018 as the effects of lowering the ICI to the lower level of 1MW will provide an incentive to those who qualify.

If you happen to be in a hospital or university and notice the lights suddenly dimming you can guess it is probably one of the anticipated high five hours.

It also means, your electricity bill just went up.

Parker Gallant

Important connections in the world of energy in Ontario

Reading an article recently about Greenpeace trying (apparently unsuccessfully) to create a solar-powered town in India several years ago reminded me of a project in the GTA proposing to use “zoo poo” to create a 500-kW biogas plant.

The project is a co-op known as Zoo Share Biogas Co-operative and plans to use methane from animal waste to produce electricity in a biogas plant. The chatter about this project goes back to June 3, 2011 and those behind the project applied for a contract with the OPA (since merged with IESO).

So where is it now? A visit to the website shows the OPA advised them early July 2013 they were granted the contract. A PDF file titled “Construction Plan Report” on the site reveals “Construction of the facility is scheduled for summer 2014 with completion and grid connection expected in the fall of 2014.”

Needless to say, the plant is still not functioning but nevertheless has taxpayer support and some $4 million raised from individuals and others who purchased bonds that carry a 7% coupon on a project estimated originally to cost $4.8 million.

Curiosity further led me to look at the members of the Co-op’s Board of Directors and I noted Chris Benedetti was a Board member.  Benedetti is a principal with the Sussex Strategy Group and the head of its Energy and Environment Practice.  Some will recall Mr. Benedetti was involved in a major fundraising event for the Ontario Liberal Party as reported in an article in the Globe and Mail in March 2016 headlined:  “For $6,000, donors get face time with Kathleen Wynne and Bob Chiarelli”.

That article contained the following attributed to Mr Benedetti: “The evening is being promoted by Sussex Strategy Group, one of the country’s top lobbying firms. In an e-mail encouraging energy industry insiders to attend, Sussex principal Chris Benedetti wrote that the soirée will be a ‘small event with a limited number of tickets,’ giving all attendees face time with Ms. Wynne and Mr. Chiarelli.”

Previously, the Sussex Strategy Group’s name was connected with what the Toronto Star noted in a November 2010 headline as:  “Group plans to ‘dupe’ public about green energy costs: Tories”.  The article also noted: “The Oct. 18 document, drafted by consulting firm Sussex Strategy Group, lays out a plan — complete with a $300,000 initial budget — to change the channel on the current green energy debate, which is largely focused on cost.”

The Benedetti/Sussex connection led me to visit the Sussex website; the page titled “Our People” shows Kim Warren’s name and picture of Kim Warren under Sussex’s “Affiliates.”. Mr. Warren was, until January 1, 2017, the COO of IESO; if you check the “Sunshine List” for the 2015 year you will note he was paid $577,000.04 — not too shabby for a public servant!  When he was employed at IESO he spoke about integrating renewable energy. Due to his positive tone the short video of his speech was posted on the CanWEA website; he was clearly supportive and claimed wind energy “was a big part” of shutting down coal.  (Many grid operators around the world would dispute his claim.)

Searching on Google again using Mr. Warren’s name and his IESO affiliation turns up other relationships.  One that pops up is NRStor:  a press release dated June 20, 2017 announces he is the newest addition to NRStor’s Board as a Director and states:  “The insights and experience Kim Warren brings to our board as previous COO of the IESO is significant,” said Annette Verschuren, NRStor’s Chair and CEO. “He is a world expert on power systems and his extensive understanding of the electricity market will help NRStor grow and develop our energy storage business.”

Coincidentially, NRStor has been awarded contracts by IESO with the first one on July 22, 2014 announced by then Energy Minister, Bob Chiarelli: “Today, the Minister of Energy, the Honourable Bob Chiarelli, announced the commencement of commercial operations for NRStor Incorporated’s (NRStor) 2 megawatt (MW) Temporal Power Limited (Temporal Power) flywheel energy storage facility in Harriston, Ontario.”   Now assuming the 2MW of storage was called on to replace Ontario’s generated power it would be capable of supplying demand for half a second, or less.

The second contract awarded to NRStor by IESO noted:  “NRStor will build a fuel-free compressed air energy storage facility that will provide 7 MWh of storage capacity to the IESO.”

For those who wonder who is NRStor, the following comes from their website: “NRStor is a market leader in understanding energy storage technologies, their costs, and the benefits they can provide customers across the energy supply chain. As a project developer, we develop, own and operate industry-leading energy storage projects in partnership with progressive stakeholders and leading technology providers.”

NRStor was founded by Ms. Annette Verschuren, former CEO of Home Depot. Ms. Verschuren spoke to the Standing Committee on Finance and Economic Affairs May 19, 2015 in respect to Bill 91, Building Ontario Up Act. One of the notable comments she made was,  We are a developer of energy storage technology, so we build projects. We are working on about 20 projects at the moment and we see the introduction of energy storage really making a big difference in terms of how we get electricity to market in a cheaper way. NRStor recently announced a partnership with the Tesla Powerwall, which is very exciting, to be introduced. We want to start in Ontario. We see that movement towards, again, using excess energy to improve costs and make it easier for customers.”

Ms. Verschuren also offered her “Congratulations to the Ontario government for its announcement on cap-and-trade policy.” and: “The privatization of Hydro One is also something that I’m very supportive of.”

While Ms. Verchuren is very accomplished and informed, from my perspective, she has missed the effects on hundreds of thousands of Ontario ratepayers/taxpayers from the Green Energy Act, and the “cap and trade” tax.    Ontario’s “excess energy,” as she puts it, represent a huge cost to ratepayers, which seems to have escaped her thinking.

The conflict in Ms Verchuren’s testimony is exacerbated by adding Kim Warren as a Director of NRStor.   The fact that NRStor has benefited from IESO’s contract awards should have triggered the question of how the media and public would view his appointment.   As a director he would be required to be a shareholder in NRStor which seems to fly in the face of IESO’s “Post-Service Restrictions” contained in their Code of Conduct which states: “It is expected that the restriction against purchasing or holding any Prohibited Financial Interests continues until 6 months following the end of your employment or association with the IESO.”

Worth noting is Ms. Verchuren is registered as a lobbyist with the Office of the Integrity Commissioner as is Chris Benedetti (lobbyist for NRStor and 55 other companies), but Kim Warren is not.

The Ontario Ministry of Energy seems to have created a tangled web that benefits select companies and individuals.

Parker Gallant,

January 7, 2018