The impact of the well above normal temperatures Ontario has been experiencing for the past several days in September was seen in hour 17 (5 pm) yesterday, September 25, 2017.
From all appearances, hour 17 set the record for high peak demand in the province for the current year as businesses and homes had air conditioners and fans blasting away, drawing power from the grid.
Peak demand for hour 17 was 21,639 MWh.
Nuclear and hydro along with gas generated 20,091 MWh during that 60 minutes and was supplemented by net imports of 1,221 MWh from Manitoba and Quebec.
Where were “renewables” (excluding hydro), wind, solar and biomass? Together, they generated a miserly 307 MWh. In fact, wind power generators probably consumed more then they contributed with a minuscule 67 MWh. That 67 MWh represented about 1.5% of their grid connected capacity of 4,213 MW.
Put another way, wind power contributed .3% of peak demand!
All this simply proves industrial wind turbines (IWT) are unreliable and intermittent. If they can’t be counted on when we need the power, why does our Minister of Energy Glenn Thibeault and Premier Wynne continue to support them? Why not cancel contracts for wind power plants that have not commenced construction?
The time has come for the Ontario Liberal government to admit that industrial-scale wind turbines deliver nothing more than unreliable, intermittent power that must be backed up with reliable power in the form of nuclear, hydro and gas.
Ontario ratepayers well ahead in international competition to see who pays more for nothing.
A recent article appearing in Energy Voice was all about the costs of “constraint” payments to onshore industrial wind developments in Scotland. It started with the following bad news:
“According to figures received by Energy Voice, the cost of paying wind farm operators to power down in order to prevent the generation of excess energy is stacking up with more than £300million* paid out since 2010.” (£300 million at the current exchange rate is equal to about CAD $500 million. )
What Scotland refers to as “constrained” Ontario calls “curtailed,” but they mean exactly the same thing. Ontario didn’t start constraining/curtailing generation until mid-September 2013, or almost three full years after the article’s reference date for Scotland. Curtailment prevents the grid from breaking down and causing blackout or brownouts.
The article from Energy Voice goes on: “In 2016 alone, Scottish onshore wind farms received £69million in constraint payments for limiting 1,048,890MWh worth of energy”.
Ontario in 2016, curtailed 2,327,228 MWh (megawatt hours). That figure comes from Scott Luft who uses data supplied by IESO (Independent Electricity System Operator) for grid-connected wind power projects and conservatively estimates curtailed wind for distributor-connected turbines to compile the information.
What that means: in 2016 it cost Ontario’s ratepayers CAD $$279.2 million** versus £69 million (CAD equivalent $115.2 million) for Scottish ratepayers. So, Ontario easily beat Scotland in both the amount of constrained wind generation as well as the subsidy cost for ratepayers who in both cases paid handsomely for the non-delivery of power!
The article went on to note: “By August 2017, the bill had already reached in excess of £55million in payments for 800,000MWh”!
Once again Ontario’s ratepayers easily took the subsidy title by curtailing 2.1 million MWh in the first eight months of the current year, coughing up over $252.5 million Canadian versus the equivalent of CAD $92 million by Scottish ratepayers.
In fact, since September 2013, Ontario has curtailed about 5.5 million MWh and ratepayers picked up subsidy costs of over $660 million.
Ratepayers in both Ontario and Scotland are victims of government mismanagement and wind power industry propaganda, and are paying to subsidize the intermittent and unreliable generation of electricity by industrial wind turbines.
(C) Parker Gallant
* One British Pound is currently equal to approximately CAD $1.67.
**Industrial wind generators are strongly rumored to be paid $120 per MWh for curtailed generation.
Back in April 2015, the Wynne-led Ontario Liberal government announced they had created the Trillium Trust and would be selling off assets to generate $130 billion dollars that would be allocated “across the province over 10 years to fund projects in public transit”.
The news release for the announcement stated an additional $200 million generated from the sale of the GM shares would be placed in the trust; it also announced plans to sell off Hydro One.
OPG’s 2nd Quarter report was released August 11, 2017. The media paid no attention despite a very successful quarter, reporting an after-tax profit of $307 million — well up from $132 million of the comparable 2016 quarter.
But if you look deeper into their results, you learn $283 million of the reported profit came from the sale of their head office.
What the OPG results signify is that profitability from their share of total Ontario power generation (52.2% or 18 TWh/terawatt hours out of the total 34.5 TWh) for those three months in that quarter produced only $24 million in after-tax profit. OPG blamed the reduced income on lower nuclear power generation.
I think there is much more to the story.
OPG, as I have said before, has become the “whipping boy” for the Ontario Liberal government and apparently it still is, as observations will confirm comparing their 2017 quarterly results with those of the same quarter in 2007. Here’s proof.
Renewables and Conservation
It would be remiss to not mention first that both the addition of renewable energy such as wind and solar (in excess of 6,700 MW) were granted “first to the grid” rights thereby superseding much of OPG’s (previously called “unregulated”) hydro (3,629 MW as of December 31, 2007) as well as other generation such as Lennox, an oil/gas fueled generating station with a capacity of 2,100 MW which is seldom called on to produce electricity. Likewise, biomass-converted coal plants in Atitikokan (180 MW) and Thunder Bay (165 MW) are idle most of the time. The other issue is the fact that consumption in 2007 was reported by IESO as 152 TWh; by 2016 that had dropped by 15 TWh (enough to supply about 1.7 million average households for a full year) supposedly due to conservation, but more likely due to the high prices.
Ten years later
Now let’s look at the ten-year comparisons for the 2nd Quarter.
Gross revenue in 2007 for the quarter was $1,393 million versus $1,146 million in 2017; a drop of $247 million or 17.7% and for the first six month (2017 versus 2007) was $691 million lower (-22.9%)
Spilled hydro generation in the 2nd Quarter of 2017 was 2.6 TWh (enough to power about 290,000 average households for a year) but not mentioned in 2007
Water fuel taxes in the 2nd Quarter of 2017 were $97 million to generate 8.2 TWh whereas in 2007 the 9.3 TWh generated resulted in water fuel taxes of only $67 million
Electricity generated in the 2nd Quarter of 2017 was 18 TWh (-25.4%) versus 25.4 TWh in the same quarter of 2007 and for the comparable six months generation was down from 54.2 TWh to
36.6 TWh a drop of 17.6 TWh or more than the 2007/2016 consumption decline of 15 TWh
Payments in Lieu of Taxes (PIL) in the 2nd Quarter of 2017 were $97 million versus $29 million in the comparable 2007 Quarter.
Operations, maintenance and administration costs dropped from $776 million in the 2nd Quarter of 2007 to $711 million (-8.4%) in the comparable 2017 Quarter however the average costs of generation per kWh (kilowatt hour) increased from 4.6 cents/kWh to 4.83 cents/kWh
OPG were also listed as a participant in the recent “cap and trade” auction of “Greenhouse Gas Allowances” but their purchase or cost of allowances was not disclosed
All this suggests only a few ways the Ontario Liberal government and the Energy Ministry are removing money from ratepayers’ pockets to fund the Consolidated Revenue Fund, etc.
The sale of OPG’s head office is another. The fact that OPG produced an after-tax profit of $283 million by the sale of its head office will do nothing to reduce electricity rates as the following note from the 2nd Quarter 2017 report states:
“Pursuant to the Shareholder Declaration and Shareholder Resolution, and as prescribed in the Trillium Trust Act, 2014, OPG is required to transfer the proceeds from this disposition, net of prescribed deductions under the Act, into the Province’s Consolidated Revenue Fund.”
What that means is, the pre-tax profit on the sale of OPG’s head office of $378 million (including the PIL or payment in lieu of taxes) will do nothing to reduce electricity rates and instead will be applied to the budgetary deficit. Perhaps some of it will be spent on transit projects or even to pave a road in a (Liberal) riding.
The profit on the sale of OPG’s head office plus all the other payments extracted from them could have gone a long way to defray the costs that the Fair Hydro Plan will accumulate and which we will have to pay for in the near future.
Next up for OPG to sell off: per the Shareholder declaration from former Energy Minister, Bob Chiarelli is “the Lakeview Site”, comprised of an approximately 67-acre portion running along the shoreline and along the southwesterly portion of the Lakeview Site and the adjacent water lots, more particularly identified” and “the remaining approximately 110 acres of the Lakeview Site”.
The Wynne-led government is doing its best to sell off any remaining assets owned by Ontario’s taxpayers to the detriment of ratepayers.
The wind power developers’ lobbyist/trade association is proposing a tripling of Ontario’s wind turbine capacity. What would that look like?
A June 5, 2017 article by Brandy Giannetta, the Ontario Regional Director at the Canadian Wind Energy Association (CanWEA), states that “Ontario could reliably integrate 16,000 megawatts of wind energy” . Later in the article, she says wind power would be “low-cost, emission-free and increasingly reliable”.
The 16,000 MW of wind capacity suggested in the article would more than triple the current 4,000 MW of grid-connected industrial wind turbines (IWT) and the 600 MW of embedded (approximately) capacity. CanWEA just recently repeated this suggestion in a Tweet, so apparently the lobbyist/trade association thinks it’s a real idea.
Let’s see how “reliable” wind power is, right now.
It is important to look at the pattern of wind power generation. In the four hours from 10 AM to 2 PM on September 12th , the grid-connected industrial wind turbine (IWT) capacity of 4,000 MW generated almost 340 MWh, according to the IESO’s Generator Output and Capability report of September 12, 2017. During those four hours, Ontario demand totaled about 58,500 MW, so the 340 MWh delivered by wind turbines provided .58% of Ontario’s power demand — yet they represent 10.9% of Ontario’s grid-connected capacity of 36.563 MW!
It is hard to fathom how delivering just over ½ % of Ontario’s demand can be vaguely considered as reliable. The full CanWEA article suggests tripling the current contracted industrial wind so that .58% delivered during those four hours would have generated 1.7% of demand over the same four hours. Connecting the additional 10,400 MW to the grid would mean major expenditures (and by that I mean, billions of dollars) on the transmission system, while neglecting spending on truly reliable generation and the various parts of the transmission system that have been neglected.
It would also cost ratepayers for additional reliable back-up generation.
The CanWEA article also suggests wind at the 16,000 MW level would avoid “about $49 per megawatt-hour of production costs” if it supplied 35% of Ontario’s electricity demand. If the four-hour experience of power generation on September 12 shows wind turbines would supply only 1.7% of our demand, it also demonstrates one thing clearly: the last thing we need in Ontario is more wind turbines, generating intermittent unreliable power!
The trial of two aides of former Ontario premier Dalton McGuinty is likely to lay bare some inner workings behind the politicized management of Ontario’s power system over the past 10 years
On Monday, the criminal trial of David Livingston and Laura Miller, who served former Ontario premier Dalton McGuinty as chief of staff and deputy chief of staff respectively, convenes in Toronto. They face charges of breach of trust and mischief in relation to the alleged destruction of government files dealing with power plants originally contracted for the Greater Toronto Area. The trial is sure to attract media attention, particularly since another trial related to alleged Election Act violations by prominent Ontario Liberals — Pat Sorbara, Premier Kathleen Wynne’s former chief of staff, and Liberal fundraiser Gerry Lougheed — is going on at the same time.
The Labour Day weekend was a disappointment for many as the last summer holiday featured below-normal temperatures in most of Ontario. The cool weather meant Ontario’s demand for electricity was only 904,000* megawatts (MWh) for the three days.
The “weighted” average of the hourly Ontario electricity price (HOEP) averaged a meagre $6.13/MWh (0.61 cents/kWh), meaning the market value for that consumption was only $5.542 million.
At the same time, however, Ontario was exporting 168,000 MWh (net exports i.e., exports minus imports) to New York, Michigan, etc. at about the same price. Ontario got $1.03 million from the sale of that power, which brought the total market value of Ontario’s consumption and exports to $6.572 million.
If the $6.57 million figure was the true cost of power generation, then Ontario’s ratepayers would have been delighted; however, we know the HOEP makes up only a small portion of the cost. The Global Adjustment (GA) represents the bulk of costs.
What the power REALLY cost
The GA includes the difference between the contracted rate and the market or HOEP value and many other costs. As is the normal process of IESO (Independent Electricity System Operator) they provide a forecast of the GA at the start of each month. For September of this year, it was the highest ever at $127.39/MWh** or 12.7 cents/kWh. Should IESO’s forecast prove correct, the total cost of those Labour Day megawatt hours for September will be $133.52 or 13.3 cents/kWh.
In other words, the 1,072,000 MWh consumed and exported over the three days of the Labour Day weekend had an all-in cost of over $143 million.
Ontario’s ratepayers in the interim were enjoying TOU (time of use) off-peak rates of 6.5cents/kWh meaning they will be billed $58,760,000 (904,000 X $65/MWh = $58,760,000). That $58.760 million plus the $1.03 million from the export of the 168,000 MWh will produce revenue of only $59,793,000.
That leaves a shortfall in the costs of contracted generation of $83,340,440. ($143,133,440 – $59,793,000 = $83,340,440)
The $83 million shortfall for those three days winds up in what is referred to as a “variance” account and is normally reflected in the resetting of the rates semi-annually by the Ontario Energy Board on May 1st and November 1st. The Fair Hydro Act however kicked these costs down the road and will accumulate with all the other shortfalls and reflect themselves in future rate increases.
Still digging the hole
Despite these crazy financials, Energy Minister Glenn Thibeault has not cancelled the renewable energy contracts issued in 2016 that are now chasing their Renewable Energy Approvals from the Ministry of the Environment and Climate Change. The amount of exported power on the Labour Day weekend combined with the 36,000 MWh of curtailed wind power represented more than one-fifth (22.6%) of Ontario’s demand.
Ontario clearly does not need any more intermittent wind power generated out of phase with demand.
Time for the Minister of Energy to brush up on his Grade 6 Math and stop punishing Ontario’s ratepayers.
* Ontario’s demand for the 2016 Labour Day was 1,197,000 MWh
**Hopefully the IESO forecast includes an allowance for curtailed wind which was approximately 36,000 MWh over the three days of the weekend and which Ontario ratepayers pay $120/MWh.
The IESO (Independent Electricity System Operator) released their July 2017 Monthly Market Report several days ago, including Class B ratepayer consumption levels along with the cost of electricity by MWh (megawatt hour) and kWh (kilowatt hour).
Compared to the July 2016 report, it shows Ontario’s ratepayers used 910,000 MWh less (down 7.2%) in 2017 than 2016 (enough to power 100,000 average residential homes for one year) yet the cost* of the electricity generated jumped, from $106.47/MWh (10.6 cents/kWh) to $126.41/MWh (12.6 cents/kWh) or 18.7%!
To put this in context, Ontario’s Class B ratepayers reduced their consumption from 10.495 TWh (terawatt hours) in 2016 to 8.858 TWh (down 15.6%), while Class A ratepayers increased their consumption from 2.284 TWh to 3.062 TWh (up 34.1%). The cost of power consumed by both Class A and Class B ratepayers increased substantially year over year.
The impact on Class B ratepayers is being tempered by the debt being accumulated under the Fair Hydro Act that will eventually result in a new and higher debt retirement charge. Some of the additional costs can be attributed to losses on our export of surplus power increasing its cost from $88 million in 2016 to $105 million in 2017. Wind curtailed (21.3% of potential generation in 2017) costs also increased from $13.2 million to $14.4 million in 2017.
What it means: despite a reduction in consumption of 15.6 %, total costs increased!
Looking at the IESO’s “Global Adjustment Components and Costs” for July 2017, you see that dividing the published Class B costs of the GA for July of $913.4 million by the consumption figure of 8.858 TWh results in a GA cost of $103.11/MWh (10.3 cents/kWh). That cost is $9.71/MWh less than the GA Monthly Market Report of $112.80. The difference of $86 million** in additional costs was allocated to Class B ratepayers for the month of July.
When I saw that apparent difference, I inquired why. What I got back was this:
“Regarding the discrepancy you’ve identified on the Global Adjustment Components and Costs web page, the reason for the difference is because of adjustments between Preliminary Settlement Statements and Final Settlement Statements for previous months. Page 28 of Market Manual 5.5 explains this. The rate as posted in the monthly market report, is not the Class B GA amount divided by TWh. Rather, it is set to cover all payments made through GA including those held in the variance account.”
The “variance account” referenced in the response from the IESO spokesperson is cleared every six months when the Ontario Energy Board (OEB) set future rates and would have been cleared when they reset the new rates under the Fair Hydro Act that applied to Class B ratepayers as of May 1, 2017. As a result of the reply, I undertook similar calculations for other months as a test and all of them wound up within pennies … not the almost $10/MWh difference for July 2017.
What I get from all this is, transparency may not be all it is claimed to be when a mistake is made, or alternately $86 million for one month being billed to ratepayers is considered a rounding error! What is obvious is that “conservation” costs Class B ratepayers a lot of money.
September 3, 2017
* GA (Global Adjustment) + HOEP (Hourly Ontario Energy Price).