OPG reports 1st Quarter Net Revenue Growth of 22.6% and No One Noticed

The 2020 1st Quarter results by OPG were reported May 12, 2020 and showed  their “gross margin” (revenue less fuel expense) increased $289 million or 22.6% over the comparable 2019 Quarter.  Net profit was up $96 million (+45%) to $309 million but the MSM didn’t notice as they were no doubt busy reporting on the pandemic and ignoring any other news!

Net Generation was up 1.6 TWh and 1.3 TWh of the addition came from the nuclear sector (up from 9.8 TWh to 11.1 TWh) and was the primary reason for the increased revenue.  The nuclear generation also included an increase per MWh delivered; jumping from 89.70/MWh to 94.96/MWh and added $58.3 million to revenue while fuel expenses increased by only $6 million.  Gross revenue from nuclear generation increased by $242 million.

Hydro generation was flat in comparison with the prior year at 8.2 TWh and a revenue gain of $11 million was due to a slight increase in an OEB approved rate application.  OPG also spilled 0.7 TWh in 2020 versus 0.3 TWh in 2019 adding about $20 million to revenue.  One should correctly assume the spilling of hydro in both years was caused by SBG (surplus baseload generation) as industrial wind turbines or solar panels delivered power when it wasn’t needed! In the past OPG wasn’t paid for spilling hydro but when wind and solar were found to reduce OPG’s revenue because of wind and solar’s “first to the grid” rights, OPG complained.  They got the McGuinty/Wynne led OLP and the OEB to agree and since 2011 Ontario ratepayers have paid for double and often triple the cost of power.  The tripling comes from gas plants whose primary purpose is to provide peaking power to back-up to wind and solar when there is no wind or sunshine.  Gas plants are paid to idle and OPG is paid to spill hydro!

Now if one does the simple math to determine the cost to ratepayers for a single kWh (kilowatt hour) in the 2020 first quarter delivered by OPG simply divide the “revenue” by the TWh delivered! For the first quarter of 2019 it is $1,426 million divided by 19.1 TWh indicating an average cost of $74.66/MWh or 7.5 cents/kWh.  For 2020 revenue was $1,720 million so dividing that by 20.7 TWh produces an average cost of $82.81/MWh or 8.3 cents/kWh.  That implies a year over year increase of $8.15/MWh which translates to a jump of 10.9 % for each and every kilowatt hour consumed. This additional cost comes in the middle of the Covid-19 pandemic so has serious implications on affordability as many from the private sector struggle with simply trying to economically survive.  If it doesn’t hit the ratepayers it will surely hit the taxpayers as the Ford government has either decreed it will be deferred or taxpayers will pick up the costs.

If it is any consolation, OPG is 100% owned by the province (we are the shareholders) so the net profit of $309 million and the $87 million in taxes (actually they are “payments in lieu of taxes) contributes $396 million to the provincial treasury.  On top of that the hydro “fuel costs” used to generate the 8.2 TWh of hydro was $67 million and will allow the provincial treasury to record revenue from OPG of $463 million for just one quarter. That money comes from the pockets of the ratepayers of the province and will clearly help to supplement the “Ontario Electricity Rebate” program.

As a ratepayer/taxpayer it is both annoying and expensive to realize we pay for unreliable wind and solar generation as well as spilled hydro and those idling gas plants needed to back-up them up!

The time has come to recognize the facts and cancel wind and solar contracts or only pay them when they deliver NEEDED power.  That action would help keep OPG’s rates down at the same time.

Ontario’s ratepayers eat $50 million extra costs for Victoria Day Weekend

As the expression goes; “the hits just keep on coming” and the three days of the Victoria Day weekend did that!  Ratepayers, as is typical in the spring, don’t consume as many kilowatt hours (kWh) daily as they do in the cold winter months or the hot summer days so they just got hit big-time!  The past weekend demonstrated the foregoing in spades, no doubt partially due to the Covid-19 pandemic, but mainly due to renewable energy generation and its required back-up support.

Gathering the information disclosing the $50 million cost for the three days was made easy as my friend Scott Luft sent me an easy to read chart disclosing: generation by source, the estimated cost of the generation and generation steamed-off, spilled or curtailed.  The chart also had the HOEP (Hourly Ontario Energy Price) or “market price” at the time of delivery and total exports over the three days.  Scott also estimated and included DX (distributor connected) generation (mainly solar and wind) and he is always very close to the actual generation delivered when that data is finally available.

It turns out total generation from all sources was 884,000 MWh (estimated) net of the 266,210 MWh (24.4% of grid accepted generation) exported. What that reflects is; average daily consumption was 294,668 MWh or about 10% below prior years.  The 1,090,210 MWh (884,000 MWh + 266,210 MWh) generated and delivered to the TX (transmission connected) and DX grids cost $126,773,990. or $147/MWh including costs of the exports we gave away for a negative value of -$11/MWh.

It is worth pointing out, the HOEP value for the 1,090,210 MWh accepted over those three days was $1,271,203 meaning market value was $1.16/MWh* compared to $147/MWh it cost ratepayers.

That should give those who manage our electricity system and our politicians something to ponder as it suggests the mess our electricity system is in.

The $147/MWh cost of generation over the three days means the total loss for the 266,210 MWh exported was $42,061,180 of the $127 million total cost!  Without the supply of surplus power and the cost to pay our neighbours to take them, our per MWh cost would have been $96/MWh (9.6 cents/kWh).  That would be less than the 10.1 cents/kWh we are charged for off-peak consumption.

So, the above raises the question why did we need to export 24.4% of accepted generation. Well, a small portion of it was due to a decrease in consumption (the pandemic perhaps) but the principal reason is we are obliged to accept wind and solar generation and pay for its curtailment.  At the same time, we also pay for steamed-off nuclear and spilled hydro caused by excess wind and solar generation.

The data from Scott disclosed the 884,000 MWh consumed by Ontarians over the three days could have been easily supplied by nuclear (688,535 MWh) and hydro (267,057 MWh) still leaving almost 72,000 MWh available to export.  On top of that over the three days we also paid for steamed-off nuclear (3,473 MWh) and spilled hydro (96,078 MWh).  While those two wastes also cost us money it wasn’t as much as the 59,119 MWh of curtailed wind whose cost was north of $7 million.

It’s past the time the ruling Premier Ford led government did something to stop the bleeding.  Either cancel the industrial wind and solar contracts or tax them for delivering power to the grid when it’s not needed which is the bulk of the time.

Ontario’s ratepayers are fed up with the burden placed on them by the Green Energy Act!

*The average household in Ontario consumes 9 MWh annually so if we could have purchased those 9 MWh last weekend it would have cost $10.44 for our annual electricity consumption.

Word on the Street

Pleased to report the word about the high costs of Ontario’s electricity system are spreading. My efforts to get the bad news out has resulted in two recent events.

I was pleased to note Catherine Swift, an economist I admire and the former CEO of the CFIB (Canadian Federation of Independent Business) kindly picked up on some of my recent rants in an article she penned for The Niagara Independent titled; Bad News for Ontario Hydro Costs!  It is worth a read.

In another case Marc Patrone the host of the 9AM to 11AM show on NEWSTALK Sauga 960 AM had me on again for another interview associated with a couple of articles I had written.  Marc knows how to ask the right questions about the energy sector which I did my best to respond to.   The interview has been now been posted on Newstalk Canada here: http://newstalkcanada.wpengine.com/

Ontario Ratepayers and Taxpayers Won’t Welcome in 2021

Ontario Premier Ford on March 24, 2020 issued a press release advising, because of the Covid-19 pandemic, his government would cut daytime rates for residential consumers, farms and small businesses for 45 days starting April 1st at an estimated cost of $162 million.  On May 1, 2020 another press release added medium and large businesses to the equation stating it too would be effective as of April 1, 2020. This release said it would defer a portion of the Global Adjustment (GA) for anything over $115/MWh and possibly extend the deferral until June 30, 2020.

While the first press release suggested the cost, the second release didn’t!  The May 1, 2020 release stated in all probability; the “deferred” amount would be recouped starting in January 2021.  The foregoing has since been clarified and IESO noted the deferred amounts would be recovered from industrial and commercial* electricity customers only.  The reduction to those customers (Class A) appears to be about $19/MWh (based on the April 2020 GA and the wording in the May 1, 2020 release). Taxpayers will be allocated costs not recovered!

The second release raises the question: How much will this amount to? Determining the dollar amount would be a guess but IESO have disclosed Class A and B consumption and GA costs for April 2020 so we can estimate the possible costs.  Following is an estimate for this deferral et al, for April, May and June!

Class A customers consumed 2.764 TWh (terawatt hours) in April 2020 versus 3.301 in April 2019 so their consumption dropped by .537 TWh or 16.2%. Applying the $19/MWh suggested above indicates the April deferral will be about $53.5 million so if May and June’s consumption is around the same level the deferral will total about $160 million.

For Class B customers the cost will be considerably more. As noted above, it does not appear to be a deferral!  Class B customers in 2019 consumed 7.382 TWh versus 7.017 TWh in April 2020 so their consumption fell 265 GWh (gigawatt hours) or 3.6%.  The drop was small, even though residential consumers were “locked-down”. One should suspect closure of small/medium sized business caused the fall in consumption.

As noted, the original press release set the maximum GA at $115/MWh, so for April, when the GA was just over $150/MWh the relief was the difference of $35/MWh.  What that means is the 7.017 MWh consumed in April may result in $250 million allocated to the annual budget for taxpayers to pick up! (7.017 TWh X $35 million/TWh = $246 mllion).  May and June could bring that to $750 million.

Beyond the above, what is disarming is IESO’s first estimate for May’s 2020 GA is $179.10/MWh which could increase the monthly allocation by $210 million if the forecast is correct and consumption is similar! Over three months the amount allocated to taxpayers could therefore rise to $1.2 billion.

Just another burden on taxpayers and ratepayers.

Intermittent and unreliable wind and solar generation contracts add $3/4 billion of costs to electricity bills every year so without them this burden would be a minor occurrence!

*Clarity on the split between Class A and B commercial/industrial customers is not presented so for purposes of this exercise we have assumed those referenced by IESO are all Class A.

Ontario’s Bureaucrats and Liberal appointed justices have full control of the Ontario Energy Ministry

On May 1, 2020 an article penned by yours truly, outlined the OEB’s (Ontario Energy Board) concerns about how the Covid-19 pandemic will reduce revenue for OPG and Hydro One. The OEB instructed both to keep track of revenue losses for future rate application increases and to establish “deferral accounts” to keep track of those losses.

The OEB has done it again but this time their letter is aimed at all of the LDC’s (local distribution companies) telling them to keep track of losses related to the pandemic and to set up: “Account 1509 – Impacts Arising from the COVID-19 Emergency (Account).  Collecting information on the balances in the Account will inform the OEB about the impacts of the emergency on distributors”.  Needless to say, the projected losses could be significant should the LDC’s bad debts include significant businesses who fail as a fall-out of the pandemic.  While the dollar amounts in respect to either of the two OEB letters is presently unknown one should suspect they will be significant as the lock-down continues and many businesses may not survive and consumption falls.

The question arising is; will it be ratepayers impacted in the future or will the burden fall on taxpayers?  We should suspect the latter as a review of Ministerial Directives* from the Ford led government, up to this point, have transferred a lot of costs to taxpayers.  The latter includes the renamed “Fair Hydro Plan” launched by former Premier Wynne, now called the “Ontario Electricity Rebate” which negatively impacted last year’s budget to the tune of $5.6 billion. Other costs continue to accumulate due to the Green Energy Act (GEA) initiative instituted by the former governing Ontario Liberal Party and with reduced consumption will grow as recently pointed out, costing ratepayers $2 billion annually related to just the cost of industrial wind turbines (IWT).

Another recent initiative by the Ford government will eventually come back to bite ratepayers as they have decreed due to the pandemic the April GA (Global Adjustment) will be set for all Class B ratepayers at $115/MWh (megawatt hour) or $40/MWh less than what my friend Scott Luft estimates it would have been.  Class A ratepayers will see a similar deferment.  The initiative will carry through to the end of June 2020 meaning it potentially could amount to over $800 million to be recouped from ratepayers commencing January 2021 according to IESO.

As if the foregoing wasn’t enough, the only significant IWT cancelled by the Ford government, potentially saving ratepayers $450 million over the 20 year contract, was just reinstated by a ruling of the Ontario Superior Court of Justice!

The Nation Rise wind power project is a 100-megawatt (MW) IWT project, which I have written extensively on. It is unneeded, as it will simply add to our surplus generation.  Additionally, the original contracted party, EDPR of Portugal (partially owned by state owned Chinese companies) sold off controlling interest to a Quebec based company (Axium) run by former senior executives of SNC Lavalin.

In examining the Justices hearing the appeal and overturning its cancellation it is striking to note one of them was Supernumerary Justice Harriet Sachs married to Clayton Ruby.  Clayton Ruby is a well-respected lawyer who has been quite active in promoting renewable energy and appears to be a firm believer in “climate change”.  Mr. Ruby has even signed the Leap Manifesto which makes major improbable and unproven claims such as: “The latest research shows it is feasible for Canada to get 100% of its electricity from renewable resources within two decades; by 2050 we could have a 100% clean economy.” A picture of Mr. Ruby and others who signed the Manifesto can be found on page 39 in the November/December 2015 issue of the Monitor.  The Monitor was issued by the Canadian Centre for Policy Alternatives.   Should Mr. Ruby desire, he could easily find many recent research papers that would dispel many of the Leap Manifesto claims.  Based on Mr. Ruby’s beliefs, it should be expected they would be chatted about with his spouse, Justice Sachs, over the kitchen table or a family event, so the question arises; does she share his beliefs?

Looking back to October 2013 Justice Sachs was to sit as the judge on a “mock trial” of environmentalist David Suzuki related to a live theatre performance referenced as “The Trial of David Suzuki” but she withdrew as Sun News host Ezra Levant raised “queries on Judge Sachs and her possible bias.”

The foregoing raises the question on whether she continues to retain the suggested bias and if so, why did she not relinquish her role in this matter or why didn’t the other two justices suggest she do so?

It is obvious the mess created by the former governments of the province continue to weigh heavily on the ratepayers/taxpayers and the Covid-19 pandemic is exacerbating the burden.

Once the pandemic recedes the Ford government needs to take serious action to correct this mess in the Energy Ministry and not simply transfer the costs to taxpayers.

 

*The Ford government has to this point issued less than 10 directives which moved costs to taxpayers whereas the McGuinty/Wynne led Ontario Liberal governments issued over 150 directives to the OEB, IESO, Hydro One and the OPG and the bulk of them have and continue to cause electricity rates to increase.

Interview on SAUGA 960AM Radio

I have been interviewed by veteran journalist and CRTC former Commissioner, Marc Patrone, the host of the Marc Patrone Show, from 9 AM to 11 AM weekdays on SAUGA 960 AM.  The interview; “Exposing the Green Scam” will be on his show tomorrow morning but I’m not sure when during those two hours.  I have tried to provide some history as well as some specifics on how we wound up with our very high cost electricity in Ontario.

I believe it will be also be available on the 960 AM podcast of his show later that day and also available on: NewstalkCanada.

Web link for SAUGA 960 AM is:

https://sauga960am.ca/timetable/event/the-marc-patrone-show/

The link for NewstalkCanada is:

http://newstalkcanada.wpengine.com/

Have a listen and take a break from the overly depressing Covid-19 news.

Ontario’s Classy “A” electricity customers accept donations from the lowly Class “B” ones

A recent article penned by yours truly, outlined how industrial wind turbines cost Ontario’s ratepayers and taxpayers as much as $2 billion annually while contributing little to ratepayer needs or grid reliability. Those costs, however, are not the only impact on electricity bills in Ontario for residential and small and medium sized commercial businesses who are labeled as “Class B” ratepayers!

Back in 2010 the McGuinty led Ontario Liberal government were hearing about the effects of the GEA via climbing electricity prices as well as issues with TOU (time-of-use) pricing.  The loudest voice came from AMPCO (Association of Major Power Consumers of Ontario) who lobbied for lower prices for their members.  As a result of their lobbying, Brad Duguid, than Minister of Energy and Infrastructure issued a directive to IESO, March 4, 2010 instructing them to create an industrial energy efficiency program.  The program was developed and labeled the ICI (industrial conservation initiative).  The ICI allowed large industrial electricity users to pick five (5) “peak” demand hours and they would be rewarded with lower rates.  Kind of like winning the “Lottery” but much easier.  During those 5 hours they would go off-grid, perhaps by shutting down or simply firing up a gas generator or two to get them through that hour. IESO labeled them “Class A” ratepayers. *

IESO’s design of the ICI has resulted in the claim; due to lower “peak demand” periods, ratepayers have been spared from higher electricity prices.  The claim is made as the sector would reputedly have had to spend big dollars to acquire additional “capacity” to ensure we avoid grid failure due to those 5 “high demand hours”. That being the claim IESO don’t tell us; why we export (19.8 TWh) more TWh (terawatt hours) annually than the AMPCO members use (15 TWh).  IESO also don’t tell us why we are obliged to pay for spilled hydro, curtailed wind and steamed-off nuclear whose costs are added to the Global Adjustment (GA).

What the ICI program accomplishes for AMPCO members is related to the GA, ie; the pot adding dollars on a continuing basis! The GA is the difference between contracted prices and market prices.  As an example; if the contracted price for wind is 13,5 cents a kWh but when it enters the grid the HOEP (Hourly Ontario Electricity Price) or market trading price is only 2 cents/kWh the difference of 11.5 cents is allocated to the GA. The ICI works on the basis of the higher the GA is, the bigger the benefit to ICI members.  As a result, the continuing annual decline in HOEP values has resulted in Class B ratepayers picking up a greater portion of the contracted or regulated price.  In other words; if demand falls and the HOEP price tanks, Class B ratepayers are obliged to pay more not less.

The foregoing was evident during the first three months of the current year compared to the first three months of 2019. Class A ratepayers consumed slightly more year-over-year, and saw their GA allocation increase from $51.94 MWh in 2019 to $59.66 MWh in 2020 for an increase of 14.9%.  Class B ratepayers however, saw their GA rate allocations increase $30.59/MWh or 37.8% from $80.85/MWh to $111.44/MWh.

The net result of the above was an allocation from Class B to Class A in 2019 for the three months of $211.5 million.  For the comparable three months of 2020 the allocation increased to $374.4 million or an additional $162.9 million (+77%) in just one comparative year-over-year quarter.

It is kind of shocking to realize and understand Class B ratepayers actually consumed 1.3 TWh less in the first three months of 2020 than 2019 but are being held responsible for payment of $162.9 million more than they paid in the 2019 quarter to subsidize “Class A” ratepayers!

Maybe the time has come to create another Class of ratepayers to stop the diatribe emanating from IESO whose CEO and President has the nerve to proclaim in their just released annual report that : “our focus has stayed the same: ensuring Ontarians have affordable electricity, where and when they need it.”

We must ask the question:  which Ontarians truly have affordable electricity and why only them?

* The availability to reference an operation/company as Class A was expanded by further directives from the Energy Ministry (Bob Chiarelli) but many of the additional ones are not members of AMPCO.

Wind on Ontario’s electricity grid is a HUGE WASTE

As IESO recently released their March 2020 Monthly Market Summary it is perhaps time to review the electricity sector’s first quarter of the current year and compare it with the 2019 first quarter to see the effects on it emanating from the early stages of the Covid-19 lock-down!

Ontario Consumption:

Reviewing the two quarters indicates Ontario demand dropped from 36,725 GWh (gigawatt hours) to 35,408 GWh over the comparable three months.  The drop of 1,320 GWh or 3.6% is about what 585,000 average Ontario households would consume in three months and represents around 12% of all households in the province.

Logically a drop in consumption would signal a drop in costs for ratepayers based on the principal of “supply and demand” but the way Ontario contracted for power supply means it doesn’t!  The “must take” contracts awarded for wind and solar signed by the McGuinty/Wynne led Ontario Liberal Governments requires us to either accept it or pay for its curtailment.

What happened with wind generation in 2019 and 2020 is not readily available from IESO (Independent Electricity System Operator) despite their claim of “transparency”!  Thanks to my friend, Scott Luft however, it is; via data he downloads from IESO on a regular basis in respect to TX (transmission connected) industrial wind turbines (IWT) and his accurate estimates of IWT generation connected to the DX (distribution connected) grid of local distribution companies.

Wind Generation’s Value:

Based on Scott’s IWT data, generation accepted to the TX and DX grids in the first three months of 2020 was 4,336 GWh with another 437 GWh curtailed.  For 2019 the accepted IWT generation was 4,449 GWh with 218 GWh curtailed.  Scott also tracks the hourly value of IWT generation when it is delivered to the grid noting the HOEP (Hourly Ontario Energy Price) market price. The latter is consistently under the average monthly HOEP value(s) signaling its bad habit of generating during low demand causing it to be sold for pennies compared to its actual cost.  In 2019 the price was 17% below the average HOEP monthly average and in 2020 the price was 31% lower.  The HOEP in 2019 valued all of wind’s generation over the three months at $102.6 million but in 2020 it was valued at only $49.8 million.

Wind Generation’s Cost:

On the other side of the ledger the total costs of the 2019 IWT generation over the three months hit the ratepayers for at least* $626.9 million versus $637.8 million in 2020 and allowing for the “HOEP” value, net costs were $524.2 million for 2019 and $587.9 in 2020 for an increase of $63.7million (+12.2%).

While wind was generating surplus power, IESO were busy selling it (and other surplus power) at the cheap prices noted above to our neighbours; in New York, Michigan, Quebec etc.  In 2019 we sold 4,784 GWh or 107.5% of grid accepted wind and in 2020 we sold 4,449 GWh or 126.8% of grid accepted wind, clearly demonstrating we didn’t need IWT generation!  At the same time OPG were spilling water (300 GWh in 2019’s 1st Quarter), and IESO were paying idling gas plants and possibly had Bruce Power steam-off nuclear.  All of the foregoing adds to the costs of electricity for Ontario’s ratepayers but IESO don’t disclose that information!

Wind Energy’s Annual Burden:

As one can readily discern, Ontario’s electricity sector has been severely compromised! Based on the foregoing it indicates IWT generation alone, is a burden of over $2 billion annually! Ontario’s ratepayers and taxpayers must endure those costs until the contracts finally expire unless the Ford government enacts legislation to stop the bleeding of ratepayer and taxpayer dollars.

*The bulk of the IWT contracts pay $135/MWh plus up to a 20% Cost of Living allowance meaning they are paid north of that price and additionally should they be forced to curtail their energy they receive $120/MWh.

The OEB and IESO are Coming After us Ratepayers Again

It appears the almost 200 employees at the OEB and the over 700 employees at IESO who collectively must survive on an average annual salary, plus benefits, of only $150K are concerned as the Covid-19 pandemic has affected people in the province.

If for some reason you felt their concerns were related to all the people who have been laid off or will lose their jobs or businesses because of the pandemic you would be sadly mistaken!

The concern, as expressed by the OEB is with OPG and electricity transmitters, ie: Hydro One!  Their recent letter of April 29, 2020 instructs those two parties to:  establish “Deferral Accounts to Record Impacts Arising from the COVID-19 Emergency”.  The letter notes; “electricity and natural gas distributors* may incur incremental costs as a result of the ongoing COVID-19 pandemic.”  As a result, the “OEB ordered the establishment of a deferral account with sub-accounts for electricity and natural gas distributors to use to track any incremental costs and lost revenues related to the COVID-19 pandemic effective March 24, 2020.”

NB: deferral accounts are set up to recoup lost revenue!

The IESO held a webinar April 23, 2020 titled: “An overview of COVID-19 impacts on electricity system operations” to also deal with the issues.

IESO disclosed some interesting pieces of information in their webinar such as:  “IESO and stakeholders have been limiting staff on-site, deferring non-essential work, and focusing on core operations” and “A third control room was built and successfully deployed in 10 days, which can be used to further maintain physical separation of control room operators”.

The latter disclosure is a big wow, as many of us have been after IESO to provide up-to-date disclosure information on issues such as: curtailed wind, spilled hydro, embedded generation etc. etc. for years without success but show them a “pandemic” and they can apparently accomplish a new “control room” in 10 days!  A simple search on the IESO website of “transparency” generates 2,290 hits but for some reason they have difficulty generating the foregoing information for those of us with a curious mind!

IESO’s webinar does provide some interesting information and the following stands out not so much for its truthfulness as much as for what IESO ignores.  First, what they posted: “High surplus baseload generation (SBG) conditions are often observed in the spring when demand is low and there are large amounts of energy from hydroelectric resources caused by higher water levels”.  The foregoing comes as no surprise however, what is surprising is, they make no mention of either wind or solar’s penchant to produce much higher generation during the Spring!  Why focus on what we all know and avoid what we would like to know?

Needless to say, the webinar info discloses (with the exception of residential consumption increasing by 4%) all segments: small commercial, industrial, etc. are showing decreased consumption in the double digit category meaning surplus baseload generation is being exported (at very cheap prices) or (non-disclosed) we are curtailing wind or spilling hydro and it will appear in our future bills and we must pay for it.

Add the above to the OEB and IESO efforts to ensure OPG and Hydro One employees (as well as themselves) can maintain their lifestyles and watch those OEB “deferral accounts” bound upwards.

Ratepayers should prepare themselves for future rate increases to ensure all those overworked and underpaid “public service” employees in the electricity sector receive their entitlements!

*While the word “distributors” is used we are unsure if that applies to all of the almost 70 LDC (local distribution companies) in the province.

Ontario’s Lock-down is Bad News for Small/Medium Sized Businesses

IESO has just released their March Monthly Market Summary and it hammered Ontario’s small and medium sized businesses where 42% (2..4 million) of Ontario’s private sector employees work, according to the CFIB (Canadian Federation of Independent Business).

The lock-down imposed by the Ontario and Federal governments, related to the pandemic, has driven down electricity consumption in the province with March being an early warning to the extended shutdown.  The March 2020 Monthly Market Summary when compared to the March 2019 summary indicates an overall drop in consumption of 5.7% or 669.3 GWh* (gigawatt hours) and 86.6% (580 GWh) of the drop was by Class B ratepayers.

While consumption dropped, Ontario’s net exports increased from 2019 by 664.1 GWh but as we ratepayers know that is not a good thing as those exports are sold at the market price or HOEP which fell 49% from an average of $27.34/MWh in 2019 to $13.93/MWh in 2020.  What that means is even though net exports increased by 80% revenues decreased from $22.7 million to $20.8 million. That implies; because of the way energy costs are allocated in Ontario, generating excess power (principally wind and solar) and selling it to our neighbours is akin to simply giving it away.

Now looking at the cost of consumption in the province and the transfer of support from Class B to Class A ratepayers the results are worse.  In March 2019 Class B ratepayers consumed 8.629 GWh and the GA (Global Adjustment) costs were $692.2 million meaning the average GA per MWh was $80.41/MWh and the HOEP added $27.34 making the overall cost of a MWh/$107.75 (10.7 cents/kWh). In 2020 it grew to a GA of $119.42/MWh and with the HOEP of $13.93/MWh added, it came to $133.35/MWh (13.3 cents/kWh) or an increase of $26.60/MWh.  Class A ratepayers on the other hand had an all-in rate in 2019 of $75.76/MWh and $75.87/MWh in 2020, an increase of only 9 cents/MWh.

Included in the Class B customer base are all residential customers (and farmers) but the Ford Government froze those rates at 10.1 cents/kWh due to the Covid-19 pandemic.  The government did nothing for all of the remaining small and medium sized Class B businesses who are shouldering more than just high electricity rates due to the lock-down.  Their livelihood is at stake!

How can the government expect Class B small and medium sized businesses to continue to support the larger Class A customers via the cost shift and hope they will survive the pandemic?

The time has come for the province to recognize how important to Ontario those businesses and their 2.4 million employees really are! Either they should fix the mess those contracted wind and solar generators have created, amend the methodology of the Global Adjustment, or, offer relief to the rest of the Class B ratepayers.

April looks to be even worse for those businesses so the Government should fix it now!

 

*A GWh is 1,000 MWh and the 669.3 GWh is what 890,000 average Ontario households consume monthly.