Outrageous: Ontario’s electricity CO 2 reductions cost

January 16, 2017

Ontario Premier Wynne: not to be outdone  (Lucas Oleniuk/Toronto Star via Getty Images)
Ontario Premier Wynne: not to be outdone

Prime Minister Justin Trudeau announced on October 3, 2016 he would put a price on carbon starting in 2018, if the provinces have not put one in place. He also announced the price would start at $10 a ton and rise to $50 per ton by 2022.  As Ontario residents may already know, as of January 1, 2017 the Premier Wynne-led government already moved in that direction imposing a “cap and trade” tax they claim will burden us with a cost of $13 per month via a tax on gasoline and one on our home heating source of natural gas.

This new tax comes on top of one ratepayers in this province should already be aware of as we have been paying for carbon reduction for some time via our electricity bills.

A website providing the Ontario Energy Report states at the bottom it “was first produced in Q3 2014” and uses IESO as its data source.  The quarterly reports contain lots of information; however, they are generally not available until the end of the quarter following the one being reported on.  The reports provide: generation achieved from the TX (transmission connected) market and details on the capacity of both TX and DX (local distributor connected) sectors.  The report is also specific in terms of both exports of surplus electricity and imports and their respective destinations (exports) or sources (imports).  Contained in the 16 pages are many charts and graphs providing information on other facts such as the average hourly electricity price (HOEP), the Global Adjustment (GA) by ratepayer class (A and B), conservation initiatives, etc.

The report also has a graph specific to CO2 emissions from Ontario’s electricity sector starting in 2007 and identifies, by year, the Megatonne (MT) emissions.   If one looks at 2009, which is the year the Green Energy and Green Economy Act (GEA) was passed, total emissions were 16 MT. In 2015 emissions had dropped to 7 MT.  The 7 MT in 2015 were flat measured against 2014’s emissions and, based on results available for the first three quarters of 2016, it appears set to a level that will be around 5.5 MT!  The drop of 10.5 MT since 2009 suggests the Ontario electricity sector reduced CO2 emissions by 10,5 million tons.

How much have Ontario electricity customers paid?

Ontario ratepayers should suspect the foregoing results have been achieved via our electricity bills as they have climbed at multiples of inflation to accommodate renewable energy in the form of wind, solar, biomass, etc.   So, how much have we have paid, and continue to pay, for that achievement, and what does that translate to on a cost per ton basis?

That question can be answered in part by the Ontario Auditor General (Bonnie Lysyk) report of late 2015. That report noted ratepayers paid $37 billion more than necessary from 2006 to 2014 for contracts negotiated by the Ontario Power Authority, and they will pay another $137 billion more by 2032 to satisfy those and other contract obligations through to their expiries.

That brings the cost to $170 billion.

The AG’s report noted wind and solar contracts were estimated to have been paid $9.2 billion over the actual market value, due to prices that failed to reflect the drop in a competitive environment.

So, using the $170 billion to calculate the cost per ton to reduce the 10.5 million tons of CO2 emissions, it appears ratepayers are paying about $16,000 per ton.   Using only the $9.2 billion (wind and solar) the cost per ton of reducing CO2 emissions comes in at over $835 per ton.  The latter cost does not account for the intermittent and unreliable nature of wind and solar which requires back-up from gas plants and easily doubles the costs, raising the emission reduction cost to over $1,600 per ton.

What the ratepayers of Ontario have been paying to reduce emissions in the electricity sector makes the Prime Minister’s upcoming carbon tax of $10 a ton in 2018 and $50 per ton by 2022 look like chump change!

If he really is intent on driving the Canadian economy into the ground, he needs to take a lesson from Ontario’s Premier Wynne and her predecessor, Premier McGuinty.

Advertisements

More wind and solar do nothing to reduce emissions: cancel the contracts!

October 3, 2016

Cancel these contracts too, Minister Thibeault

flatline

Ontario’s ratepayers have heard for years the reason we are increasing our renewable energy supply in the form of industrial wind turbines (IWTs), solar panels and biomass is because we need to reduce our CO2 emissions.  It now appears that we have reached the point of no return as the 2nd Quarter Ontario Energy Report is now out and on page 8 is a chart that suggests we have flat-lined!

The chart shows our CO2 emissions for 2014 and 2015 were 7 mega-tonnes and for the first 6 months of 2016 are 3 mega-tonnes (probably heading for another 7).  It now appears more wind or solar added to the Ontario electricity grid will do nothing to further reduce our emissions.  That begs the question: why do we continue to add unreliable and intermittent power coming from those two sources as the only thing they now do is increase the price of electricity.

According to Environment Canada Ontario’s CO 2 emissions in 2014 were 170.2 mega-tonnes and the Ontario Energy Report (page 8) claims the “electricity sector” in the Province was responsible for only 7 of those mega-tonnes in 2014 therefore representing only 4.1% of total emissions.

The recent Throne Speech of September 12, 2016 included the following:

“Over the course of the past decade, Ontario electricity ratepayers have helped cover the costs associated with removing dirty coal-fired generation from our electricity system. And while these investments have resulted in increased costs associated with generation, they have also created savings of more than $4 billion a year in health and other costs associated with smog and pollution from coal-fired generation.”

Now if I was extrapolating the above claim by the Ontario government I would wonder: if 4.1% of those emissions cost the Health Ministry $4 billion annually, how much do the remaining 166.1 mega-tonnes cost? Based on the above claim the 7 mega-tonnes are supposedly costing taxpayers about $565 million per mega-tonne annually. That means the full cost of the CO2 emissions of the 166.1 mega-tonnes would be north of $95 billion and almost 71% of all of the 2016/17 planned budget expenditures.

If that is true, perhaps it’s time the government focused their CO2 reduction efforts on the segment producing the 166.1 mega-tonnes rather than the electricity ratepayers.  If that were to happen Minister Thibeault would be in a position to do some cancelling (not suspending) of renewable energy projects aimed at continuing the efforts to further reduce future rate increases.

We would recommend Minister Thibeault immediately cancel the LRP I contracts which have not been finalized which would affect 300 MW of industrial wind, and cancel all the projects listed on the IESO chart [below] which show just over 1,000 MW of contracted industrial wind projects not in compliance with their contracted operational dates.

Those cancellations would reduce future rate increases per average household by $8.00 per month or almost $100.00 over a year saving ratepayers well over $400 million annually and $8 billion over the 20 years of the contracts.

Now that would give you some firm bragging rights.

Parker Gallant

iesochartjune2016