The political web of EDPR and the Nation Rise wind power project

 

The power from Nation Rise would be like a fly on an elephant in terms of Ontario demand. Cancelling would save hundreds of millions.

Last week, a news article appeared in the Nation Valley News reporting the local Conservative MPP, Jim McDonell’s response to a question asking on why the government hasn’t cancelled the 100-MW Nation Rise wind power project. Mr. McDonell said, “We’ve always been clear: We would cancel any project we could cancel economically,” and he added “… we just can’t spend a billion dollars to cancel a project and get nothing from it.”

The same day, a press release from the Ford government noted that Premier Doug Ford told people attending the annual Rural Ontario Municipal Association (ROMA) conference, that “We’re lowering electricity costs”

I am at a loss to explain Mr. McDonell’s suggestion that cancellation of the Nation Rise IWT project would cost the same as the McGuinty/Wynne gas plant moves, but that’s what he said. It’s worth a look back at how this power project came into being, as it illustrates the disaster that has been Ontario energy policy for the last 15 years.

The Nation Rise wind project was one of five awarded contracts in March 2016; after that, its history gets really interesting … and very political.

Cost of the project

The Independent Electricity System Operator (IESO) at that time noted the average price for all the projects proposed was $85.90/MWh (or 8.5 cents per kWh). Over 20 years that would produce revenue of about $450 million, or less if their bid was lower than the average..

If the project were cancelled, no court would award them the full contract amount; it is more likely the government would be on the hook for perhaps 5 to10 % of that amount (on the high side).

There is no doubt that cancelling this project would save Ontario citizens hundreds of millions.

Timing of the approval

According to the Environmental Registry the Nation Rise entry for the Renewable Energy Approval or REA is dated May 7, 2018 and indicates it was loaded to the registry May 4, 2018.  That is just four days before the writ was drawn up by former Premier Kathleen Wynne, formally announcing the upcoming Ontario election.  It was known* the voting date would occur on June 7, yet the REA — a major decision — was given by the Ministry of the Environment and Climate Change (MOECC).  At that time, not only were polls forecasting a defeat for the Liberal government, “electricity prices” and hydro bills were a major election issue. The MOECC issued the decision anyway.

Is the power needed?

In 2015 (before the IESO called for more wind power proposals) Ontario had a huge surplus of generation. Our net exports (exports less imports) were 16.8 TWh (terawatt hours) or enough to supply almost 1.9 million average households (over 40% of all Ontario households) with their electricity needs for a full year.  It cost ratepayers an average of 10.14 cents/kWh to generate that power which was sold for an average 2.36 cents/kWh, representing a cost of $1.3 billion to Ontario’s ratepayers.

Due to the highly intermittent nature of output from wind turbines, the IESO’s projections of long-term capacity use only 12% of the nameplate capacity for wind power installations when calculating their contribution to overall capacity. So for Nation Rise, the IESO is projecting that the useable contribution of the project will be 105,120 MWh — just .0765% of the IESO’s forecast power consumption of 137.4 TWh. That is a fly on the flank of an elephant, in my estimation.

Cancellation of Nation Rise would not affect the long-term supply of electricity for the people of Ontario.

Worse, adding more capacity, particularly from an intermittent source, could result in more spilling of hydro, more curtailment of wind power generation, additional nuclear shutdowns or steam-off, all of which would drive Ontario’s electricity bills rates higher.

Property value loss

The property losses in value caused by the presence of 33, 650-foot industrial wind power generators throughout the countryside in the Nation Rise project will be in the tens of millions of dollars according to a study which notes: “Using research completed recently by a land economist with the University of Guelph and published in Land Economics, Wind Concerns calculates that overall, the property loss for houses within 5 km of the 33 planned turbines could be $87.8 million. Using other research that is less conservative, however, the property value loss could be more than $140 million.”

A loss of either magnitude would impact North Stormont’s realty tax base leading to either significant drops in revenue for the township or realty tax increases as a multiple of the COL (cost of living).

And then there’s the water

One condition among many in the REA given to EDP/Nation Rise was related to identifying and mapping all water wells in the project area within a set range of any proposed equipment, meteorological tower or wind turbines. This was due to concerns about construction activities on the local aquifer. While EDP identified 444 wells, the community group says there are more than 800 homes within the immediate project. Water wells in other areas of Ontario and elsewhere have become contaminated allegedly due to drilling and vibrations from wind turbines. There is significant concern about contamination of the wells, and the assessment taking place.

North Stormont is dairy farm country, and each farm operation uses thousands of litres of water every day — what would be the effect on these businesses, and Ontario’s food supply, if suddenly, the water wells were not functioning?

Who is EDP?

EDP (parent of EDPR) is a Portuguese utility company partially owned by two of the Chinese government’s companies; China Three Gorges (23.27%) and CNIC Co., Ltd., (4.98%) and the former has been trying for several years to acquire the balance of the shares. That attempt is speculated to be off; however, a recent NY Times article suggested otherwise, based on discussions with Portugal securities regulator CMVM.

Where is democracy?

North Stormont, where the Nation Rise wind project is planned, declared itself an “unwilling host” in 2015, well before the award of the contract or the issuance of the REA. The people perhaps relied on promises made by former energy minister and Ottawa Liberal MPP, Bob Chiarelli, when in 2013 he declared: “It will be virtually impossible for a wind turbine, for example, or a wind project, to go into a community without some significant level of engagement”. Despite their council passing the unwilling host motion, and also joining the 117 Ontario municipalities demanding a return of local land-use planning for energy projects, the IESO still granted Nation Rise the contract.

There are many questions about this project and many reasons why it simply isn’t needed. Cancelling this contentious project is a perfect way to lower future electricity costs, directly.

PARKER GALLANT

*The Toronto Star reported in an article dated October 19, 2016 the next Ontario election would be on June 7th, 2018

 

Advertisements

A fallen (green) star in Texas

Texas small town Mayor Dale Ross meets up with reality

In early January I wrote about “virtue signaling” by the mayor of a small Texas city who was wooed by none other than Al Gore because he used “facts” to sign long-term contracts committing his city to purchase 100% renewable energy.

He has had a long hard fall from grace.

Dale Ross set himself up as a “green” hero, and claimed his social media news has been seen by 2.1 billion people around the world. He was even touted as a celebrity and interviewed by CanWEA at their convention last fall.

At the time, I said this about Mr. Ross and his claim to fame:

“This unexpected cost will presumably have a detrimental effect on the services that the city will be able to deliver OR service costs (electricity, water and waste removal) will spike much higher! These are just a couple of ‘facts’ that will make Georgetown’s utility consumers upset.”

Well, it now appears the bad news is out: the city’s ratepayers are facing increases in their electricity bills of more than $1,200 USD per year.

I surmise Mr. Ross will not be greeted warmly by his constituents.

To see why, watch this short video on Fox News!

https://video.foxnews.com/v/5996313943001/#sp=show-clips

Honesty, virtue and energy policy (3)

The previous two articles in this series pointed out how the mayor of the city of Georgetown, Texas and the former Ontario Liberal government endorsed the use of renewable energy to try to reduce emissions and save money for taxpayers. Led by environmental lobbyists (Pembina, Environmental Defence, David Suzuki, Al Gore and others) and proponents of wind and solar power generation, the politicians laid out the “facts” to persuade the public that doing so would both save money and create jobs.

The problem was, only some of the “facts” were presented and many of them were less than truthful!

Alberta-bound spin

What happened in Georgetown, Texas and Ontario has moved west to Alberta and the execution similarities are remarkable. In an article from the Calgary Herald November 24, 2016 the NDP Environment Minister announced, “We have chosen to incentivize new investment in clean energy and improve Albertans’ health by eliminating dangerous air pollution” and announced an agreement to pay $1.4 billion to shut three coal plants earlier than planned.

A government webpage titled: “Phasing out coal pollution” carries a message similar to what we were virtue signaled by Premier Wynne and her Environment Ministers noting: “Moving to more renewable energy and natural gas will protect the health of Albertans — especially vulnerable groups like children and seniors — and save money in health-care costs and lost productivity.”

Environmental push

Similar to what happened in Ontario in 2005 when a study was released about health costs (Liberal politicians claimed the cost was $4.4 billion annually) related to Ontario’s coal plants, Alberta politicians were handed a similar study. It was produced by Pembina Institute, the Asthma Society of Canada (ASC), Canadian Association of Physicians for the Environment and the Lung Association, and claimed the use of coal power cost $300 million annually in health costs. Using the 2017 Alberta census population figures for 2017 that works out to about $70 per resident. Using the 2005 census population figures for the Ontario study results in a cost of about $350 per resident. Something seems askew in the two claims, but in both cases, it provides the unverified “facts” politicians require to “virtue signal” and drive up electricity prices.

Political spin supported by wind power proponents                                                                                                                                     Alberta Premier Notley’s decision to phase out coal plants resulted in seeking out “more renewable energy” in the form of 600 MW of wind power generation. When the winning bids to the REP (renewable electricity program) were announced, the Premier was front and centre stating “It’s a new record for renewable energy pricing in Canada — the lowest price Canadians have ever seen, right here in Alberta.” The Premier went on to say in mid-December 2017: “Alberta isn’t only a leader in the [fossil fuel] energy that we are going to get to Tidewater. We are also a leader in renewable energy, and we are going to show our fellow Canadians, and the world, that economic growth and environmental responsibility can, and must, and will go hand-in-hand.”

Well, now it appears Premier Notley’s promise to get “fossil fuel” energy to Tidewater will not happen on her watch so that is just one “fact” she won’t be delivering on before the upcoming provincial election. Premier Notley went on to say: “In fact, our process was so competitive and so many companies wanted to invest, we got a 20-year price of 3.7 cents a kilowatt-hour.”

As one would expect, wind power trade association and lobbyist CanWEA (Canadian Wind Energy Association) was eager to get the word out, couched in language that made the announcement as wonderful as the Premier made it sound. Robert Hornung, CEO of CanWEA made it sound simply spectacular: “By attracting investment in the wind energy projects announced today, Alberta is diversifying its economy, driving economic growth and creating much-needed jobs in multiple sectors such as engineering, construction and local services.”

That sounds similar to what he said three years ago when he claimed: “Ontario’s choice to be the leading wind energy market in Canada has returned many economic benefits,” added Mr. Hornung, “As other jurisdictions consider a greater penetration of wind energy in their electricity systems, ‎this study clearly shows that the economic benefits associated with wind energy development are significant.” Pure fluff for the then Ontario Liberal government.

While the foregoing sounds impressive Premier Notley left out an important fact related to certain bonuses built into those contracts which include (RECs) “renewable energy certificates”.   Specifically, those RECs have a significant value which the recipients will be able to sell for revenue, boosting their income and the cost of electricity delivered to Alberta ratepayers. Those RECs will be tradeable in a market established in California in 2007.

From the Western Renewable Energy Generation Information System: (WREGIS) we would point out the following in a Q & A posting: “WREGIS issues one REC for each MWh of renewable generation. WREGIS accounts are similar to bank accounts; Certificates are deposited and managed within these accounts. Certificates can be transferred, retired, or exported to a Compatible Tracking System at the discretion of the certificate holder.” The value of a REC varies widely but as laws or regulations add such things as “carbon taxes”* to industries, (companies being charged a “carbon tax”) they can instead purchase an REC as an offset to the carbon tax and purchase it for less than the “tax”!

The monies will flow directly to those renewable energy companies.

What the foregoing suggests is the “20-year price of 3.7 cents a kilowatt-hour” may be a lot more as the future value of a “carbon tax” climbs over the $20/50 current cost, making the REC offset much more valuable than in today’s market. In summary, electricity prices will rise!

As politicians keep “virtue signaling” while only releasing selective “facts” we taxpayers/ratepayers must keep a vigilant watch.

PARKER GALLANT

*Current carbon tax in Alberta is $30/tonne and will increase further in 2021 to $40/tonne.

Honesty, virtue, and energy policy (2)

Yesterday’s post in respect to honesty and energy policy examined a small city in Texas and how its mayor has been courted around the world by proponents of renewable energy — because his actions sit into their narrative. However, I also showed how incomplete information given to the media can lead to bad results for those directly affected, the people who have to pay the bills for the “virtue signaling”.

What follows is how the two parties (politicians and energy proponents) collectively stomped on Ontario’s taxpayers/ratepayers!                                                                                                                

CanWEA spin

The Canadian Wind Energy Association (CanWEA) recently published an article that carried this claim:  “The Pan Canadian Wind Integration Study – the largest of its kind ever done in Canada – concluded that this country’s energy grid can be both highly reliable and one-third wind powered.”

The annoying part of the “study” is that it was completed by biased parties and used considerable taxpayer funds!

Perhaps Ontario’s grid operator, IESO, did make wind generation reliable but at what cost? As it turned out, in 2017, wind turbines delivered only 24.9% (9.2 TWh) of their capacity and curtailed* over 26% (3.3 TWh) of what they could have actually delivered.  That generation also caused hydro spillage of 5.9 TWh and nuclear steam-off of one (1) TWh!

IESO’s 18 Month Outlook Report also indicates they only rate the capability** of wind turbines to deliver generation 12.9% of the time it may be needed. Wind power generation also contributes to a reduction in the “real market” (HOEP) price, meaning we sell our surplus generation into the export market well below its cost.

Virtue signaling from former Ontario Premier Wynne                                    

Just over three years ago Ontario’s Auditor General released her report that noted the billions of dollars in extra costs Ontario ratepayers had to pay for the Liberal government’s green energy. The AG’s report said consumers would pay $9.2 billion more for 20-year wind and solar contracts signed by the Liberals than they would have under the former procurement system.

Premier Wynne’s response was: “There’s a cost associated with getting out of coal, of putting more renewables in place, and we’ve got other jurisdictions looking to Ontario as a model for how to do that,” said Wynne. “I’m happy to defend the changes that we’ve made.” She went on to say: “You only have to look at other jurisdictions that are struggling with air quality, with particulate matter in their air, with families that don’t feel they can let their kids play outside,” she said. “I know we weren’t in those serious straits, but the fact is we have reduced our pollution in this province.“

Apparently lost on her was the concept of the costs her government later imposed on those “kids” when in an attempt to win the last election she kicked in the neighbourhood of $50 billion down the road for them to pay via the Fair Hydro Act.

Premier Wynne earlier (about five years ago) got a pat on the head from Al Gore the climate crusader, when the last Ontario coal plant was about to be shut down.  In her speech she also referenced the children who will be paying back the above costs when she said: “And I would contend it’s our moral duty to take action to protect our children, our grandchildren, and our fellow citizens. We’re lucky today to be in the presence of a man who’s been fighting on these fronts for many years.”

In another announcement with Al Gore present she claimed: “Becoming a coal-free province is the equivalent of taking up to seven million cars off the road, which means we’ll have cleaner air to breathe, while saving Ontario $4.4 billion in health, financial and environmental costs”

It has now been four years since Premier Wynne said that so it would be nice to know, from a ratepayer and taxpayer perspective, what has happened to that $17.6 billion, we were supposed to have saved?

We should suspect Premier Wynne’s remarks was simply political spin meant to preserve her position as Premier while driving up our cost of living for a necessity of life. Our health care system has not improved in the last four years and the province’s financial situation has only become worse!

The self-evident virtue signaling has simply resulted in increasing a future cost for “our children, our grandchildren and our fellow citizens”.

PARKER GALLANT

*Those 3.3 TWh of curtailed wind cost Ontario ratepayers almost $400 million or more than all of the curtailed wind in the UK which was estimated as costing them more than £100 million in 2017 to switch off their turbines and NOT produce electricity. The equivalent of the UK’s cost was about $174 million Canadian!

**Forecast capability of capacity for other major generating sources are:  nuclear 81.9%, hydroelectric 68.4%, gas/oil 81.4% and solar 10%.

NB: If one wants to view what former Minister of the Environment and Climate Change, Glen Murray knew about the Ontario energy sector have a look at his interview at the COP 20 Conference in Lima, Peru here.  You will see that Minister Murray gave many incorrect answers and even wrongly cites the Atikokan (200 MW) coal station as the largest in North America.  It was Nanticoke (3,964 MW!

Honesty and energy policy

The new buzz is “virtue signaling” in which politicians espouse environmental solutions — but are they being honest? First in a three-part series

Texas small-town mayor Dale Ross: a star is born. But is he really a leader? [Photo: CBC]

An article penned just a couple of weeks ago focused on the spin emanating from industrial-scale wind power proponents and coupled their spin with less than honest political diatribe. Needless to say, the spin and diatribe continue.

Here is one example:

Mayor’s spin in Georgetown, Texas

Mayor Dale Ross* of Georgetown, Texas, population 70,000, has become an international celebrity. The reason: the city contracted for 100% renewable energy from a wind power development and a large solar farm, both hundreds of miles away. Because of this, Mayor Ross has been touted by Al Gore in his sequel to “An Inconvenient Truth,” interviewed by the UK’s BBC as well as many other national and international radio and TV stations. Mayor Ross, in this linked article estimated he has been seen by over 500 million people (now 2.1 billion-see below) around the world. What could go wrong? 

“To achieve 100% renewables, Georgetown negotiated two long-term (20+ year), fixed-price power contracts, one with EDF Renewables’ 194 MW Spinning Spur 3 wind plant beginning January 2016 and the second with NRG’s 154 MW Buckthorn solar site, effective July 2018. Details on pricing were withheld citing business confidential, but the contracts are for 144 MW of wind and 150 MW of solar for a combined annual quantity of nearly 900,000 MWh.”

Both of those generating sources were hundreds of miles away from Georgetown! 

Mayor Ross spins in Edmonton, Alberta

Mayor Ross was invited to speak at the 2018 Alberta Climate Summit organized by the Pembina institute. During that visit he was interviewed by the CBC where he claimed, in respect to a question about how he could support this as a Republican while the U.S. Republican president is pro-coal: “My daytime job is being a Certified Public Accountant and we make our decisions based on facts. In Georgetown, we put silly national partisan politics to the side and we just do what’s good for the voters and citizens that put us into office.”

Mayor Ross and CanWEA

Canada’s wind power trade association CanWEA naturally took an opportunity to interview Mayor Ross during his visit to Alberta and the Q & A session had the usual spin.  On closer examination however, some things Mayor Ross disclosed had a few bits of truth, but they were couched in such a way the reader would have to have knowledge of how electricity grids function to find them.

The Mayor said: “2.1 billion people have heard, read or saw my message”. When asked what advice he would give other communities, he had this to say: “In Georgetown’s case, it was mitigation and hedges to prevent negative pricing impacts of fuels components of energy production. Those take many forms and are often debated but certainly are a major component of electric generation pricing that use any form of fuel component in the process.”

If one reads about the subsequent events that have occurred to the public utility delivering electricity, water and waste collection in Georgetown, it is obvious Mayor Ross is really admitting that a few “facts” he and the City’s council based their decision on were missing.

What Mayor Ross didn’t say

A recent article notes Georgetown’s average annual consumption is about 575,000 MWh, which means they were forced to sell the surpluses into the real-time market usually at prices well below the contracted rate, including negative prices.

This small city is now facing a problem! “Actual power purchases for 2016 were 22% over budget coming in at $42.6 million against an expected cost of $35 million. In 2017, costs surged again to $52.5 million and all indications are Georgetown electricity customers will take another bath this year.”

This unexpected cost will presumably have a detrimental effect on the services that the city will be able to deliver OR service costs (electricity, water and waste removal) will spike much higher! These are just a couple of facts” that will make Georgetown’s utility consumers upset!

The message, even from a mayor who claims as a Certified Public Accountant, his decisions are fact-based, is that “virtue signaling” outweighs telling your constituents the real truth!

PARKER GALLANT

*Reading about Mayor Ross of Georgetown reminded me of Chatham Kent (population 102,000) where Mayor Randy Hope has a love affair with wind power, and CanWEA awarded him the “Friend of Wind Award” in 2017. Mr. Hope was defeated in the municipal elections of 2018.

 

 

 

 

 

Wind power: separating truth from spin

The quote “A lie told once remains a lie, but a lie told a thousand times becomes the truth” is attributed to Joseph Goebbels, the Minister of Propaganda in Nazi Germany from 1933 to 1945.

Ontarians have been lied to by politicians (although none has held the title “Minister of Propaganda”) particularly related to electricity. Here are some examples.

Job creation                                                                                                                                           Deputy Premier and Minister of Energy and Infrastructure George Smitherman, in a speech to the Toronto Board of Trade February 20, 2009 at the launch of the Green Energy Act had this gem: “Mimicking the impressive employment growth in various European jurisdictions, economic modeling projects that the GEA will create more than 50,000 jobs in the next three years.”

Those jobs never materialized despite repeating that claim (lie?). Instead as electricity costs climbed many good manufacturing jobs were actually lost inOntario.

Low cost renewables                                                                                                                                           Smitherman also made an interesting claim to the Ontario Standing Committee on Estimates on May 27, 2009.  He said: “Through our projected investments and expenditures as part of the Green Energy Act, electricity prices are expected to rise approximately 1% annually, on average, over the next 15 years for ratepayers.”

Wow, 1% annually over the next 15 years! What really happened was that at the end of 2008, electricity prices were 5.2 cents/kWh, and by the end of 2017 they were 11.55 cents/kWh for an increase of 122% for residential ratepayers over the nine years. Not quite the 9% increase Smitherman promised (under oath) to the Committee. Needless to say, those claims were repeated over and over again to presumably make us believe it was the truth.

CanWEA’s role                                                                                                                                                                         One can only assume fabrications like these were developed as part of a communications strategy either by politicians or by stakeholders who stood to reap financial benefits from the passage of the Green Energy Act. The spin by lobbyist and trade association the Canadian Wind Energy Association (CanWEA) and by “environmentalists” has been constant in order to get buy-in from gullible politicians! The spin has been highlighted in the past by many including me. A couple of examples are:

  1. A 2016 Pan Canadian Wind Integration Study (partially funded with tax dollars) in an article titled: Wind power industry claims Canada needs more wind power–with a hefty price tag for electricity customers and more recently another
  2. One titled Wind Power in Panic Mode as a new Ontario Government signaled the end of lucrative wind energy contracts and another more recent one titled
  3. CanWEA makes promises it can’t keep which suggested Canada could get one third of its power from industrial wind turbines (IWT)

Still spinning

CanWEA’s spin hasn’t stopped as their President Robert Hornung once again is singing the praises of that biased Pan Canadian Study in a recent posting on their website titled: Wind Energy: A Reliable Part of Today’s Energy Mix. Hornung’s article on wind power has Hornung describing it as “low-cost” twice, as “reliable” eight times and he even makes the claim that wind turbines would “help grid operators maintain reliability in the case of system imbalances or emergencies – services wind energy can often supply to the grid more quickly and cost-effectively than conventional generation.”

As if that wasn’t enough of a blatant distortion of reality, Hornung suggests the Pan Canadian “study found that if Alberta increased its wind energy capacity from 1,500 MW to 17,700 MW, reserves would need to increase by only 430 MW or 2.4 per cent of total wind energy capacity. In most of the rest of Canada the percentage would be even lower.”

What he doesn’t mention in the same context is the billions and billions of dollars needed to augment the grid via transmission spending for the many times wind turbines simply don’t generate sufficient power. The net result would mean Alberta and “most of Canada” would need to depend on neighbours to supply them with electricity should the wind be dormant—that would require those major transmission enhancements. As an alternative wind power could be backed up with gas plants as we do in Ontario and as elsewhere around the world.

It certainly appears CanWEA is hoping to convince Premier Notley or her successor that Alberta should believe his spin just as the Ontario government did under former Premiers McGuinty and Wynne. As if Alberta (and Canada) is not suffering enough due to the restricted ability for the province to build even one to pipeline to get a natural resource (oil) to a competitive market.

“Politics preys on people’s naivete,” wrote Bangambiki Habyarimana, in his book Pearls of Eternity.

Many people have taken advantage of Ontarians’ wish to do what’s right for the environment by using “feel good” promises and claims for power and profit.

In the future it is likely those who were preyed upon will realize the benefits promised by wind power proponents was simply “spin” meant to capitalize on their naivete.

PARKER GALLANT

OPG: generating less power, but earning more

Lots more. A record, in fact.

K2 Wind: first-to-the-grid rights for wind and solar, and lucrative 20-year contracts added to costs

Ontario Power Generation (OPG) released its 3rd Quarter report in mid-November, and it was impressive!

Revenue was up $156 million to $1,373 million (+12.8%) and after-tax income was 113% higher, increasing from $131 million to $279 million. For the first nine months of 2018, OPG reports RoE (return on equity) of 10.8% and will easily generate record after-tax profits for the full year of well over $1 billion. Nine-month profits sit at $948 million, up 84% or $433 million—that’s a record.

Revenue is also poised to crack the $5 billion-dollar level (nine-month revenue is $4,062 million) as it has many times in the past; however, after-tax profits have never been this high since the creation of OPG in 1999 when Ontario Hydro was broken up into several different entities.

What’s interesting about those record profits? OPG is record profits despite a substantial decline in generation.

Look at year-end December 31 2000: OPG generated and sold (into the grid) 139.8 TWh (terawatt hours) and earned revenue of $5,978 million for an after-tax profit of $605 million.   What that means is, back in 2000, OPG’s approximate cost to generate 1 TWh was $42.7 million (4.3 cents/kWh). In 2018 (so far) the cost has jumped to $74.8 million (7.5 cents/kWh) for the 54.3 TWh delivered in the first 9 months.

The 54.3 TWh delivered so far in 2018 is down from the comparable 2017 period by 1.7 TWh or 3% and from 2000 (9 months) by 49.4 TWh* or 46%!   Comparing the first nine months of 2018 to 2000, net income is up $405 million or 74.6%

With such significant drops in generation one would expect net income to drop so what happened?

Some five years ago (December 4, 2013) an article I wrote for Energy Probe was headed up: “OPG-whipping boy for the Ministry of Energy” and it outlined how the GEA (Green Energy Act) had a detrimental effect on OPG’s electricity generation and its revenue, which resulted in declining profits.

I noted how their many “unregulated hydro” assets received only the HOEP (hourly Ontario energy prices) which produced revenue of just over 2 cents/kWh, and how they had been instructed to build “Big Becky” (cost of $1.5 billion) and the Mattagami run-of-river project (cost of $2.6 billion).  Falling out of the GEA also was the rise in prices caused by wind and solar generation with first-to-the-grid rights and had resulted in declines in consumption. That meant much of OPG’s power generation was called on less and less.

OPG were also instructed by the Liberal Minister of Energy to convert power plants such as Atikokan and Thunder Bay from coal to biomass and to close the remaining coal-fired plants, one of which required a multi-million dollar write-down for prior expenditures on “scrubbers” to eliminate emissions.

As all this was happening, over the subsequent years, OPG applied for rate increases such as being paid “regulated prices” for all of their hydro assets and for revenue when they were forced to spill hydro. Those were eventually approved along with other increases to cover pension contribution shortfalls, increases in operational management and administrative costs (OMA), and for refurbishment of some nuclear plants.

OPG’s capacity has fallen from 25,800 MW in 2000** to 16,218 MW today, yet in 2000 they generated electricity at a capacity level of almost 62%. So far in 2018, they are operating at a capacity level of just under 51%.

OPG power could have eliminated excessive costs for wind and solar

If OPG were granted the rights to operate at the 62% level of capacity as they did in 2000, they could have generated 65.8 TWh easily, replacing all the generation produced by industrial wind turbines and solar panels. That generation would have resulted in a cost of electricity of less than 7.5 cents/kWh and eliminated the excessive costs for wind and solar under those 20-year contracts!

Today, OPG seems to no longer look like the “whipping boy” but still produces power at prices well below the costs of contracted generation under the GEA and should earn over $1 billion for 2018!

PARKER GALLANT

*Enough to power all of Ontario’s 4.9 million households for a full year with over 5 TWh left over.         **Staffing levels have dropped from 12,250 (including 650 under contract) in 2000 to 7,700 in 2018 meaning the ratio of employees to capacity has remained static at 2.1 employees per MW.