The line of poetry “it’s an ill wind that blows nobody any good” was a reality in November for Ontario ratepayers. The IESO (Independent Electricity System Operator) finally released their November 2016 Monthly Market Report on Friday, January 13, 2017 and there was not much good news in it.
While net exports* were down compared to the same month in 2015, it wasn’t related to the amount of wind power generated and curtailed (estimates of the latter from Scott Luft); that exceeded November 2015 by about 152,000 megawatts (MWh) and clocked in at 1,363,000 MWh. Generated and curtailed power exceeded Ontario’s net exports in 2015, representing 102.7% versus 72.9% the previous year. One should suspect November 2016 also saw spilled hydro and steamed off nuclear, but at 102.7% of our net exports, it is obvious that power generation from wind was clearly not needed.
November 2016 was not the month with the highest combination of generated and curtailed wind, but rather the second highest. The highest, according to Scott’s estimates, was December 2016, but we will save that report for another day.
Exported power could have served half of Ontario
Net exports in November 2016 were equivalent to the power that approximately 150,000 “average”** Ontario households would use in a year, or to put it another way, was sufficient to supply 2.4 million of those same households for the whole month of November. That is slightly more than 50% of all Ontario households.
The net exports of 1,326,960 MWh in November 2016 cost Ontario ratepayers $169 million to generate and sold at an average price of $16.69 per/MWh, resulting in income of $21.4 million. What that means is, Ontario’s electricity ratepayers subsidized the sale, picking up the difference of $l47.4 million, along with another $30.8 million for the 254,000 MWh of curtailed wind. Past and present Energy Ministers in the Wynne-led government would probably claim the deeply discounted sale price for those exported MWh was actually a “profit” but most ratepayers recognize that claim to be untrue.
Cancel the contracts
Current Energy Minister Glenn Thibeault has a chance to make his mark by halting all planned acquisition of wind power generation in LRP I and LRP II, as well as cancelling any wind power projects that have not commenced construction, or which have passed their critical “operational” dates.
Time to treat industrial-scale wind power development as that “ill wind”!
With Ontario’s lead in energy prices in Canada and the fastest rising consumer rates in North America, it is perhaps worth a review of a few of the ministerial comments that got us to this point.
Rates will rise 1% because of the GEA
George Smitherman, Minister of Energy and Infrastructure from June 2008 to November 2009 told the Standing Committee on General Government in April 2009: “We anticipate about 1% per year of additional rate increase associated with the bill’s implementation over the next 15 years.” In May 2009 the “average” rate was 6.07 cents per kilowatt hour (kWh) (not including delivery or HST). By May 2016, the “average” rate had increased to 11.1 cents/kWh, an increase of 82.9% in 7 years. The comparable costs of generation from IESO’s Monthly Summaries for the May 2009 to May 2016 comparisons grew by 84.9%. Looks like the forecast missed the mark by a bit.
Conservation will save you money
Back in July 2013 a press release from Minister Bob Chiarelli credits him with this quote: “By investing in conservation before new generation, where cost-effective, we can save ratepayers money”. At that point, average rates were 8.4 cents/kWh — in just three years they increased 32.1%. IESO’s monthly summaries indicate the cost of generation rose 26.4% in the same time-frame. Since 2012, consumption has fallen by 4.3 terawatts (TWh) on enough to provide 475,000 average Ontario households with power for a full year. Conservation hasn’t shown it will “save ratepayers money.”
Moving a gas plant is less than the price of a Tim Horton’s coffee
Another from former Energy Minister Bob Chiarelli who, when asked about the Oakville gas plant move was quick to suggest, “It’s less than a cup of Tim Horton’s coffee a year.” for the average ratepayer over 20 years. He made this dismissive comment to the Legislature Justice Committee investigating the move. What it meant was the waste of $1.1 billion dollars of taxpayer/ratepayer money; the Minister’s comment is a reflection of the regard the Ontario Liberal government has for the average hardworking Ontarian.
The Ontario Auditor General not informed?
Bob Chiarelli again: when the Auditor General’s report in late 2014 on smart meters was released suggesting the program was over-budget and under-effective Minister Chiarelli said, “Why are my numbers more credible than hers?” He went on to say: “Electricity is very complex, is very difficult to understand. Some of our senior managers, in discussing these issues with some of the representatives from the auditor general’s office, had the feeling they didn’t understand some of the elements of it.” As it turned out Auditor General, Bonnie Lysyk worked for Manitoba Hydro for 10 years so probably knew more about the electricity sector than the Minister.
Municipal authority is a non-starter Oh dear: Mr. Chiarelli, again. In May 2013 Bob Chiarelli said “Municipalities will be given a much bigger say in where or if renewable energy projects are located”. His remarks were well received by many municipalities and in the case of Dutton Dunwich council a survey they engaged in allowed them to declare 84% of their residents were against industrial wind developments. So what? The will of the people was ignored and a contract for a $250-million wind power project was granted anyway. The minister’s comments appear to have been a pretense that rural Ontario had been given authority to accept or reject contracts.
Industrial Wind Turbines granted special realty tax status
When Dwight Duncan was Minister of Finance it appears he bowed to lobbying efforts by trade association Canadian Wind Energy Association or CanWEA members who may have been concerned they would be required to pay significant municipal taxes should MPAC assess IWT at actual value! He accordingly issued a direction to MPAC (Municipal Property Assessment Corporation) to assess industrial wind turbines (IWT) at only $40,000 per megawatt (MW). That means, not only did municipal governments have no say in allowing IWT in their jurisdiction, but were also to receive nominal realty taxes from their presence.
Transparently opaque Premier Wynne in early March 2014 introduced the Accountability Act and had this to say to the Legislature: “I came into this office just over a year ago saying that I was going to do government differently, that we were going to open up and be more transparent.” Now should you have the urge to seek specific information from the Energy Ministry, which this writer frequently does, what you receive back is a homily that starts out with “you have reached out to us” followed by the promise they will get back to you. If and when the response comes, it generally dodges the question(s) and simply repeats the spin in the press release you are inquiring about.
Electricity exports are profitable We have consistently heard about how profitable our exports of electricity are from the various Energy Ministers in place over the past decade. Former Minister Chiarelli’s claim we made $6 billion was debunked, but the claims continue. The profits were claimed by former Premier Dalton McGuinty, Brad Duguid when Minister of Energy, and even a senior officer with IESO. The Auditor General noted the following in the 2015 report: “Since power is exported at prices below what generators are paid, and curtailed generators are still paid even when they are not producing energy, both of these options are costly. From 2009 to 2014, Ontario had to pay generators $339 million for curtailing 11.9 million MWh of surplus electricity.” This continues today, at a much higher rate!
High electricity prices a “mistake”
When Premier Wynne spoke to the 850 members who attended the Ontario Liberal Convention on November 19, 2016 she told the delegates her “government made a mistake” by allowing rates to soar. Apparently Premier Wynne doesn’t pay her electricity bills and didn’t notice since she was elected leader of the Ontario Liberal Party January 26, 2013 to the date of her recent speech, rates charged to residential ratepayers increased 38%. She also missed the fact that IESO in their monthly summary of December 2012 reported the cost of power generated was 8.89 cents/kWh and the October 31, 2016 summary reported it had climbed to 13.49 cents/kWh — an increase of almost 52%.
The last word is mine
I challenge anyone to make the claim that “planning” or a “cost/benefit” analysis ever played a role in Ontario reaching our current state of claiming the title of “highest cost” electricity in Canada or “fastest rising” in North America! The design pursued by the various energy ministers occupying the portfolio since the current government gained the reins of power in Ontario demonstrate clearly, they failed to consider the fate of Ontario households, along with the impact on jobs. Instead, they listened to the cadre of environmental NGOs and corporations that benefit from subsidies provided by the ratepayers.