Calculating the costs of Ontario’s electricity: which sources add the most to our bills?

More transparency in the Ontario Energy Ministry  would reveal important facts, sooner 

The Ontario Energy Board (OEB) took more than nine months to compile and release what they label Ontario’s System-Wide Electricity Supply Mix: 2017 Data, a one-page document identifying the Electricity sources and the “Electricity Mix.”  The data includes both TX (transmission-delivered electricity) and DX (distributor-delivered electricity), but only in percentage terms. In order to determine the amount of electricity actually generated by the “Supply Mix” one must go through a mathematical exercise.

Lagging transparency

If one wonders why it takes nine months and why the OEB won’t supply the amount of electricity delivered by each of the “Electricity sources” you wouldn’t be alone.  Why have we spent billions on “smart meters” and the “smart grid” (developed by IESO) and the data can’t be provided within, say, the first Quarter of the following year?  That question should be raised by our elected politicians as the ratepayers of the province would like to know that all those billions weren’t wasted.

Digging deeper

Going though the math exercise isn’t unduly onerous; if one uses nuclear as the base (generating 60.1%) and the IESO “2017 Electricity Data” the information shows nuclear generated and delivered 90.6 TWh (terawatt hours), so the other percentages can be used to calculate the actual electricity delivered.  As all of nuclear generation is grid-connected, the total electricity generated (DX + TX) for 2017 was 150.7 TWh.  From that it is easy to determine solar with 2.2% generated 3.3 TWh, wind 10.85 TWh, hydro 38.6 TWh, biomass .6 TWh, natural gas 6.0 TWh and other .45 TWh. Add those figures to nuclear generation of 90.6 TWh and it comes to 150.7 TWh

The next step is determining the costs of those generation sources so we ratepayers can judge if they are giving us value for money. That is easier said than done; however, there are enough clues and information available to give us some reason to believe we will come close to disclosing costs.

Let’s start with the HOEP average for 2017 which was $15.81/MWh (megawatt hour) or $15.81 million per TWh meaning the 150.7 TWh of generation represents a cost of $2,282.6 million. The GA (Global Adjustment) inclusive of Class A and B for 2017 total was $11,851 million making total generation costs $14.233 billion for the 150.7 TWh.   Other costs such as transmission and wholesale market service charges add another $1.8 billion to total costs.  Adding the latter brings total cost to $16.033 billion.

If one than examines total Ontario demand for 2017, it would be the 132.1 TWh that IESO claim in their year-end report plus generation within the DX sector of 4.45 TWh making Ontario demand 136.55 TWh.

Finally, If one estimates the revenue generated from “net exports,”* reported as 12.471 TWh at the HOEP value of $15.81 million per TWh, the net revenue generated was $197 million reducing total electricity costs to $15.826 billion.

Putting total Ontario demand (136.55 TWh) in context, nuclear generation of 90.6 TWH and hydro’s 38.6 TWh together provided 94.6% (129.2 TWh). In 2017 OPG was forced to spill 6 TWh and Bruce Nuclear steamed off 1 TWh meaning those two generation sources could have supplied almost 100% (99.7%) of Ontario’s total demand.  Gas generation (10,548 MW capacity) could have easily supplied the balance including peak periods as they operated at only 6.5% of capacity.

So, what did wind and solar cost? 

Wind generated 10.85 TWh so at $135/MWh cost $1.465.000,000 + curtailment of 3.3 TWh at $120/MWh, added $396 million, making the total cost from wind generation $1,861,000,000. Solar generated 3.3 TWh so at an average of $448/MWh would add costs of $1,478,400,000

The two together — without including spilled hydro or steamed-off nuclear or gas back-up — totalled $3.339 billion.

The math calculation to get the actual cost of 2017 Ontario consumption therefore is simply dividing total electricity costs of $15.826 billion by 136.55 TWh, giving a per kWh cost of 11.6 cents kWh!

Without the total costs of wind and solar of $3.339 billion the costs of electricity consumed by Ontario electricity customers would have been $12.487 billion or 9.14 cents a kWh. That would have been 2.5 cents a kWh less than we experienced with wind and solar as generation sources.

The additional costs of wind and solar in 2017 added approximately $220.00 per average household to their electricity bills. Should wind and solar contribute similarly over the next 20 years the costs to Ontario ratepayers will be in excess of $66 billion.

The time has come to demand more transparency and to re-evaluate the details in long-term wind and solar contracts.

PARKER GALLANT

PS: Scott Luft has created pie charts that highlight much of what is contained in the foregoing article and they can be found here: https://twitter.com/ScottLuft/status/1050045294287745024/photo/1?ref_src=twsrc%5Etfw%7Ctwcamp%5Eembeddedtimeline%7Ctwterm%5Eprofile%3AScottLuft&ref_url=http%3A%2F%2Fcoldair.luftonline.net%2F

*exports less imports

 

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Ontario’s wind turbines demonstrate what they can’t deliver: reliability

The wind power lobbyist makes impressive claims but reality is a different story

Ontario turbines at Belle River: power not there when needed

 

In a bid to be assertive after the Speech from the Throne last Thursday and Premier Ford’s pronouncement of the upcoming demise of the Green Energy Act, CanWEA’s (Canadian Wind Energy Association) President Robert Hornung issued the following announcement

He made some impressive claims.

Maintaining investor confidence in the Ontario marketplace is important for Ontario’s short- and long-term economic prosperity. The Canadian Wind Energy Association (CanWEA) shares the Ontario Government’s commitment to an affordable and reliable electricity system that benefits Ontarians. CanWEA notes that wind energy projects in Ontario are an important source of sustained revenue for municipal and Indigenous partners. Ontario’s wind energy projects are providing long-term, stable pricing for Ontario ratepayers. Wind energy is now the lowest-cost option for new electricity supply in Ontario, across Canada, and throughout much of the world.”

Focusing on the weekend immediately following Mr. Hornung’s announcement is an interesting exercise. Examining his use of the words “reliable electricity system” is worthwhile to see if it has any bearing on generation from industrial wind turbines (IWT).

As it turns out, both Saturday July 14th and Sunday July 15th delivered pretty average summer days with Ontario demand of 837,000 MWh and total demand (including net exports) of 910,000 MWh. Over those two days, grid-connected IWTs in Ontario delivered 11,329 MWh.

What that means: wind turbines operated at a capacity value that was 5.4% of their rated capacity of over 4,400 MW. Peak output was at 12 AM on July 14th when they generated 969 MWh or 22% of rated capacity. The lowest output was at 10 AM on July 15th when they were probably consuming more than their output of 26 MWh, or 0.6% of their rated capacity.

Wind power generators represent 11.9% of total grid-connected capacity in Ontario according to IESO, so if they are promoted as part of “reliable” electricity, it’s not too far a reach to expect them to demonstrate their reliability.

It appears CanWEA’s claim is false.

Over the two weekend days they generated 1.4% of Ontario’s demand and only 1.2% of total demand.

If that is considered a “reliable” electricity source, Ontario’s ratepayers have been taking it on the chin since the wind contracts were awarded. Those contracts have had the opposite effect of bringing Ontario “short- and long-term economic prosperity” as our electricity cost increases have been more than double those of our neighbours.

All Ontario’s ratepayers are grateful that nuclear and hydro generation, (supported by gas generators during peak periods) were up and running over the past weekend.

Now all we ratepayers need is for the President of CanWEA to finally confess: wind power is intermittent and NOT reliable, and, oh yes, very expensive!

 

Ontario’s electricity export tariff

Special to The PostMedia Network, June 14, 2018

BY PARKER GALLANT, GUEST COLUMNIST

Former Energy Minister Chiarelli and his claim of a $6B profit on surplus electricity exports. “You can verify it.” No, you can’t.

Many will recall Bob Chiarelli, when in the position as Ontario’s Minister of Energy, was questioned on the costs of exporting our surplus electricity on TVO and stated: “since 2008, the province of Ontario – and you can verify it with the IESO – has made a $6 billion profit on the trading of electricity.”

Needless to say Minister Chiarelli was called out by the media and opposition parties for making such a spurious claim.

Let’s look at Ontario’s 2017 electricity exports and see what he would claim about them. The U.S. Energy Administration Information (EIA) in a recent release, had the following information posted from data supplied by Canada’s National Energy Board (NEB):

“Electricity accounts for a small, but locally important, share of bilateral trade. In 2017, the value of U.S. imports of electricity from Canada increased for the second straight year, reaching $2.3 billion*. The United States imported 72 million megawatt hours of electricity from Canada in 2017 and exported 9.9 million megawatt hours, based on data from Canada’s National Energy Board.”

As it turns out, Ontario’s exports of 19.1 million megawatt hours (MWh) in 2017 represents 26.5% of the 72 million MWh reported as exported by the NEB and those 19.1 million MWh generated “revenue” of $496.6 million (approximately) made up of the $15.80/MWh of the yearly average HOEP (hourly Ontario energy price) as reported by IESO and another $10.20/MWh for transmission** costs.

The implied revenue generated represented 16.6%* of total Canadian electricity revenue versus 26.5% of total Canadian electricity exports. The Ontario based generators of that 19.1 TWh of power were paid a yearly average of $115.5 million/TWh (yearly average includes HOEP plus global adjustment based on the IESO’s December 2017 monthly summary.

That means the cost to Ontario ratepayers for exported power was $1,709.5 billion and the credit (net of the monies to Hydro One of $194.8 million for transmission) resulted in Ontario’s ratepayers picking up the missing revenue of $1,507.7. Anyone with a small math knowledge would not refer to that as a profit as it would represent a cost of about $300 per Ontario household.

Export tariff?

The cost to ratepayers of electricity exports in 2017 at over $1.5 billion and prior years played a significant role in driving up electricity rates and represented almost 10% of total generation costs. To put that in current context, Ontario’s ratepayers were slapped with an “export tariff” by our Ontario government of 88% which greatly exceeds the US tariffs recently announced by the US government on Canadian manufactured steel and aluminum.

Getting slapped with only a 10% or 25% tariff would be a net benefit to Ontario’s ratepayers.

*Presumably US dollars so would represent approximately $3 billion CDN dollars at a $1.30/$1.00 exchange rate.

**A large part of these revenues ($194.8 million estimated) went to Hydro One who control about 99% of all transmission in the province.