Ontario electricity records smashed in June

And no, that didn’t make your life better

The month of June came and went and while several records were set, the media paid no attention.

Let’s start with why it took IESO until early August to release their Monthly Market Summary for June with the rest to follow!

IESO reporting: The IESO webpage where one accesses the daily and monthly summaries states the following: “The monthly report follows the Settlement Calendar for the release of Preliminary statements, generally in the middle of the following month.” While this may not be a record for late reporting it certainly doesn’t live up to their claim. They might want to edit that statement.

Ontario ratepayers’ consumption: The IESO Monthly Market Summary disclosed Ontario’s consumption was less than 10.6 TWh (terawatt hours) and, looking back over the past ten years (since passage of the GEA) June 2019’s TX (transmission-connected), consumption was the lowest. Possibly a record low.

 Curtailed wind: While the amount of curtailed wind (paid for but not generated) wasn’t the highest ever, the percentage of curtailed wind was a new record according to my friend Scott Luft who does an excellent job every month at estimating it, and provides data well before it is made available by IESO.  In June, Scott estimated 390,567 MWh of DX connected wind was curtailed versus 381,946 MWh grid-accepted. The curtailed wind represented 50.6% of what they could have generated and cost ratepayers $46.868 million via the Global Adjustment (GA) pot.

Grid-accepted wind power’s value: Scott also keeps track of the HOEP rate when wind is added to the grid and for June, he noted the HOEP valued wind at 0.17 cents/MWh.  We ratepayers pay wind generation companies an average of $135.00/MWH while the electricity trading market, i.e., HOEP valued their generation for pennies.  This is a record since Scott commenced tracking IESO data. Grid-accepted wind was HOEP valued at $65,000.

Global Adjustment sets a record: On Page 22 of IESO’s Monthly Market Summary they provide the Arithmetic and Weighted Average of both the GA and the HOEP and as it turned out, the GA hit a new record high for both at $140.96/MWh and $142.11MWh respectively.  This record high GA signals a high transfer to the Fair Hydro Plan (FHP) instituted by the Wynne government to reduce residential ratepayer’s electricity bills.

Monthly transfer to the FHP sets a record: The FHP transfer is referred to as the “GA Modifier” and it set a record for June coming in at $329.8 million, or 32.3% of the June GA cost ($1,018.2 million) for Class B ratepayers. Both the amount of the transfer and the percentage established new records.

HOEP sets a new record low: IESO’s “Monthly Market Summary” page 22 also contains the monthly Arithmetic and Weighted Average of the month’s HOEP value and they were respectively $3.68/MWh and $4.83/MWh and both were new lows.

Contribution by ratepayers to net exports sets a record:  As sales of surplus electricity to our neighbours doesn’t include the GA costs our net exports (surplus grid generation) for the month were adversely affected by the low HOEP.  Net exports for the month were 1.7 TWh (enough to power 2.2 million average residential households for the month) and generated approximately $8.2 million at $4.83/MWh but cost ratepayers about $241.6 million at $137.28/MWh meaning the loss for the month of $233.4 million was added to the GA pot.

Conclusion                                                                                                                                      What all this demonstrates is that there is something severely wrong with our electricity system in Ontario.

While wind and solar clearly played a significant role in driving up our electricity costs as it turns out, for June, a large portion of the record costs came about as OEB approved rate riders for OPG. Some of those are related to OPG’s nuclear refurbishment whereas other increases are due to OPG rate applications that were before the OEB for several years.  The latter are related to variance accounts including pension and other post-employment benefits in the hundreds of millions of dollars.  The OEB said no to the original applications but legal action by OPG took the issue all the way to the Supreme Court of Canada and the OEB lost!  As a result, those rate applications were allowed and their effect is to add hundreds of millions annually to OPG’s revenue base at a cost to ratepayers.  Scott Luft lays out the impacts of the foregoing in a recent posting on his site.

The revenue spurt OPG is now experiencing may well be the reason they suddenly announced the planned acquisition of 1,808 MW of gas plants from TransCanada and its affiliates for $2.87 billion. OPG suggested it was to replace the Pickering Nuclear generation capacity that will be winding down over the next several years, but it adds nothing to the province’s electricity capacity.

Ratepayers and taxpayers will continue to pay the price for political directions/interference and their exercise of control over the electricity sector.

The Green Energy Act passed by the McGuinty government is simply one example. It remains to be seen if the current government can untangle the mess.

PARKER GALLANT

 

5 reasons not to believe wind power lobby spin-Part 2

CanWEA points to Denmark as a fine example of “affordable” wind power — great if you think 47 cents a kWh is affordable [Photo Pioneer Institute]

In Part 1 of this series, I dealt with two of the five claims CanWEA makes for industrial-scale wind power development in its October 11, 2018 blog post, “Five reasons why wind energy is Ontario’s best option for new electricity supply”.

Refuting those two claims for omission of facts was relatively easy.

Here are the details on the remaining three.

3. CanWEA claim: “Wind energy will be necessary if Ontario is to keep Ontario’s electricity supply reliable through the next decade.”

CanWEA says the IESO “forecast a need for significant new electricity generation, especially from 2023 onwards, as the Pickering Nuclear station shuts down, other nuclear units are being refurbished, and generation contracts expire.”   Well, that is true as IESO did suggest a shortfall, but here are the facts: the forecast shortfall is 1,400 MW. The OPG Lennox generation station with 2,100 MW has a contract expiring that year. So the question is, will the contract be extended? I was recently taken on a tour of the Lennox facility where I observed they were in the process of refurbishing one of the four 525-MW units which suggests they anticipate a renewal of the contract. With the anticipated renewal the “need for significant new electricity generation” is simply a figment of CanWEA’s imagination.

This claim goes on to suggest: “New wind energy would help keep Ontario’s electricity supply reliable, as well as more affordable.” And, “Other jurisdictions around the world are proving this – for example, Denmark now produces more than 44 per cent of its electricity from wind turbines on an annual basis.” The Denmark example ignores the cost of residential electricity on Danish households which is the highest in Europe. Denmark’s household electricity price is 312.60 Euro/MWh or $471.10 CAD/MWh, based on current exchange rates.

Is CanWEA suggesting is that if Ontario’s ratepayers were paying 47.1 cents/kWh it would be affordable? That seems like a big stretch and would push many more households into energy poverty!

The same applies to the claim of it being “reliable.” As noted in a June 2017 peer-reviewed report by Marc Brouillette, wind generation in Ontario presented itself when needed only 35% of the time. If one considers that wind’s annual generation averages about 30% of capacity, it is therefore “reliable” about 10.5% of the time it’s actually needed. (Note: IESO values wind generation at 12% in their forecasts)

4. This CanWEA claim suggests: “Wind energy provides many services to system operators to keep electricity supply flexible.” Their view of “flexible” fails to align with what the grid operator IESO would consider flexible. As Marc Brouillette’s report noted, “… wind output over any three-day period can vary between almost zero and 90 per cent of capacity.” That variance often requires clean hydro spillage or nuclear steam-off or the export of surplus capacity or full curtailment.

All of those actions cost ratepayers considerable money. Wind is unable to ramp up if demand increases and is the reason Ontario has over 10,000 MW of gas/oil plant capacity, with much of it idling in case the wind stops blowing or clouds prevent solar from generating. CanWEA needs to review the definition of “flexible.”

Another amusing statement under this claim is that: “Wind energy can also provide a suite of electricity grid services, often more nimbly and more cost effectively than conventional sources, helping to ensure reliable and flexible electricity supply. These services include: operating reserve, regulation, reactive support, voltage control, primary frequency response, load following, and inertia and fast frequency response.”   The bulk of those “suite of electricity grid services” are requirements for any generators on the grid. The ones suggesting operating reserve, reactive support, load following and fast frequency support are really referencing the curtailment of wind generation as noted in the preceding paragraph.

5. CanWEA’s final claim is: “Wind energy is essential to reducing greenhouse gas emissions” and goes on to suggest: “Ontario has achieved a 90 per cent reduction in electricity sector greenhouse gas emissions over the past 15 years, and wind energy has been an important contributor. Wind turbines do not emit greenhouse gases, just as they do not pollute the air.” If CanWEA bothered to be truthful, the trade association would not claim “wind energy has been an important contributor” in reducing greenhouse gas emissions.   If you review year-end data as supplied by IESO for the year 2004 and compare it to the data for 2018, you are obliged to reach the conclusion that wind generation played absolutely no role in the “90% reduction in the electricity sector greenhouse gas emissions.”

Ontario demand in 2004 was 153.4 TWh (terawatt hours) and in 2018 was 137.4 TWh representing a drop in demand of 16 TWh. Nuclear generation in 2004 was 77 TWh and in 2018 was 90.1 TWh for an increase in generation of 13.1 TWh. The drop in demand of 16 TWh, plus the increased nuclear  generation of 13.1 TWh, equals 29.1 TWh. Those 29.1 TWh easily displaced the 2004 coal generation of 26.8 TWh!

Ontario didn’t need any wind turbines to achieve the 90 per cent reduction in emissions by closing the coal plants, and CanWEA was totally wrong to suggest wind generation played anything more than a very small role.

As the saying goes, “there are always two sides to every story” but if it doesn’t fit the message you wish to convey, you simply ignore the other side! CanWEA has done that consistently while ignoring the negative impacts of industrial wind turbines.

Here are just five:

1.Providing intermittent and unreliable generation,

2. Causing health problems due to audible and inaudible noise emissions,

3. Driving up electricity costs,

4. Killing birds and bats (all essential parts of the eco-system), and

5. Possible link to contamination of water wells.

I could list other negative impacts, but I would first invite CanWEA to attempt to dispel those five.

Needless to say, the anticipated response will be “crickets”!

PARKER GALLANT

Wind power lobbyist spins numbers to its advantage

Too bad the facts show that actually, wind power isn’t needed in Ontario

Comber wind project with 72 turbines: add up ALL the costs for the truth

The trade association and lobbyist for the wind power development industry, the Canadian Wind Energy Association (CanWEA), loves to provide its audience with information that only shows them in a good light. Their audience, “environmental” organizations and gullible politicians are easily sold.

Once again CanWEA has put the spin out.

A recent short post is titled “A Canadian Success Story” and it claims “Wind energy met approximately 6 per cent of Canada’s electricity demand in 2017 – and more than that in jurisdictions such as P.E.I. (28 per cent), Nova Scotia (12 per cent), Ontario (8 per cent), Alberta (7 per cent) and New Brunswick (7 per cent).”

It is curious as to why CanWEA would have used 2017 as their “success story” as it was an expensive one for Ontario’s ratepayers. Wind generation, the curtailment of excess generation, the need for backup gas plants, and the inability of wind to deliver actual power when needed, all played a significant role in continuing to drive up costs for Ontario electricity consumers.

Power arriving on the grid when demand was low was a big factor in the creation of the Fair Hydro Plan by the former government. IESO reported grid-connected wind delivered 9.2 TWh (terawatt hours) which was only 6.4% of total grid-connected generation — not the 8% claimed by CanWEA. Another 3.3 TWh of wind generation was curtailed in 2017 which added costs.

The 9.2 TWh delivered to the grid cost ratepayers $1,242 million and the 3.3 TWh curtailed added another $396 million, bringing the total cost of wind generation to Ontario’s ratepayers to $1.638 billion or 17.7 cents/kWh! If spilled hydro of 6 TWh and 1 TWh of steamed-off nuclear caused by wind due to surplus baseload generation (SBG) conditions, their costs of about $330 million bring the total cost of wind generation to $1.968 billion. And that is without gas plant idling costs for when wind is absent.

The total costs for all grid-supplied electricity in 2017 amounted to approximately $16 billion. So, the cost of wind power generation, along with the wasted hydro and nuclear, represented about 12.3% of all costs for 6.4% of their grid-accepted generation. If costs of our exports were included, wind generation effects on our electricity bills would be even higher. In 2017, nuclear and hydro supplied 97.1% of Ontario’s demand; with the spilled (wasted) hydro of 6 TWh and the 1 TWh of steamed-off nuclear, they could have supplied 102%.

In other words, wind wasn’t needed.

Scanning stats for a couple of months in 2018 shows that during the hot and high demand summer months of July and August, wind generation does what it generally does — falls flat. Data supplied by Scott Luft and the IESO monthly summaries shows wind provided only 4% of Ontario’s demand in July and 4.4% in August. In May 2018, a low demand month, grid-connected wind supplied 5.7% of Ontario demand. It could have supplied 9.1%, but almost 40% of what it could have generated was curtailed due to the month’s low demand.

What this all demonstrates, again, is the intermittency and unreliability of power from wind turbines. Wind power forces ratepayers to simply hand out money without any benefit.

Our politicians need to recognize spin when they see it, and understand that wind turbines provide almost no value in reducing emissions, or providing a reliable supply of electrical power.

PARKER GALLANT

 

What (and who) is the Ecofiscal Commission (Part III)?

People in Ontario have seen some of this before … it didn’t end well

Part one in this series dealt with the creation of the Ecofiscal Commission and had a short review of its commissioners (economists), advisors and funders. Part Two looked at the Chris Ragan/TVO interview with Steve Paikin and several of the claims made by Mr. Ragan, Chair of the Commission.

Today, I deal with the significant influence the Ecofiscal Commission and its economists/commissioners have had in respect to the Pan-Canadian Framework and various government documents created in support of “pricing carbon pollution”.  The Pan-Canadian Framework gives special mention to “Canada’s Ecofiscal Commission” in a call-out on page 7: “Carbon pricing is the most practical and cost‑effective way to lower GHG emissions while encouraging low‑carbon innovation — Canada’s Ecofiscal Commission”.  The only other non-government credit handed out is to the World Bank.  That alone speaks volumes about Ecofiscal’s influence!

Chris Ragan’s influence was obvious in his appearance at the Standing Committee on Environment and Sustainable Development November 1, 2018 where he dazzled them! In his presentation he suggested: “The proposed federal backstop is also a quite well-designed policy,” and went on to say: “there are two main challenges that you need to address. One is the impact on business competitiveness. The second is the impact on household purchasing power.” He also claimed “you can however, design policies in a way that address those challenges head-on” and “This is the output-based pricing element of the federal backstop”.

(Mr. Ragan’s views on this echo what Ontarians were told when the Green Energy and Economy Act was presented. Consumers, both residential and businesses, would become innovative in order to reduce the use of electricity. We know how that worked out!)

The questions posed to Ragan were gentle and he handled them with conviction. Ragan answered one question by saying: “I am not an expert on the number of tonnes we have to go, basically because that’s not our focus.” Huh?

One of the issues ignored by the media in respect to the Pan-Canadian Framework is how it is really more than just “pricing carbon pollution” via the carbon tax. It also established “clean fuel standards” which “would promote the use of clean technology and lower carbon fuels, and promote alternatives such as electricity, biogas, and hydrogen.”  Additionally, the federal government will establish a “methane regulation” and “energy efficiency/building code amendments”.  Along with that array of additional costs for businesses and households in Canada, the government would be able to purchase foreign “carbon offsets” using our tax dollars.  In effect, the Pan-Canadian Framework adopted by the First Ministers of the 10 provinces and three territories on March 3, 2016, referred to as the “Vancouver Declaration on Clean Growth and Climate Change,” created as many as five ways Canada’s taxpayers and businesses will be hit with costs.

On October 3, 2016, Environment and Climate Change Canada issued a press release containing a quote from Minister McKenna stating: “Pricing pollution is one of the most efficient ways to reduce greenhouse gas emissions and to stimulate innovation. Already 80 percent of Canadians live in a province where there is pollution pricing. We want to continue this trend and cover the final 20 percent.”

As most people now know, that 80 percent has fallen significantly with the election of the Ford government in Ontario and is likely to fall further pending the outcome of the upcoming Alberta election.

Needless to say, the Environment and Climate Change Ministry put out several documents to augment their views and the wonders of “pollution pricing” in driving down emissions. One of those documents was referenced as “Estimated impacts of the Federal Carbon Pollution Pricing System”.  Canada’s Ecofiscal Commission is touted for its recommendations and is cited three times in the “Endnotes”. 

One of the ENGOs, the Pembina Institute, also gets two nods in the Endnotes, one of which states:

“Pollution from coal power plants results in health issues that cost the health care system over $800 million annually, according to a study performed by the Pembina Institute in 2014.” Now in yet another Pembina Report a year earlier they had this claim: “According to the analysis, climate change impacts from coal-fired power range from $1.1 to 4.5 billion annually.”

Pick a number, any number, seems to be the theme, so politicians and ministry officials apparently do nothing to confirm what they are told!

The Ecofiscal Commission is also to be an intervenor in the Ontario Court of Appeal in respect to “the matter dealing with the Greenhouse Gas Pollution Pricing Act (GGPPA)”. Their “Factum” was handled by none other than Stewart Elgie, a professor of law and economics at the University of Ottawa, and director of the University’s interdisciplinary Environment Institute and founder of Ecojustice. The latter is also scheduled to be an intervenor. The factum clearly indicates Ecofiscal’s support for the Federal carbon tax and makes this assertion under 12 (a) of the factum: “The use of price-based regulation minimizes the costs to provincial economies — saving an estimated $70 billion per year across Canada, compared to prescriptive regulations, based on the CEC’s economic modeling.”

The suggested $70 billion seems like a stretch but perhaps as the bulk of the commissioners in Ecofiscal are quasi-government employees perhaps they are confident that the annual costs would be 225% more than the combined 2018 budgets of both Saskatchewan and Manitoba. Perhaps they are trying to make the case that by 2022 the carbon tax priced at $50/tonne will only extract $35 billion (based on Canada’s 2016 emissions of 704,000 tonnes). Their argument apparently is that we would be saving $35 billion annually by simply accepting their “economic modeling.” As a former banker, I have trouble buying into their suggestion.

As an Ontarian, It is hard for me to believe this is anything more than our experience from the creation of the Green Energy and Green Economy Act (GEA). It even includes some of the players involved in that fiasco via the GEAA (Green Energy Act Alliance) whose goal was: “to make Ontario a global leader in clean, renewable energy and conservation, creating thousands of jobs, economic prosperity, energy security, and climate protection.” The GEAA basically wrote the GEA for the McGuinty government.

We all know how that turned out!

PARKER GALLANT

Who (and what) is the Ecofiscal Commission?

It recently came to light that when Canadian universities hand out doctorates thus allowing an individual to be called an “economist,” some recipients feel they can also call themselves “Commissioners” with attendant heightened gravitas.

For example, if you examine the “Ecofiscal Commission” the 13 economists are listed as “commissioners”. If you thought a “Commission”* as it relates to Canada is normally appointed by the legislature of the country or the province, you are apparently wrong.  In the spirit of appointing themselves as “commissioners” they also created the word “ecofiscal” proposing its definition as follows:

“An ecofiscal policy corrects market price signals to encourage the economic activities we do want (job creation, investment, and innovation) while reducing those we don’t want (greenhouse gas emissions and the pollution of our land, air, and water).”

Reviewing the bios of the 13 commissioners is an interesting exercise: not one seems to have spent any meaningful time working in the private sector. They are all university professors or engaged as government employees — only one appears to have actually worked for a short time outside of a government position not paid for by taxpayers.

The Liberal Party of Canada (LPC) likes “commissions” : “Indigenous Peoples Commission”, “Young Liberals of Canada”, “National Women’s Liberal Commission” and the “Senior Liberal’s Commission”.  Presumably they were also simply created without legislative involvement?

My interest in Canada’s Ecofiscal Commission was triggered by an interview on the “Agenda” that Steve Paikin had with Chris Ragan, Chair, Canada’s Ecofiscal Commission, and specifically the claims made by him when responding to Paikin’s questions.  The interview title was “The Battle Over Carbon Pricing” and Ragan was effective at simply walking over any of the questions posed by Paikin, providing superficial answers as if they were facts. “Commissioner” Ragan’s purpose in life seems to be to support “carbon pricing” come hell or high water!  He, his fellow commissioners and the assembled team of “Advisors” believe the science is settled and Canada, along with a few other countries, will solve the AGW/climate change/pollution (pick one) problems plaguing the world due to human consumption.

Perhaps the 13 economists/commissioners lack confidence, otherwise why would they also need 15 “Advisors” composed of representatives from the NDP (Michael Harcourt, former BC Premier), the Liberals (Paul Martin, former PM) and the Reform/Conservative Party (Preston Manning, former Leader of the Opposition) and Jim Dinning (former Alberta Treasury Minister)! The other 12 “Advisors” come from industry such as GE Canada, Mattamy Homes, TD Bank and even Suncor Energy. Sprinkled in are others with a decidedly biased view on how to save the world from global warming.  The latter include individuals like Bruce Lourie (Ivey Foundation) and Peter Robinson (former CEO of the David Suzuki Foundation).

On top of all those economists/commissioners and advisors the Ecofiscal Commission also has nine permanent staff, most of whom were drawn from the public sector.

I am unsure as to how the “Commission” survives and pays staff as it doesn’t appear to have charitable status, nor does it solicit funds via their website. It also doesn’t appear they receive funding from either the federal or provincial governments.  They do, however, thank their funders in their abbreviated and unaudited “annual reports”. The 2017 annual report (day and month not disclosed) suggest they received and spent $1.3 million with 7% ($91K) spent on “contract research.” The latter seems to be a very small amount to reach the conclusions they claim and publicize, but perhaps they are of the view that the “science is settled” and therefore their role now is to convince the masses.  That goal was noted in the Chair’s letter in the annual report which stated: “Meanwhile, as governments at every level recognize the benefits of ecofiscal instruments, we piloted a series of workshops for public servants on the practical details of designing good ecofiscal policies.”

The “Funders” consist of eight charity foundations and three corporate funders with the latter being TD Bank, Suncor Energy and KTG Public Affairs Partners, formed in 2013 by two former Liberal insiders and one NDP insider. Clicks on the TD logo and you are taken to TD’s “corporate giving” site; click on the Suncor logo you are taken to Suncor Energy Foundation. The eight charitable foundations have total assets of $1.3 billion*** and use their annual earnings to dole the funds out to apparently worthy causes. One of them, the Peter Gilgan Foundation however, seems to operate by disbursing almost all of the funds received annually by the charity. Peter Gilgan, an Ecofiscal “advisor,” is the founder and CEO of Mattamy Homes which claims to be the largest privately-owned home builder in North America. Interestingly enough all eight are members of Canadian Environmental Grantmakers Network (CEGN)! CEGN was created by another “advisor,” namely, Bruce Lourie, President of the Ivey Foundation and a past Board member of the Trillium Foundation, the Ontario Power Authority and former Chair of Environmental Defence Canada. In addition, two of the corporate members of CEGN are Suncor Energy Foundation and TD Friends of the Environment Foundation. (It should be noted Mr. Lourie together with Rick Smith, former CEO of Environmental Defence, are also two-time winners of the prestigious Financial Post’s “Rubber Duckies” award!)

It’s obvious the economists/commissioners, advisors and funders of Canada’s Ecofiscal Commissioner are firm believers in climate change and represent a major force in supporting those beliefs.  They seem willing to cause great pain to Canadian families through advocating for a carbon tax despite questions about the effectiveness of such a tax, and Canada’s role in global warming generally.  Imposing a carbon tax in Canada while countries representing 86% of global emissions do nothing, will make Canada un-competitive and reflect in lost jobs and considerable harm to low-income families.

 

PARKER GALLANT

 

Coming soon: Part two, an exploration of the Agenda interview with Chris Randal, Chief Commissioner of Ecofiscal.

*The Federal Government has had a Commissioner of the Environment and Sustainable Development dating back to at least 2002.

**Merriam Webster’s definition of “economist” is simply; “one who practices economy”.

***Based on the writer’s review of the latest financial statements filed by the eight foundations on the CRA “charities” site.

 

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.

 

 

 

 

 

Should the Pickering nuclear plant be closed? Not based on cost and performance…

Pickering: working at 95% capacity during the heat wave [Photo: OPG]

July 6, 2018

Wind power a failure during recent high demand during heat wave; dependable power needed

I got a call at 11 a.m. on June 25th from the producer of the Scott Thompson show on CHML 900 AM to appear on the show to discuss the suggestion by NDP leader Andrea Horwath about closing the Pickering Nuclear plant.

Essentially it was about her statement during the election campaign indicating the NDP’s position on Pickering:  “we will begin the decommissioning process immediately, which will bring more jobs to the area — as opposed to the Liberal plan, which is to mothball that facility for 30 years and allow the next generation to figure out the decommissioning”.

Doug Ford, leader of the Ontario Progressive Conservatives, on the other hand stated: “The Pickering plant can continue to safely operate until at least 2024. We can generate 14 per cent of Ontario’s power needs right here”.

The producer suggested Scott wanted to explore the opposing issues with me.

Aware I was scheduled to be on his show at 12:35 p.m., and remembering that a Brady Yauch article a few months earlier in the Financial Post had suggested closing Pickering, I felt I should do more research before the call back.  Brady’s principal point was Pickering was a poor performer and the estimated costs ($300 million) of the extension would prove to be negative for ratepayers.

OPG’s website describes Pickering as follows: “Pickering Nuclear has six operating CANDU® (CANadian Deuterium Uranium) reactors. The station has a total output of 3,100 megawatts (MW) which is enough to serve a city of one and a half million people, and about 14 per cent of Ontario’s electricity needs.”.

Pickering Nuclear traces its roots back to 1971 when it first commenced operation with four units and expanded to eight units in 1983.  Two of the first four units have been in voluntary lay-up since 1997.  The CNSC (Canadian Nuclear Safety Commission) awarded OPG’s Pickering and Darlington nuclear stations its highest safety rating in 2017.

Combined, the Pickering and Darlington nuclear stations generated 10.4 TWh (terawatts) of power for the 1st Quarter of 2018 at a combined cost of 7.2 cents/kWh (up from 5.8 cents/kWh in the comparable quarter).  The 10.4 TWh was sufficient to supply the 4.6 million average residential households in the province.

Directing my research to IESO’s hourly Generator Report I was able to discern Pickering at hour 10 of June 25th had just generated 2,308 MWh out of 10,457 MWh produced by all the nuclear plants in the province.  Pickering nuclear represented 22% of nuclear generation at that hour, 15.6% of Ontario demand and 14% of total demand (including exports).   At hour 10, wind turbines were generating 452 MWh or 10% of their capacity versus Pickering nuclear which was operating at about 74.5% of its capacity.

Both nuclear and wind are classified as “base-load” generation!

As it turned out, when I was on Scott’s show the bulk of our chat was related to his prior guest’s discussions about Premier Ford’s cancellation of the “cap and trade” tax.  Only a couple of questions were raised about Pickering which I responded to.

Interestingly enough, now that the Ontario July heat wave has passed, I felt the urge to look at the performance of Pickering and IWT over the seven days when peak demand was high.  Pickering nuclear performed well generating close to 3,000 MWh each and every hour over the period meaning it was operating at over 95% of capacity.  Wind power generation, however was all over the map reaching a high of 2,769 MWh (62% of capacity) at midnight July 1st and a low of 5 MWh (0.11% of capacity) at 10AM on July 4th!

It is obvious that wind fails miserably as “base-load” generation when needed and the relative cost of generating power (sans back-up costs) is over 17 cents/kWh.

It sure looks like we should keep Pickering nuclear operating, as Premier Ford suggested.

Parker Gallant

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.

Hydro One takeover of U.S. company a big negative for Ontarians

The Financial Post, August 10, 2017

Parker Gallant: Thibeault and Wynne believe it’s wrong for the province to borrow $4 billion to reacquire Hydro One shares, but OK for Hydro One to borrow $5.1 billion while diluting the province’s interest in it

PostMedia photo

By Parker Gallant
On March 28th, a few weeks after Ontario Premier Kathleen Wynne and Energy Minister Glenn Thibeault held their press conference about the “Fair Hydro Plan,” Andrea Horwath, leader of the NDP, delivered a motion to the Ontario legislature calling for a buy-back of Hydro One. The motion failed and later resulted in Thibeault calling the NDP motion “short on details and long on hollow promises.” He noted that many of the NDP’s proposals “rely on a vague and yet-to-be-determined ‘expert panel’ that will be convened in the future.” Buying back $4 billion in Hydro One shares is costly, the energy minister added, and “will not take one cent off electricity bills. What it will do is send billions to the stock market instead of making much needed infrastructure investments in communities across Ontario.”

Fast forward to July 19^th, when Thibeault was beside himself with excitement because Hydro One will be paying US$5.3 billion ($6.7 billion) to purchase Avista, a much smaller electricity and natural gas utility headquartered in Spokane, Wash., 3,200 kilometres from Toronto. Hydro One offered a 24-per-cent premium on the traded value of the stock price over its July 18th closing and, based on Avista’s 2016 annual profit, it will take Hydro One 38 years to recoup the $6.7-billion price tag. Thibeault’s press release announcing the takeover carried this obtuse claim: “It is to the shared benefit of Hydro One’s customers, employees and shareholders to see the company strengthened and growing.” He also stated that, “In particular, we welcome the fact that this proposed acquisition will not impact the rates that Ontario customers pay. Neither will it have any impact on local jobs.”

The privatization of Hydro One and dilution of the province’s shareholding keep its debt off of the province’s balance sheet

 Based on that press release, and the requirement to get shareholder approval, we must assume Thibeault gave his blessings to the acquisition and dilution of the province’s holdings, which will decline from 49 per cent to 44 per cent. He presumably also blessed Hydro One’s borrowing program, which will add US$2.6 billion ($3.7 billion) in new debt, not including another $1.4 billion via a convertible debenture paying 12 per cent per annum in interest prior to its conversion to common shares.

Thibeault and Wynne believe it’s wrong for the province to borrow $4 billion, as the NDP suggested, to reacquire Hydro One shares, but OK for Hydro One to borrow $5.1 billion while diluting the province’s interest in it. The privatization of Hydro One and dilution of the province’s shareholding keep its debt off of the province’s balance sheet.

So, is the acquisition all that Thibeault and Hydro One’s CEO, Mayo Schmidt, claim it is or is the spin meant to distract ratepayers into believing the takeover will lessen pressure on future rate increases? Let’s examine a few facts:

— The acquisition of Avista will result in Hydro One’s debt (short and long term) increasing by 46 per cent, or $5.1 billion, to reach in excess of $16 billion. Should interest rates increase Hydro One will submit an application to the Ontario Energy Board (OEB) for a rate increase, an accepted OEB process.

— Hydro One’s 2017 first-quarter report notes it currently has five rate applications awaiting approval by the OEB and plans to file another nine rate applications over the next four years.

— Washington, where Avista’s electricity ratepayers are located, pays the second-lowest rates of any state on average, with all-in residential rates of 9.43 cents/kWh as of April 2017. Only Louisiana can claim lower rates at an average of 9.35 cents/kWh (U.S. rates expressed in U.S. currency).

— Based on the information in Avista’s 2016 annual report, it appears the all-in cost of a kilowatt-hour delivered to its ratepayers was 8.68 cents/kWh.

— Hydro One, on the other hand, has the highest rates in Canada and in most of North America. It is difficult to see how Washington ratepayers will see any benefit from this acquisition. Based on the data supplied by Hydro One to the OEB for 2015, its average cost of a kilowatt-hour was almost double Avista’s at 17 cents/kWh.

It is difficult to believe several of the claims in Hydro One’s news release

It is difficult to believe several of the claims in Hydro One’s July 19th news release. As an example, it states the acquisition of Avista “will be accretive to earnings per share in the mid-single digits in the first full year of operation.” Politicians and regulators in Washington may be tougher than those in Ontario when Hydro One seeks a rate increase! It gains increases in Ontario from the OEB and via political tampering, which recently resulted in a requirement that taxpayers pick up a part of Hydro One’s bad debt allocations via the Ontario Electricity Support Program.

Another quote is also a stretch: “Efficiencies through enhanced scale, innovation, shared IT systems and increased purchasing power provides cost savings for customers and better customer service, complementing both organization’s commitment to excellence.” This claim comes from the company that had the distinction of being singled out by Ontario’s ombudsman for issuing over 100,000 faulty hydro bills. Moreover, last October Global TV found Hydro One had almost 226,000 clients in arrears, which represented 20 per cent of all its residential clients and 40 per cent of all ratepayers in arrears in the province.

Ratepayers and taxpayers should view the Hydro One takeover of Avista as negative. To re-purpose Thibeault’s comment to the NDP leader, this action “will not take one cent off electricity bills.”

Financial Post

Parker Gallant is a retired bank executive who looked at his power bill and didn’t like what he saw.

One (megawatt) is the loneliest number

On one day recently, for one hour, Ontario’s thousands of towering wind turbines delivered just one megawatt of power. And still, Ontario  had a surplus that was sold off cheap.

May 27 was a Saturday which is usually a “low demand” day for electricity in Ontario, compared to weekday power demand and assuming weather patterns are close to average. The temperature on the recent May 27 was slightly below historic averages in Toronto; as people woke up and set about their activities that day, the demand for electricity built slowly.

According to the IESO’s (Independent Electricity System Operator) Daily Market Summary, Ontario demand peaked at 14,069 MW and averaged 12,751 MW (total Ontario demand was 306,024 MWh for the whole day).  If anyone checked IESO’s “Power Data” page at, say, just after 11 AM, they would have noted demand was 13,208 MW at 10 AM and the HOEP (Hourly Ontario Energy Price) was indicating a negative price of -$4.00 /MWh.   If one had also looked at the “Generator Output and Capability” and scrolled down to “Wind Total” they would have seen that under the heading “Output” the number appearing on the screen was “1”!

As in, one single megawatt of power.

About half the capacity of one ordinary wind turbine.

So, at 10 AM on May 27, 2017 the approximately 4,500 MW capacity of the more than 2,000 wind turbines installed throughout the province by the McGuinty/Wynne governments with lucrative, 20-year contracts, were delivering one megawatt of power.

And yet, to the best of my knowledge, Ontario didn’t experience a blackout or brownout because intermittent wind power generation was almost completely absent, nor did our emissions increase, as we got all the power needed from nuclear and hydro resources.   In addition, the almost 9,000 MW of gas generation was idling, operating at an average of about 2% of capacity almost all day.

Despite wind only producing an average hourly output of 75 MW for the day and just the “1” for hour 10, Ontario still exported 43,584 MW of power at a cost to ratepayers of $5.6 million*.

Despite the lackluster performance of industrial wind turbines May 27 and on many other occasions, a visit to the home page of CanWEA still claims:  “Wind is delivering clean, reliable and low-cost electricity”!

Sure!

Perhaps with another 4,500 MW of capacity in Ontario, the industrial wind turbines may have delivered TWO MW of power at 10 AM on May 27?

 

*Cost estimate assumes the second IESO estimate of May’s Global Adjustment of $127.76 holds up.