Where did the $50 billion go, Premier Wynne?

He said, she said: we say, where did the money GO? [Photo: Toronto Star]
Last September 13, Minister of Energy Glenn Thibeault issued a press release announcing the  Ontario Liberal government would reduce electricity bills for five million families, farms and small businesses.  The relief granted was equivalent to the 8% provincial portion of the HST. The press release also claimed Ontario had “invested more than $35 billion” in new and refurbished generation.

Fast forward to March 2, 2017 and that $35 billion jumped to $50 billion in a press conference the Premier jointly held with Minister Thibeault. An increase of $15 billion in six months!

The press conference was to inform us the 8% relief announced by Minister Thibeault would be added to, with a further 17% reduction. A Toronto Star op-ed Premier Wynne wrote March 7, 2017 reaffirmed the $50 billion investment claim made the previous week, and further claimed: “By delivering the biggest rate cut in Ontario’s history and holding rate increases to inflation for at least four years, this plan provides an overdue solution.”

That made history alright, but not the way she meant. What the Premier forgot to say was that her government had brought us the biggest rate increases in Ontario’s history.  In March 2011 the Ontario Energy Board (OEB) website shows the average electricity rate was 6.84 cents per kilowatt hour (kWh) and on May 1, 2016 it had increased to 11.1cents/kWh.  In just over five years, the price of the commodity — electricity — increased 62%, a multiple of the inflation rate during that five years, which added about $400 to the average consumer bill.

Electricity price goes down, your bills go UP

From 2010 to 2015 Ontario demand fell by 5 TWh (terawatt hours) to 137 TWh.* That is enough to provide electricity to 550,000 “average” Ontario households for a year, yet the price for residential consumers increased 62%.   The increase was not driven by the trading value via the hourly Ontario electricity price (HOEP) market.  In fact, the market treated Ontario generated electricity badly as it fell from an average of 3.79 cents/kWh in 2010 to 1.66 cents/kWh in value for 2016 —  a 56.2% drop.

As to how they were achieving this “relief,” Wynne and Thibeault told us they were pushing the payback period for the 20-year contracts (wind and solar) out another 10 years. Those generation sources are the principal cause of the increase in electricity prices.  (For further proof of that, read  Scott Luft’s recent analysis on the costs of “other” generation in 2016 which confirms its effect on our rising electricity rates.)

Where did the money go?

What the Wynne/Thibeault announcement means is, ratepayers will pay for the intermittent and unreliable power for their 20-year contracted term(s), and continue to pay for the same contracts which, by that time use equipment that will be heading for, or already in the scrap yard.

It is time for Minister Thibeault to disclose what is behind his claim of $35 billion invested and for Premier Wynne to disclose the details of the $50 billion she says went to “necessary renovations” to rebuild “the system.”

Time to come clean.

* Ontario consumption remained at 137 TWh in 2016.

Where did our $50 billion go? Or, how Ontario citizens lost $18 mil in just 2 days

Premier Wynne making her announcement: no accounting for costs [Photo: PostMedia]
Almost a week after Premier Wynne announced her plan to reduce our electricity bills by 25%, the wind was blowing!  On March 8, six days after the cost shifting  announcement (from ratepayer to taxpayer), potential power generation from wind was forecast by IESO to produce at levels of 80/95% of their capacity, for many hours of the day.  IESO was concerned about grid stability and as a consequence, curtailed much of the forecasted generation.

When the Premier made her announcement about reducing hydro bills, she also claimed “Decades of under-investment in the electricity system by governments of all stripes resulted in the need to invest more than $50 billion in generation, transmission and distribution assets to ensure the system is clean and reliable.”

It is worth noting that much of that $50 billion was spent acquiring wind and solar generation and its associated spending on transmission, plus gas plants (to back them up because the power is intermittent), and distribution assets to hook them into the grid or embed them with the local distribution companies. It would have been informative if Premier Wynne had had Energy Minister Glen Thibeault provide an accounting of exactly what the $50 billion was spent on.

As it turned out the amount of curtailed wind generated on March 8 was 37,044 megawatt hours (MWh) was just short of the record of 38,018 MWh set almost a year ago on March 16, 2016 (estimated by my friend Scott Luft).  The curtailed wind on March 8, 2017 cost Ontario’s ratepayers $120/MWh or $4,445,280.

The cost on March 16, 2016 was $4,562,160.

What does it mean? Curtailing or restricting power output but paying for it anyway means a portion of the $50 billion spent was simply wasted money. It went to the corporate power developers that rushed to sign those above-market contracts for renewable power.

The other interesting aspect of the surplus power generation on March 16, 2016 and March 8, 2017 is revealed in IESO’s Daily Market Summaries: the hourly Ontario energy price (HOEP)  March 16, 2016 was negative at -$1.25/MWh and on March 8th, 2017 was also negative at -.49 cents/MWh. This meant ratepayers paid for surplus exports sold to our neighbours in New York and Michigan, etc. Net exports (exports minus imports) on March 16, 2016 were 52,368 MWh, and on March 8, 2017 were 37,944 MWh. Total costs of their generation (HOEP + GA) fell to Ontario’s ratepayers along with the cost of any spilled hydro, steamed off nuclear and idling gas plants.

Millions here, millions there = a whole lot of wasted money

So, bear with me here, if we price the cost of the net exports at $110/MWh for those two days, ratepayer costs were approximately $9.8 million with $5.7 million for March 16, 2016 net exports and $4.1 million for March 8, 2017 net exports, not including the $84,000 we paid our neighbours to take our power.

How much did it cost you? Two days out of 729 (2016 was a leap year) cost Ontario ratepayers about $18.1 million for power not delivered (curtailed wind) or needed (net exports).

I hope this helps Minister Thibeault in his calculations for a long overdue accounting to Ontario citizens as to where the other $49.982 billion went.

 

Energy Minister’s promise of action causes concern

Past ministerial promises haven’t worked out so well. Why should we have faith in a minister who admits mistakes but then says he is planning major change?

Glenn Thibeault, Minister of Energy, spoke at a breakfast session for the Economic Club of Canada in Ottawa and admitted that “Ontario” (not the Liberal Party or his predecessors in the energy portfolio)  screwed up by paying too much for renewable energy.

Shock.

While that was a significant admission by Mr. Thibeault, recall that only three weeks earlier he claimed “We have the system of the future paid with yesterday’s dollars.”

His Ottawa remarks claimed Ontario’s leadership position in green energy was “absolutely the right policy,” yet the attractive fixed-term contracts handed out “created a bonanza” for wind and solar providers but “left ratepayers with a hangover.”   Minister Thibeault’s many claims made in that speech about eliminating “heavily polluting coal-fired power plants,” how “we drove significant investment in the province,” how “demand for electricity plummeted in the steep recession” of 2008, and how “Ontario had taken a leadership position in green energy,” have all been disputed by many. As just one example, the Green Energy Act (GEA), the feed-in tariff program and time-of-use pricing mechanisms were all policies copied from Germany and Denmark, and not a leading position.

Billions spent without proper planning: AG

The apparent surprise, “Ontario was paying too much for renewable energy,” was already noted by Auditor General Jim McCarter in his December 5, 2011 report: “Billions of dollars of new wind and solar power projects were approved without many of the usual planning, regulatory, and oversight processes.”

The AG report came over a year after then Energy Minister Brad Duguid released his Long-Term Energy Plan, calling for 10,700 MW of  renewable energy from wind and solar. Minister Duguid also directed spending on the Niagara Tunnel ($1.5 billion) and the Lower Mattagami River ($2.6 billion) hydro projects which presumably are some of those “yesterday’s dollars” Thibeault mentions.   Just before his LTEP was released, Minister Duguid pulled the plug on the Oakville gas plant and said, “As we’re putting together an update to our Long-Term Energy Plan, it has become clear we no longer need this plant in Oakville.”  More “yesterday’s dollars”!

As the electricity rates started spiraling upwards, Minister Duguid gave us the OCEB (Ontario Clean Energy Benefit) in February 2011, which took 10% off electricity bills for the following five years, and also added over $5 billion to the province’s debt.

Now many critics (me included) of the GEA said renewable energy would drive up electricity prices soon after the GEA was passed. One of the first articles I pointed this out in appeared seven years ago (February 24, 2010) in the Financial Post where I commented,  “As expensive electricity coming from wind and solar power slowly works its way through the system, many more rate increases will follow.”  (Several months later Minister Duguid labeled me as  a “self-appointed guru” on the Goldhawk Live TV show.  Perhaps he considered my forecasts to be “fake news”.)

Promises, promises

Back to Minister Thibeault’s speech: the remark we should all be concerned about is, “In the coming weeks you’re going to hear about out plan, how it will impact businesses and families, and most importantly, how it will provide structural changes that ensure both immediate and lasting relief.”

We ratepayers have seen claims like that before. On February 17, 2011, Minister Duguid promised: Creating more than 50,000 jobs in the clean energy economy” and “Helping reduce costs for consumers and making the power system more efficient through conservation”. 

Those jobs were never created and we reportedly reduced our consumption by the 7,100 MW Duguid had as a target, but our electricity bills increased.  In February 2011, the average electricity rate was 6.84 cents/kWh; and in Feb. 2017 it is 11.1 cents/kWh — an increase of 62.2% in just six years.  Off-peak rates are up over 70%.

The “structural changes” promised by Minister Thibeault may well turn out like past promises and fail to deliver anything close to what is promised.

Minister Thibeault and the Wynne government should instead cancel unfulfilled wind and solar contracts, LRP II (currently suspended), move the Ontario Electricity Support Program (OESP) to the Ministry of Community and Social Services, and stop the annual spending of $400 million on conservation programs.

Leave the planning to the experts!

 

Mr Thibeault needs to go to energy minister school

Ontario Energy Minister Thibeault: listening to the earbuds, not really in the know on energy
Ontario Energy Minister Thibeault: listening to the earbuds, not really in the know on energy

Ontario’s Energy Minister Glenn Thibeault was in Port Hope February 8, 2017 and delivered a speech to the local Chamber of Commerce.  Based on a few of his quotes appearing in the local paper, Northumberland Today, he needs basic training in the electricity system. Clearly, he doesn’t get it.

The article said, “Except for one question from the floor at the Port Hope and District Chamber of Commerce event, all of the queries from chamber members to Thibeault were solicited and chosen prior to his arrival.” I guess he needed help from bureaucrats in the Ministry to ensure he could answer the questions!

Looking at one of the Minister’s quotes along with a message from his speech, one is blown away by what appears to be either ignorance or fabrications he thinks ratepayers will believe.

“Thibeault supported the refurbishment of nuclear power plants in Ontario, a 30% source of power in this province, he said.”  Nuclear refurbishment was approved prior to Thibeault’s appointment so that’s a meaningless message.  But it also failed to deliver the correct facts!

According to IESO, while the capacity of nuclear was only 30% it produced 61% of total generation in 2016 and 67% (91.7 TWh) of Ontario’s total demand of 137 TWh (terawatts).

The quote that makes absolutely no sense is his remark, “We really have built the system of the future with yesterday’s dollars,” he said.”   Was he suggesting “yesterday’s dollars” were money in the bank already? If so,

Why have electricity rates risen over 100% under this government?

Why does Ontario have the highest electricity rates in Canada?

Why does Ontario have the fastest rising rates in North America? And

Why were almost 567,000 households (12% of households) in arrears on their electricity bills as of December 31, 2015?

We could go on and on about the damage done to the electricity system in the province by the current government meaning, the Thibeault’s claim “yesterday’s dollars” were used to “build the system of the future” is either a bogus boast or an outright lie.

The time has come for the Minister of Energy to admit his and his predecessor’s mistakes, and get some basic training.

Hard to see through the fog of Wynne government energy promises

On October 21, 2013 Premier Wynne wrote a letter “To the people of Ontario” with a few promises.

“We must also unlock public data so that you can help us solve problems and find new ways of doing things. I believe that government data belongs to the people of Ontario and so we will make government data open by default.”

and

“Our Open Government initiative will help create the transparent, accessible government that the people of Ontario deserve. Over the months and years to come, we’ll be bringing forward additional initiatives that will improve transparency, accountability, and connectivity.”

Almost a year later, possibly in an effort to augment her promise of “transparency” she wrote “mandate letters” to her Ministers. To her Minister of Energy, Bob Chiarelli she said, “We want to be the most open and transparent government in the country. We want to be a government that works for the people of this province — and with them. It is of the utmost importance that we lead responsibly, act with integrity, manage spending wisely and are accountable for every action we take.” [Italics mine]

Premier Wynne’s “mandate letter” to the current energy Minister, Glenn Thibeault, September 23, 2016 said nothing about transparency but does say:  “At this halfway mark of this government’s mandate, I encourage you to build on the momentum that we have successfully achieved over the past two years, to work in tandem with your fellow ministers to advance our economic plan”.

After almost three and a half years since Wynne’s letter to the people, perhaps it’s time to look at the promise to “unlock public data” and how the “Open Government” promise has delivered on  “transparency”!

  • Two months after Wynne’s letter to her Energy Minister Bob Chiarelli, in an appearance on TVO he claimed, “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.”
  • Current Energy Minister, Glenn Thibeault when asked in an interview with Global TV for information on how many ratepayers were behind in their hydro bills and how many had been disconnected, he had no idea! Neither did the OEB, or Ministry of Energy staff. Thibeault wouldn’t admit there was a crisis.
  • Less than two months after Thibeault refused to agree there was a crisis, Premier Wynne admitted rising hydro bills were “an urgent issue”. Loss of a critical byelection finally opened her eyes.

The IESO (Independent Electricity System Operators) website dazzles with the amount of data available. Search using the terms “transparency” or “transparent” you get 2,800 hits. Impressive, but as the saying goes, actions speak louder than words!

IESO fail to provide data on:

  • How much wind is curtailed or
  • How much water is spilled by hydro electric generators or
  • How much nuclear is “steamed off” by Bruce Nuclear or
  • How much wind or solar distributor connection energy was produced or
  • How much money was generated from sales of surplus exported power to our neighbours and
  • How much that exported power cost Ontario’s ratepayers

IESO is responsible for the financial aspects of settling (contracted and/or regulated) with each and every generator in the province either directly or via local distribution companies, and also must settle with the buyers and sellers of both our exported and imported energy. In effect they play a major role in determining the final cost of what each and every ratepayer are charged for the line on their bills reading either “electricity” and “GA” or Global Adjustment.

They should be the purveyors of all the “public data” from the energy sector Premier Wynne referenced in her letter to us in September 2013 but as noted, they are falling short.

A recent event made that obvious.

On January 18, 2017, IESO issued a News Release, “ Ontario’s Independent Electricity System Operator Releases 2016 Electricity Data”. The release had a table summarizing Ontario’s transmission connected generator output by fuel type, listing the outputs as: Nuclear 91.4 TWh (terawatt hours), Hydro 35.6 TWh, and Wind 9.0 TWh respectively.   Two days later, those three “outputs” were suddenly different with Nuclear at 91.7 TWh, Hydro at 35.7 and Wind at 9.3 TWh.

No apologies, no explanations or even a mention they altered the original News Release. The .7 TWh added to the output represents a cost of about $70 million ratepayers will pay, yet no explanation was posted about the change.

In Ontario today, transparency is shrouded in fog, and “spending wisely” has been forsaken by this government, in the badly managed electricity sector.

No natural gas, more natural gas: what is the Wynne government’s game?

February 6, 2017

In April 2015 Brad Duguid, then Minister of Economic Development, Employment and Infrastructure issued a press release stating: “Increased natural gas access, through the $200 million Natural Gas Access Loan and $30 million Natural Gas Economic Development Grant, will attract new industry, make commercial transportation and agriculture more affordable, help to create jobs, provide more energy choices and will lower electricity prices for businesses and consumers across Ontario.”

The focus was expansion in rural communities and the money offered would do wonderful things including lowering “electricity prices.”  The Duguid statement appears to have flowed from the 2013 Long-Term Energy Plan (LTEP) released by Bob Chiarelli when he held the Energy Minister’s portfolio as noted in the OEB’s 2014-2017 Business Plan.

Just days ago, another press release was issued on the same issue by Bob Chiarelli, Minister of Infrastructure:  “Ontario is expanding access to natural gas for communities that do not currently have service, including those in rural and Northern Ontario and First Nations communities.”  It gave a “Quick Fact”: “Natural gas is the dominant heating source in Ontario and continues to be consistently less expensive than alternative sources such as electricity, heating oil and propane.” The Chiarelli announcement increased the “grant” amount to $100 million.

The recent announcement indicates the Duguid offer fell flat so perhaps Chiarelli’s announcement is an effort to see the claim he endorsed in the 2013 LTEP as one he is determined to follow through on, even if it raises Ontario’s debt by $100 million!

It is also ironic that Chiarelli is pushing expansion of natural gas consumption while our current Energy Minister, Glenn Thibeault is heading in the opposite direction. He recently instructed IESO (Independent Electricity System Operator) to basically shut several of the NUG (non-utility generators) gas plants down. Minister Thibeault’s recent directive to IESO notes:  “Ontario has put in place legislation for its new cap and trade program to limit greenhouse gas pollution while moving to a low-carbon economy.”   Most NUG contracts are gas generation units whose original contracts (executed in the Peterson Liberal government days) are close to expiry, and are “take or pay” contracts.  With the  surplus of power today, Minister Thibeault considers them expendable.  As a result the directive instructed IESO to renew contracts but only: “if the IESO is able to negotiate replacement contracts (IESO Contracts) with OEFC NUGs that incentivize them to operate in a manner that is better aligned with the integrated power system’s needs.”

As noted by Scott Luft some of those NUG contracts have been renegotiated, others ended, (the plants will be closed or mothballed) while some are in the process of  renegotiation.  One of those cancelled contracts offered to produce and sell power for 5.9 cents/kWh, but that offer was rejected even though it was way under prices paid for generation from industrial wind turbines and solar panels. Both those forms of power generation are unable to generate power when needed.

Is the objective of the Energy Minister to reduce emissions from gas plants so Premier Wynne can claim the “cap and trade” tax is working?

Meanwhile, if Minister Chiarelli is successful at handing out the $100 million tax dollars as grants to expand natural gas use, emissions will increase! Any increase will generate additional cap and trade revenue to help pay for the grants and the early shutdown of those gas plants.

Here’s the game: reduce emissions in the (already clean) electricity sector while pushing them up elsewhere and capture additional taxes along the way.

The topsy-turvy world of power policy in Ontario continues.

Amherst Island: perfect example of why wind power can be a bad choice

Ontario’s Energy Minister Glenn Thibeault, at the launch of planning for the next Long-Term Energy Plan, said “We have a robust supply of all forms of energy for at least the next 10 years.”  The month prior to the launch he announced the suspension of LRP II  slated to acquire another 1,000 MW of renewable energy.  His claim at that time was, it would save ratepayers $3.8 billion in electricity costs over the projected term of the contracts.

Cancel the contracts 

Why didn’t he go further and cancel contracts that have not broken ground and saved billions more?   Amherst Island’s “Windlectric” project, owned by Algonquin Power & Utilities Corp., project is just one. On its own, cancellation could save Ontario ratepayers over $500 million in future costs.  Those contracts, signed years ago, either have not been built or are involved in litigation preventing them from breaking ground.   Their sunk costs are small in comparison to their full costs over 20 years and canceling them outright would represent a nominal cost to ratepayers while saving, birds, bats, butterflies and endangered species from harm as well as prevent human health effects, and depreciation to property values.

Cancellation would reduce the amount of surplus energy that is exported at a cost to ratepayers or simply curtailed, but paid for by ratepayers. Savings would be in the billions.

Amherst Island—Owl Capital of North America

 In the July/August 2003 copy of “Wildbird”, Kevin T. Karlson wrote this article “Owl Capital of North America.” and said “An occasional glance at these ‘owls in wonderland’ always brings a smile to my face.” The Owl Woods is the only place where it is possible to see ten species of owls in one day.

Amherst Island, 66 square kilometers in size, is situated west of Kingston along the northeastern shore of Lake Ontario close to the St. Lawrence River and considered a “Hidden Cultural Gem.” The island is the first of the world famous 1,000 islands based on the water flow. The permanent population of about 450 residents swells to over 1,000 during the summer months and attracts visitors from all over the world. People come to see the culture and history of a settlement dating back to the late 1700s by the Empire Loyalists and the Irish immigrants who followed. Many also come to see the birds as the island is on the IBAs (Important Bird Areas) list. Amherst Island is home to “as many as 34 different species at risk known to rely on the Island’s natural environment for survival.” including the threatened Blandings turtle.  

The foregoing paragraph should make the reader wonder exactly why, back in 2011 the Ontario Power Authority (OPA) granted the contract to a shell company (Windlectric) established by Algonquin Power & Utilities Corp. Subsequent to the contract award the Ministry of the Environment (MOE), since relabeled the Ministry of the Environment and Climate Change (MOECC), granted a Renewable Energy Approval (REA) with some modifications to the original contract.  One wonders why the REA was granted as Amherst Island was already designated as an IBA and known as the Owl Capital of North America.  Was it simply because the OPA (now merged with IESO [Independent Electricity System Operator]) gave them a contract, or was the MOECC unconcerned about the heritage of the island and the many species at risk?  

For over 10 years, residents of Amherst Island and their onshore supporters have battled proposals to blanket the Island with industrial wind turbines. The support received by APAI (Association to Protect Amherst Island) has been overwhelming coming from many different groups and individuals, including those who support wind power as renewable energy. Among them are Nature Canada and Ontario Nature who jointly wrote an 18-page letter to the Ministry of Environment and Climate Change in March, 2013. Their logical defence of wildlife had no effect on the outcome of the appeal to the Environmental Review Tribunal.

In fact, the decision of the Tribunal in August of 2015 was a major failure according to Nature Canada: “The Amherst decision is a reminder that we are missing adequate government policy that both promotes renewables in the right places while recognizing and protecting our key biodiversity areas including Canada’s nearly 600 Important Bird and Biodiversity Area (IBAs) such as Amherst Island and the South Shore of Prince Edward County.” 

Organizations as diverse as Heritage Canada The National Trust, Mohawks of the Bay of Quinte, Kingston Field Naturalists, the Dry Stone Wall Association of Ireland, BirdLife International, the Maryland Ornithological Society, the Hawk Migration Association of North America, Pennsylvania Ornithological Society, and Brereton Field Naturalists’ Club all oppose turbines on Amherst Island.

Economic impact

 The Windlectric project proposes 26 wind turbines with a capacity of 74.3 MW and according to the specifications, would be Siemens turbines each with a total height in excess of 500 feet with a hub height of about 330 feet and a blade radius of almost 180 feet. If they generate electricity at the anticipated norm of 30% of capacity, they will produce about 195,000 megawatts (MWh) intermittently and out of synch with Ontario demand. Windlectric will be paid $135 per/MWh plus cost of living benefits up to 20% more, so as much as $162 per/MWh in the latter years of their contract term. At an average of $140 per/MWh, the gross revenue to Windlectric will be $27.3 million annually, or about $550 million over the life of the contract.

Loyalist Township, where Amherst Island is located, was obligated to allow the Windlectric project to proceed because the Green Energy Act in 2009 stripped all municipalties’ local land use planning powers as regards an energy project. The best the township could do was reach agreement on a “Community Benefit Fund” for an annual payment of approximately $520K. Added to that will be realty taxes of around $240K. Ontario limits the assessed value of wind turbines to only $40K per MW. The assessed value of the 26 turbines will be less than $3 million, but their capital cost is over $200 million.

All-in, the township will get about $760K annually — 2.8% of the revenue to Windlectric. Obviously, the contributions Algonquin Power and other large renewable energy companies gave to the Ontario Liberal Party were worth the money.

So, Ontario has a “robust supply” of electricity, wind turbines will harm the 34 endangered species, and we are exporting surplus generation at pennies on the dollar while curtailing wind, spilling hydro and steaming off nuclear energy.   Ontario doesn’t need the intermittent power from the turbines on Amherst Island. We don’t need them in Prince Edward County either (White Pines) (or Dutton-Dunwich, or La Nation, or North Stormont). The Minister should demonstrate that he means what he said recently in North Bay:  “There are some families in this province that are struggling to meet their energy bills. It’s why I’ve recognized and the premier has recognized that we need to do more …That is why we’re making sure we can find ways to reduce bills. Everything is on the table within reason.”

The Minister has an opportunity to save ratepayers $1 billion dollars in future rate increases by simply canceling the Amherst Island Windlectric project and the Prince Edward County White Pines project, to name two.

He should take it.