May showers Ontario electricity customers with records

With a forecast of more increases on the way …

Ontario news in May focused on record rainfalls in many areas of the province, records were being set elsewhere, too: in Ontario’s our electricity sector.

While one of those records occurred on May 27 when the 4,500 MW capacity of industrial wind turbines generated a record low of one (1) megawatt hour, there were others. They won’t make you proud.

Highest “B” Class GA per MWh ever @ $123.07/MWH – What the $123.07 represents is a Global Adjustment cost to all Class B ratepayers of 12.3 cents /kWh without including the HOEP (Hourly Ontario Electricity Price) at a time when Premier Wynne has told us her government is reducing our electricity bills by 25%* so the difference between what the cost of electricity was in May and other months and the TOU rates (to be announced) will be “kicked down the road” to be paid at a future date.

Highest “B” Class total dollar GA cost ever @ $1,013.9 million – The Class “B” ratepayers got stung badly in May 2017 as their portion of the GA reached record levels.

Highest OPA contracted GA monthly cost ever @ $838.3 million – The Ontario Power Authority (since merged with IESO) was created by Dwight Duncan when Minister of Energy and contracted for all new power contracts, including those above market ones for renewable energy (wind, solar and biomass).  Those contracted generation sources set a new record for contribution to the GA representing 73.2% of the total amount as noted under # 5. below.

 Lowest “B” Class consumption for May (in evidence) @ 8.310 TWh – It would appear that Class “B” ratepayers did their best to reduce consumption and based on data on the IESO website consumption levels set a record low in May 2017.

Highest overall total GA costs ever @ $1,144.5 million – The total GA costs for May 2017 for the combination of Class B and A ratepayers achieved this record level since the GA was first created.

Based on what happened in May, it would appear that holding future rate increases in the next four years to the inflation index will result in huge increases when the hold-back (financed by taxpayers via the OPG) is slated for recovery.

That could make the Debt Retirement Charge look like chump change!

—-

*  The OEB has not yet announced the TOU rates that will apply effective July 1, 2017 as a result of the passing of the “Fair Hydro Plan” Act in the Ontario Legislature.

 

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.

CanWEA wants to “reap” more “benefits” from wind energy

The wind industry association claims wind power is the “least-cost” option. The numbers tell a different story [Photo: IESO]
The past few days presented a couple of conflicting news events that made you want to scratch your head in wonderment.

First was a CTV news item June 5 headlined “Wasted green power tests China’s energy leadership”. The article stated: “In western China’s Gansu province, 43 per cent of energy from wind went unused in 2016, a phenomenon known in the energy industry as ‘curtailment.’ In the neighbouring Xinjiang region, the curtailment figure was 38 per cent and in northeast China’s Jilin province it was 30 per cent. The nationwide figure, 17 per cent, was described by Qiao’s organization as ‘shockingly high’ after increasing for several years in a row.”  It went on to say: “The problem threatens to slow China’s progress in clearing its air and controlling the greenhouse gas emissions that make it the top contributor to climate change.”

A CanWEA blog (Canadian Wind Energy Association) by Brandy Giannetta, also on June 5,  was headlined:  “Adding more wind to the Ontario grid: no problem!”

Ms. Giannetta made these claims:  

“Ontario could reliably integrate about 16,000 megawatts of wind energy (which would be able to meet more than a third of electricity demand in the scenario studied).

The additional amount of electricity generation reserves required to back up that 16,000 MW of wind (beyond the reserve capacity already in the system) would be as small as 196 megawatts, or 1.2 per cent of the wind energy capacity.

Wind energy, which is now the least-cost option for new electricity generation available in Ontario, would avoid about $49 per megawatt-hour of production costs within the electricity system if it supplied 35 per cent of Ontario’s electricity demand.”

The claims made on the blog supposedly used information from a partially taxpayer-funded, three-year study released in July 2016 co-sponsored by CanWEA and Natural Resources Canada and carried out by GE Energy Consulting, a subsidiary of General Electric. (GE’s website claims  “Our portfolio of turbines feature rated capacities from 1.7 MW to 3.8 MW (Onshore) and 6MW (Offshore), we are uniquely suited to meet the needs of a broad range of wind regimes.”)  As one would expect there is a “legal notice” (disclaimer) at the start of the report which names CanWEA as their client.

Needless to say, the report is extensive but looking at the 62-page Section 1, Summary Report, I noted the following, suggesting CanWEA suggest the small “reserve capacity” of  only 196 MW is required to back up the 11,000 MW of new wind capacity and could be integrated:

“1.11.9 Reduced Reserves from Conventional Generation    — This sensitivity examined the impact of reducing the level of spinning reserves obtained from conventional generation resources (thermal and hydro). Instead the reserves could be obtained from demand response, storage devices, or other nonconventional resources. This approach could reduce curtailment during periods where conventional generation resources are dispatched to their minimum output limits.”

The suggested CanWEA small 196-MW “reserves” being all that would be needed is a huge “stretch goal” (to use a phrase once favoured by the ruling Ontario government) and highly improbable!  It suggests dispatching existing “conventional generation resources” will allow wind to contribute a lot more of its intermittent and unreliable generation.

The same section contained a stumbling block in respect to containing further cost increases as it notes: “Production simulation results show no significant reduction in curtailment. This indicates that the system is not constrained by the commitment of conventional generation units for reserve services.”

What that means is, curtailment will remain as is, as long as ratepayers pick up the costs of constraining conventional generation. It infers industrial wind generation be treated as “base-load” with “first to the grid” rights!   Somehow, CanWEA view the expensive: “demand response, storage devices or other nonconventional resources” along with dispatch of conventional generation as an unrelated cost ratepayers must pay for unreliable and intermittent generation from industrial wind turbines, yet they claim “wind is now the least-cost option”.  This appears to be CanWEA’s contribution to the “Fair Hydro Plan” kicking wind’s integration costs to the ratepayers bills!

Now with two conflicting perspectives about IWT curtailment from China and CanWEA, let’s look at recent Ontario history sourced from IESO and Scott Luft’s Monthly Wind data.

IESO reported in their 2016 Year-End Data they dispatched 2,244,230 MWh  “representing 19 per cent of the total amount of wind energy produced in the province.So, 2% more than China’s “shockingly high” amount garnered no attention in Ontario!   Dispatched wind in 2016 added approximately $270 million to the GA for undelivered power, and no doubt caused nuclear steam-off and spilled hydro adding additional costs to the GA pot.

Scott’s files contain TX (transmission connected) and DX (distributor connected) wind generation as well as what has proven to be relatively conservative estimates of “curtailed” generation. For the first five months of the current year, curtailed wind was 1,580,629 MWh, which represented 22.3% of grid delivered and curtailed wind. It looks like the current year will easily surpass the record amount dispatched in 2016 in MWh and percentage terms.

Combining the average costs of wind generated MWh along with dispatched MWh suggests an average cost of a kWh from industrial wind turbines for the first five months of 2017 was 17.5 cents /kWh and for May 2017 was 23.4 cents /kWh.

Those costs to Ontario ratepayers makes it relatively easy to understand Ms. Giannetta’s closing paragraph on her blog where the “we” in the following sentence suggests she is clearly speaking for the members of CanWEA!

“It’s increasingly obvious that we are only beginning to reap the benefits of wind energy in Ontario.”

© Parker Gallant

What good is wind power?

April brought high winds, record curtailment of wind power, and record low consumer demand. Wasted and exported power could have supplied half the homes in Ontario for a month.

The Independent Electricity System Operator (IESO) recently released their April 2017 Monthly Market Report with information on power consumption, market pricing, exports and a host of other data.  What the April report revealed was Ontario’s average demand was low — so low that when energy analyst Scott Luft searched IESO’s records, he found the total demand for the month was a record low. He searched back to 1994, which is as far back as available.

The total demand reported by IESO for April 2017 was 9,788,614 megawatt hours (MWh): Ontario ratepayers are conserving, or we have lost many industrial clients, or both!

Another significant fact appearing on IESO’s website is that April was a pretty good month for Class A ratepayers. They consumed 21.9% of Ontario’s demand, but were only charged 11.4% of the Global Adjustment (GA), $965.7 million.  Class B ratepayers (that’s you and me, and small businesses) were charged with paying 88.6% of the GA, but represented only 78.1% of Ontario’s demand.

Cost: $160 million for revenue of $14 million

The other disturbing fact about April was our net export sales of power. That totaled 1,311,120 MWh sold at an average price of $11.14/MWh for a revenue of just $14.6 million for power that cost ratepayers $160 million. The loss of $145.4 million for the month contributed to the GA total of $965.7 million.

That 1.3 million MWh of exported power — which you paid for — could have provided power for more than 1.7 million average Ontario households at a cost of 1.11cents/kWh or just $8.35 for the month! (Assuming average use of 750 kilowatt hours/kWh of electricity for the month.)

Reviewing the IESO stats provides relatively current information but it doesn’t disclose the source of the generation, or what caused the hourly Ontario electricity price (HOEP) to be so low. Did we, for example, have to curtail wind?

Wind power: wasted. Again.

For that information I depend on my friend Scott Luft, who keeps a monthly data file which includes not only actual industrial wind generation, but also an estimate (always conservative) of curtailed wind power which we pay for but isn’t delivered to the electricity grid.  For the month of April 2017, wind power generated and curtailed (521,056 MWh) was 1,374,873 MWh, for a cost of  approximately $182 million.

Curtailed wind in April was the highest on record since we began paying for it back in September 2013!

Here’s the fatal math:

net exports of 1.3 million MWh +

the 521,000 of curtailed wind = 18.7% of total Ontario demand.

Combined, the 1,832,176 MWh at the HOEP price of $11.14/MWh and 1.11 cents/kWh and what do you get? Enough power for more than 2.4 million average households (over 50% of all households in the province) with their average need for power at a cost of only $8.35 — for the whole month.

Why doesn’t Premier Wynne simply cancel the Green Energy Act and the contracts for projects not yet built?

Either math is a problem for the Premier or she doesn’t want to admit to another “mistake”!

Parker Gallant

May 28, 2017

*Please note the GA is the can Premier Wynne is “kicking down the road” under her “Fair Hydro Plan” where she will refinance assets the Province doesn’t own by getting Ontario Power Generation to accumulate the debt for the uncoming 25% reduction in our monthly bills for the next four years. Look forward to a reappearance of the DRC (Debt Retirement Charge) but on a bigger scale in 2021!

Free power for a month for 4,000 Ontario families? Here’s how we missed that

How many homes could have benefitted from the excess power Ontario wastes, or sells off cheap?

Recently reading comments on an article related to the cost of wind power generation in Ontario, I was struck by a simple message.

The commenter had obviously visited the IESO “Data Directory”  and reviewed one item labeled Intertie Flows; he observed that IESO had exported 3,000 MWh (megawatt hours) in an hour.   He then observed that the exported power could have supplied 4,000 homes with free power for a month.  (Here’s the math: 3,000 MWh equals 3 million kWh; the “average” Ontario household consumes 750 kWh per month, so divide the 3 million by 750 and the answer is 4,000.)

This simple fact has not been picked up on by the media and yet, it is an easy way to shed more light on Premier Wynne’s “mistake” and our rising electricity rates.   The commenter also suggests going further and examining a full quarter to determine how many Ontario households would benefit from no exported power.

Excess wind and solar costs us

To be fair, while Ontario has frequently exported 3,000 MWh, we also import electricity generated elsewhere presumably at similar market prices. Those net exports or net imports (very infrequent for Ontario) are contained in the Intertie* hourly reports posted by IESO. Let’s look at the first three months of the current year.

To begin, IESO’s Monthly Market Reports for January, February and March of 2017 indicate Ontario’s “average net intertie schedule” for the first quarter of the current year totaled 2,909,000 MWh. While that was happening, industrial-scale wind turbines were generating over 3.9 million MWh in the same three months, and were also required (by IESO) to curtail (and be paid for) another 536,000 MWh.  So, the wind power developers picked up about $620 million for those three months.

To make matters worse, the average of the Hourly Ontario Electricity Price (HOEP) received (via the traded market) over those three months was only $22.72 per MWh or 2.27 cents per kWh.   That means Ontario received $66.1 million for the sale of the 2.9 million “intertie” MWh, while the average cost paid by ratepayers at 11.1 cents/kWh means the cost of those exports was almost $324 million.

Reducing power bills by 25% is peanuts—kill the contracts

Let’s go farther: if 1.3 million (28% of all residential households) of Ontario’s average ratepayers could have purchased those net exported kWh over the three months at the same price they were sold for, the 2250 kWh they consumed would have cost them $51 instead of the $250 they were billed. That would have reduced their cost of electricity by 390%. That makes Premier Wynne’s supposed 25% electricity bill reduction pale in comparison.

If the Premier really wants to lessen the burden on future ratepayer bills she should immediately cancel any wind and solar contracts that have not broken ground, and suspend any all future procurement of these unreliable and intermittent generation sources.

 

*Intertie is defined as an interconnection permitting passage of current between two or more utility systems.

Wynne spin and the Fair Hydro Plan–Part 2

Part 1 in this series featured Premier Wynne’s assertion that “In the past few years we’ve invested more than $50 billion in electricity infrastructure — new dams in the south, new towers in the north, $13 billion to refurbish nuclear power plants alone and billions more to ensure new transmission and distribution lines everywhere.”

She is obviously spinning tales! Those “new dams in the south” are nowhere to be seen unless she is talking about “Big Becky” the tunnel under Niagara Falls at a cost of $1.5 billion ($600 million over budget) and the “new towers” in the north are presumably the industrial wind turbines (IWT) erected on the shores of Lake Superior where they despoil the landscape made famous by the Group of Seven.   And most of those “new transmission and distribution lines” were added to accommodate wind and solar developments, not to improve the existing electricity infrastructure!

The Premier’s spin about bringing bills down by 25% and her declaration “This is the largest cut to electricity rates in the history of Ontario” ignored the facts when she references “the elephant in the room” claiming it took “too long to come to grips with” how costs had increased.

The Premier claiming the “largest cut to electricity rates” should have admitted to how much rates have increased, but that admission would have failed to win back any of her former supporters. The “elephant” was the 138% increase Ontario’s average residential ratepayer has seen in time-of-use rates since May 1, 2008 in just the raw commodity (electricity) cost — that increased from $420 a year to $1,002.   The $582.00 increase is exclusive of the provincial portion (8%) of the HST!  The cost to small and medium-sized businesses was naturally a lot worse, as their consumption is much higher.

The Premier has already removed the provincial tax portion on out bills so the remaining reduction will reduce the average residential bill by 17% or $170 on the commodity cost for a monthly drop of $14. That’s almost the same amount as the Wynne government suggests the “cap and trade” tax will cost us!

How did we get to a 138% increase?

Let’s look at where that 138% increase came from. Based on the Ontario Energy Board’s Yearbook of Distributors for 2008* and 2015** the “cost of power” increased from $9.031 billion to $13.971 billion, an increase of $4.940 billion despite a reduction in consumption of 4.2 terawatts (enough to supply 465,000 average households).  As well, “average” consumption fell while the number of customers increased by 362,000!

That additional annual cost for less power of $4.940 billion was the product of the GEA passage in early 2009 which resulted in contracted developers being paid above market prices for intermittent, unreliable wind and solar generation requiring back-up from new gas plants.

A prior article dealing with 2016 costs for wind, solar, gas and conservation was based on information from IESO that allowed me to estimate an annual cost of $4.123 billion made up of: wind-$1.566 billion, solar-$1.493 billion, gas back-up-$734 million and conservation-$300 million.  Not included was an estimate for the low-income support program or OESP (Ontario Electricity Support Program) which was included in the recent budget for the 2016/2017 year as $400 million.  Also not included are the costs of spilled hydro and steamed-off nuclear (about 5 TWh or enough to power 550,000 average households) which would add another $300 million bringing the estimate to $4.823 billion and close to the 2008/2015 increase of $4.940 in the commodity cost***.

The next article, Part 3 in this series, will examine Finance Minister, Sousa’s recent budget. We will do our best to identify the budgeted costs of the “Fair Hydro Plan” as they make their appearance in the forecasts.   Just how much are the Premier Wynne led government kicking “down the road” for future generations to pay?

 

* Note that both the cost of power and the consumption information in the OEB’s Yearbook do not include: First Nation Distributors, Hydro One Remotes, and Direct Connections to the Transmission Grid

** The OEB has not yet posted the 2016 information.

*** The Yearbook for the 2008/2015 comparison indicates distribution costs increased $767 million in this time frame which was a 21.6% increase and slightly higher than the cost of living increases.

April winds blow in high wind power costs

How badly were ratepayers hit? Millions upon millions for power produced out of phase with demand…

The Independent Electricity System Operator or IESO’s 18 month outlook report uses theirMethodology to Perform Long Term Assessments” to forecast what industrial wind turbines (IWT) are likely to generate as a percentage of their rated capacity.

The Methodology description follows.

“Monthly Wind Capacity Contribution (WCC) values are used to forecast the contribution from wind generators. WCC values in percentage of installed capacity are determined from actual historic median wind generator contribution over the last 10 years at the top 5 contiguous demand hours of the day for each winter and summer season, or shoulder period month. The top 5 contiguous demand hours are determined by the frequency of demand peak occurrences over the last 12 months.”

 The most recent 18-month outlook forecast wind production at an average (capacity 4,000 MW growing to 4,500 MW) over 12 months at 22.2%, which is well under the assumed 29-30 % capacity claimed by wind developers. For the month of April, IESO forecast wind generation at 33.2% of capacity.

April 2017 has now passed; my friend Scott Luft has posted the actual generation and estimated the curtailed generation produced by Ontario’s contracted IWT.   For April, IESO reported grid- and distribution-connected IWT generated almost 703,000 megawatt hours (MWh), or approximately 24% of their generation capacity. Scott also estimated they curtailed 521,000 MWh or 18 % of generation capacity.

So, actual generation could have been 42% of rated capacity as a result of Ontario’s very windy month of April 2017, but Ontario’s demand for power wasn’t sufficient to absorb it! April is typically a “shoulder” month with low demand, but at the same time it is a high generation month for wind turbines.

How badly did Ontario’s ratepayers get hit? In April, they paid the costs to pay wind developers – that doesn’t include the cost of back-up from gas plants or spilled or steamed off emissions-free hydro and nuclear or losses on exported surpluses.

Wind cost=22.9 cents per kWh

For the 703,000 MWh, the cost* of grid accepted generation at $140/MWh was $98.4 million and the cost of the “curtailed” generation at $120/MWh was $62.5 million making the total cost of wind for the month of April $160.9 million.   That translates to a cost per MWh of grid accepted wind of $229.50 or 22.9 cents per kWh.

Despite clear evidence that wind turbines fail to provide competitively priced electricity when it is actually needed, the Premier Wynne-led government continues to allow more capacity to be added instead of killing the Green Energy Act and cancelling contracts that have not commenced installation.

* Most wind contracts are priced at 13.5 cents/kilowatt (kWh) and the contracts include a cost of living (COL) annual increase to a maximum of 20% so the current cost is expected to be in the range of $140/MWh or 14cents/kWh.