Ka-ching! Windy days blow away ratepayer dollars

Consumers pay: wind power is surplus, and expensive — emissions-free power is wasted

Wind power on two recent windy days cost Ontario electricity customers three times the current rate … and the surplus meant emissions-free hydro and nuclear was wasted

 

A simple Google search “wind power is cheapest energy” will generate 1.2 million hits.

If you search “wind power is most expensive energy” you get 2.1 million hits.

Two days last week in Ontario are real-world proof of the cost of wind power, no matter what the government or wind power industry spin tells you. Tuesday, December 5th and Wednesday December 6th were two very windy days, an excellent opportunity to examine both the power generation from industrial wind turbines in Ontario and their delivered cost of power to the grid.

The numbers for those two days:

$$$   IESO forecasts indicated that wind could have delivered 23.8% (177,100 MWh) of total Ontario demand (755,200 MWh) via the 4,200 MW of grid-connected wind capacity.

But wind turbines have a bad habit of generating power when it’s not needed (middle of the night, spring and fall) so the intermittent power must often be curtailed (constrained/wasted but paid for).  It was!

$$$   The IESO curtailed 41.8% of their forecast generation meaning 74,000 MWh were not used!

Via the contracts in place with wind power companies, IESO is obliged to pay for both delivered and curtailed power at prices for grid-accepted power at $135/MWh and $120/MWh for curtailed power.

$$$   Quick math: the cost for grid-accepted wind on those two days meant Ontario ratepayers got charged approximately $22.8 million or $221.14/MWh for grid-accepted wind. That means it cost ratepayers 22.11cents/kWh (kilowatt hour), well above what the average time-of-use rates would be for the average Ontario ratepayer!  The cost of the delivered wind power for those two days was almost three times the current levied* “average” cost of 8.22 cents/kWh, and 3.7 times the off-peak cost of 5.9 cents/kWh.

There’s more (sorry): be assured IESO instructed OPG to spill water over the hydro dams and Bruce Nuclear to steam off nuclear power — so power from our two reliable, emissions-free sources of power generation was also wasted.   OPG and Bruce will be paid for that waste and the cost will be added to our bills.  At the same time gas plants (backing up wind and solar) were being paid for idling.

Those two December days also saw sales of surplus power of 93,700 MWh to our neighbours in New York, Michigan, and others for pennies of the actual cost. In all probability, we recovered around 15% of their generation costs meaning, we bit the bullet for another $10/11 million.

Total: too much

Just the cost of the curtailed and grid-accepted wind and the losses on our surplus exports for those two days was $32/33 million for absolutely no benefit to any of us ratepayers. If every day of the year was like those two days last week, Ontario’s ratepayers would be shelling out over $6 billion annually, due to the abysmal planning and management of the electricity sector by the current Ontario government.

Imagine how far $6 billion would go to improve our health care system.

Parker Gallant,

December 10, 2017

 

* This price reflects the 17% deferral under the Fair Hydro Act.

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Ontario ratepayers gored at Goreway

What’s up with the big consumer rip-off Mike Crawley has ably reported on? (ref: http://www.cbc.ca/news/canada/toronto/goreway-power-station-investigation-1.4433061)

The report that Crawley relies up on was issued by a secondary watchdog agency within Ontario’s power system called the Market Surveillance Panel (MSP). The MSP reports to the OEB and relies on a research department within the IESO.

Here is the report: https://www.oeb.ca/sites/default/files/MSP_Report_Goreway_201709.pdf

As Crawley notes, the report explains in detail how Ontario ratepayers have been getting ripped off by a large gas-fired power generator located near Bramalea called Goreway Station Partnership (Goreway).

The current owners are the Japanese firms Toyota Tsusho Corporation and JERA Co. Inc., each with 50%.

The dollar amounts of the estimated ripoff are large. The MSP estimates that over a three-year period starting when the plant went online in June 2009, Goreway was paid at least $89 million more than could be justified. Some secret amount plus a $10 million fine was paid by Goreway over the course of subsequent investigations. In addition, in a parallel investigation the MSP found that “the Panel believes that a substantial portion of the $11.2 million in Ramping CMSC payments received by Goreway during shut-down over the course of the Investigation Period was the result of gaming.”

In addition, in another parallel investigation the MSP found that Goreway had benefitted from approximately $5.6 million in what the panel called “anomalous top-up payments” under a payment program called the Day Ahead Commitment Process that were “unwarranted”.

More troubling than the dollar amounts of the particular Goreway example, the investigation has pointed to vulnerabilities in the power situation that make it likely that other related ripoffs have occurred.

Goreway is not the only example. Gaming of those CMSC payments has proven to be a persistent problem for consumers, with both generators and large industrial loads exploiting gaps in the system to capture excess payments.

As noted by the MSP in a December 2016 report, the MSP has completed other investigations prior to Goreway that found gaming to have occurred. The first one concerned a gas-fired generating station located near Sarnia, Greenfield Energy Centre. Another investigation identified two dispatchable loads both owned by Abitibi-Bowater. Power importers and exporters have also been found to be gaming the system. (https://www.oeb.ca/oeb/_Documents/MSP/MSP_CMSC_Report_201612.pdf)

A key problem that has made the power system vulnerable to gaming like that pursued by Goreway is a flaw in Ontario’s market design arising from decisions taken in 1999 to maintain Ontario’s long-standing practice of pricing power equally for consumer irrespective of where they take power off the Ontario grid. (I voted against the uniform price market design bullshit which requires the 2-schedule system in favour of nodal pricing.)

The problem with this concept is that transmission constraints that are inherent to a grid like Ontario’s mean that increments or decrements of power injected or withdrawn from the grid do not have equivalent value at all locations. To accommodate the reality of transmission constraints, the IESO operates a two-schedule market. Under this workaround, consumers are billed on the basis of a theoretical unconstrained market plus top-up payments, whereas generators and dispatchable loads that are required to operate outside of the parameters of that unconstrained market in order to manage constraints get paid various incremental amounts, primarily Congestion Management Settlement Credits, often called CMSC payments. Other top-up payments available to generators are Generator Cost Guarantee (GCG) program and the Day Ahead Commitment Process
(DACP), both of which the MCP found Goreway gamed.

The MSP has warned for years about the market design flaws that Goreway
exploited:

“The Panel has, on more than one occasion, recommended that Ramping CMSC paid during shutdown be eliminated…Proposed changes to the rules that govern Ramping CMSC during shut-down have been brought forward by the IESO from time to time, and been defeated. In May, 2013, the IESO launched a further stakeholder engagement that included the issue of eliminating Ramping CMSC during shut-down. Goreway made numerous submissions on the issue, first opposing its inclusion in the
process at all, then questioning its materiality and suggesting that the Panel’s 2011 Monitoring Document had adequately dealt with any problem…After several postponements, the Market Rule amendment took effect in December 2016.”

The new rule appears vulnerable to similar abuses as the old rule.

On the topic of the RT-GCG :

“Among other things, the Panel has estimated that payments for O&M have exceeded a quarter of a billion dollars since 2010, with little or no apparent incremental reliability benefit…The Panel
acknowledges that the IESO is considering a longer-term solution in the form of an enhanced intra-day unit commitment program that would replace the RT-GCG program. However, by the IESO’s own admission that solution is many years away and it remains unclear to the Panel why changes to the program that have the potential to save millions in costs should not be made immediately. Goreway stands as a clear example of how generators are able to exploit the GCG regime and of how difficult and time-consuming it is to address. The Panel is concerned that the same situation remains in place today.”

The IESO Board of Directors has some serious explaining to do to justify why these problems have gone unsolved for so long.

The basic chronology of events also indicates that something rotten is up at the OEB:

The MSP initiated various gaming investigations of Goreway in 2011 and 2012.

The MSP found the gaming started in 2009, immediately after the plant started operations.

The MSP report was complete as of December 2016, but MSP chairman’s cover letter is dated Oct. 2. What? The chair of the MSP is a very well respected energy lawyer. It doesn’t seem reasonable to me that he would sit on his own report. Could the OEB have ordered a revised date on the cover letter to avoid blame for
sitting on the report?

The OEB didn’t release the report until November. What’s that
about?

Parker Gallant and Tom Adams

Wind waste should worry Ontario ratepayers

Ontario’s electricity ratepayers paid more than $500 million in 2017 for nothing

With only one month left in the current year, the bad news on the electricity sector keeps getting worse.

Well before the official sources such as IESO report on how much power industrial wind turbines generated and how much was curtailed (constrained, or paid for but not added to the power grid), my friend Scott Luft has published his estimates for both the former and the latter for the month of November.

As he reports (conservatively), curtailed wind in November was over 422,000 megawatt hours (MWh)  that could have supplied 562,000 average Ontario households with free power for the month.

Instead, no one got free power; the cost of the 422,000 MWh of undelivered wind power to Ontario ratepayers was $120/MWh.  That $50.7-million cost for the month was simply added to the costs of the electricity bills ratepayers will be obliged to pay, while some of it will deferred to the future as part of the Fair Hydro Plan.

Somebody’s enjoying cheap power — not you  

No doubt the wasted wind power presented itself when it wasn’t needed; if it had been accepted into the grid, that extra power could have caused blackouts or brownouts, so it was curtailed.  At the same time, much of the grid-accepted wind was exported to our neighbours in New York, Michigan and elsewhere, at discount prices!  Curtailed wind for November 2017 compared to 2016 was almost 55% higher.

How bad is it? Let’s review the first 11 months of the current year, compared to 2016.

So far in 2017, curtailed wind is about 786,000 MWh higher (+33.8%) at just over 3.1million MWh.  The cost of all the curtailed wind so far in 2017 is approximately $373.6 million, or $94.3 million more than 2016 costs.

And wind wasn’t the only source of power generation constrained. When Ontario Power Group reported their third Quarter (September 30, 2017) results they said this:

“Baseload generation supply surplus in Ontario continued to be prevalent in 2017, resulting in forgone hydroelectric generation for OPG of 1.1 TWh*: and 4.5 TWh in the three and nine month periods ended September 30, 2017, respectively, compared to 0.5 TWh and 3.9 TWh during the corresponding periods in 2016.”  

Translation: ratepayers will pick up the approximately $165 million cost of that waste via their electricity bills.

Not only are we curtailing wind and spilling hydro, but we also steamed off nuclear power generated by Bruce Nuclear at the same time we pay for idling gas plants to back up intermittent wind and solar power generation.

Intermittent wind and solar cost us

The cost of “greening” Ontario with unreliable and intermittent wind and solar keeps climbing, no matter what their proponents or politicians say.  As ratepayers and taxpayers we should reflect on why 25% of the waste of the noted 7.6 TWh of undelivered power and its cost of $539 million (so far this year) is being deferred via the Fair Hydro Plan.  And at the same time, we should recognize that we have experienced the worst possible planning in the Energy Ministry in the history of the province.

The energy sector in Ontario needs real planning by experts that will provide real value for money and save ratepayers from paying more than $500 million a year … for nothing!

~

*  1 (one) terawatt is equivalent to 1 billion kWh

The secret is out: wind power costs plenty

This past weekend’s stats are not kind to the wind power cheerleaders

The wind power trade association, the Canadian Wind Energy Association or CanWEA, uses every opportunity to push for more wind power development, and often uses “selective facts” to promote their claims.   One of the latest relied on investment firm Lazard by stating:  “A December 2016 report from the U.S. investment firm Lazard found that wind energy is the lowest cost option for new supply in the United States without any subsidies. Wind energy costs continue to fall, offering an attractive electricity source to provinces seeking to clean and diversify their electricity systems.”

That statement is included in CanWEA’s recently released brochure “The Secret is Out, Wind is in”.

Had the unknown author(s) at CanWEA simply looked at the Ontario Energy Board’s (OEB) semi-annual Regulated Price Plan they would have noted Table 2 on page 21 of the April 20, 2017 report that the cost of a wind-generated kilowatt hour (kWh) in Ontario is shown as 17.3 cents ($178/MWh), as the cost of “curtailed” (not added to the grid) wind is also included as a cost input.

Had the author(s) also simply looked at IESO data they might also have noticed that maybe wind energy costs are not continuing to fall!   Saturday, November 25th was an example: it was a very windy day in Ontario with an especially windy night. Unfortunately for the wind power cheerleaders, our demand for power from 12 AM until 7 or 8 AM was relatively low, but the wind was really blowing. That meant the 4,200+ MW of wind capacity were running at 90% (approximately) of their capacity, at the same time as Ontario’s demand for power was hovering mid-way between 11,000 and 12,000 MW. That’s very close to what our nuclear plants can provide on their own without help from other generation sources.

As a result, IESO ordered wind’s curtailment, hydro’s spilling and nuclear steam-off. At the same time, they were exporting whatever the market would take.

So, all together on November 25, the IESO curtailed 35,600 MWh of grid-connected wind and accepted 30,600 MWh into the grid, while scrambling to prevent brownouts or blackouts by exporting about 50,000 MWh over the day.

Industrial-scale wind power developers get paid $120/MWh for curtailed wind and $135 MWh for grid-accepted wind.

Quick math on all that means:

Ontario’s ratepayers picked up the costs of almost $8.6 million for curtailed and grid-accepted wind power produced when it wasn’t needed.

The cost of the grid-accepted wind (30,600 MWh) was therefore just over $280/MWh or 28 cents per kWh or, 10.7 cents more than the OEB reported back in April. On top of that, we ratepayers also ate the costs of spilled hydro, steamed off nuclear and the losses on the 50,000 MWh exported at a price close to zero.

Now if that author or authors who cranked out the latest CanWEA “selective facts” brochure were brutally honest, they would immediately change the title to:

“The Secret is out: wind is horribly expensive, intermittent and unreliable!”

Wind power peaks match power use lows

Once again, the numbers show: wind power shows up when it’s not needed, adding to consumers’ electricity bills

The IESO/Independent Electricity System Operator just released their October 2017 Monthly Market Report.

As usual, it was full of bad news.

Ontario power consumption was down 2.6% from October 2016 and was the third lowest consumption month of the 10 so far in 2017.

October 2017 was also the fourth highest month for curtailed wind* in 2017 with 37.9% (481,243MWh [megawatt hours]) curtailed, compared to May’s record curtailment of 49.3%, April’s of 42.6% and June’s curtailment of 38.1%.  History has shown wind’s generation levels in Ontario tend to always be higher in the Spring and Fall months, so this was no surprise.  What it does underscore, again, is that the months of lowest power consumption line up with wind power’s best days on the job. Power when its not needed!  Curtailment of wind in October cost Ontario ratepayers about $58 million.

On top of the wind power curtailment, Ontario also was busy exporting surplus power to our neighbours in New York, Michigan, etc. providing them with cheap power subsidized by the ratepayers of Ontario.  Net exports (exports minus imports) averaged 1,438 MW per hour so 1,069,872 MWh were delivered elsewhere.  Based on the record Global Adjustment (GA) for the month of $125.63 and the very low HOEP (hourly Ontario electricity price) of $8.75 MWh (0.088 cents.kWh) the cost to Ontario ratepayers; after recovery of the HOEP, transmission and congestion charges was approximately $107 million.

In summary, Ontario ratepayers picked up costs of curtailed wind of $58 million plus lost revenue from exports of $107 million for 1,550,000 MWh (rounded) generation of no value to them.  Those 1,550,000 MWh were enough power to have supplied 172,000 average households with power for a full year or almost 2.1 million average households with power for the full month of October.

No doubt we also spilled cheap clean hydro and steamed off emissions free nuclear while paying for idling gas plants, at the ready; to ensure power when clouds passed over solar panels and the wind refused to blow.

This all adds up to very Un-Fair Hydro Plan!

Parker Gallant

November 23, 2017

Note: “constrained” means the power was not needed so not added to the grid … but paid for anyway.

* Thanks to Scott Luft for his invaluable data!

Wind: worst value for Ontario consumers

The wind power lobby continues to claim power from wind is great value and contributes to “affordable” electricity bills. But the facts of October tell a different story.

Ontario turbines near Comber: not helping

Right after Ontario Energy Minister Glenn Thibeault released his version of the LTEP (Long-Term Energy Plan), “Delivering Fairness and Choice,” CanWEA (the Canadian Wind Energy Association) issued a news release with the following statement:  “New wind energy provides the best value for consumers to meet growing demand for affordable non-emitting electricity.”

To back up that claim, CanWEA president Robert Hornung had this to say: Ontario’s harnessing of wind power can help fight climate change while keeping electricity costs low. Without new wind energy, costs to electricity customers and carbon emissions will both continue to rise.”

Brandy Giannetta, CanWEA’s Regional Director for Ontario also had a quote: “CanWEA supports competitive, market-based approaches to providing flexible, clean, and low-cost energy supply, to meet Ontarians’ changing needs.”

The expression “I wish I had a dollar for every time I heard that,” immediately comes to mind but here’s the truth: industrial-scale wind turbines have failed miserably in producing anything resembling “low-cost” energy and is instead one of the reasons consumers’ electricity bills “will continue to rise”!

If Hornung and Giannetta had waited just five days, they could have visited my friend Scott Luft’s spreadsheet and noticed how wind performed in October.   They would have discovered it was pretty dismal: 37.9% of possible grid-connected (Tx) wind power generation was curtailed (paid for but not used).  

The IESO (Independent Electricity System Operator) was concerned that too much wind power generation could cause repercussions such as a blackout or brownout, so 481,243 MWh (megawatt hours) were not accepted throughout the month. However, Ontario’s ratepayers will still pay for those undelivered MWh at a cost of $120 each, meaning the GA (global adjustment) increased by $57.7 million (481,243 MWh X $120. = $ $57,749,160).

Add that $57.7 million to the 787,627 MWh of the Tx  generation accepted into the grid, the total costs rise to $165 million or $208.32/MWh — the equivalent of 20.8 cents/kWh (kilowatt hour).   (That calculation is 787,627 X $135/MWh = $106,329,645 + $57,749,160 = $164,978,805.  Simply divide the latter amount by the Tx accepted generation and you get the $208.32 MWh or the 20.8 cents/kWh.)

It is important to note that the costs calculated and reported here do not include the transmission charge, delivery charge, regulatory charge or the HST.  Additionally, another 158,609 MWh of wind were delivered to local distribution companies (Dx) at a cost of $135/MWh, bringing IWT costs for the month to $185 million — for power we didn’t need.  No doubt during the month we were also steaming off clean nuclear power from Bruce Nuclear and spilling clean hydro power from OPG’s hydro generation units. In both cases the cost of the steamed off nuclear and the spilled hydro will be added to the Global Adjustment pot and find its way to our future bills.

I hope Mr. Hornung and Ms Giannetta will rethink their claims and simply admit wind power generation is high-cost, and frequently displaces low-cost non-emitting nuclear and hydro power.

You can’t hide October’s facts!

 

Ontario’s fond hopes for wind power dashed by reality

Ontario’s energy minister will likely crow about the $146 million in revenue from selling surplus power recently … too bad it cost consumers $892 million

 If you visit the Canadian Wind Energy Association (CanWEA) website, the first page has the message:  “Wind is delivering clean, reliable and low-cost electricity”.  Anyone following my recent postings on how wind has either delivered almost no power or way too much, may have a different view.  You can also find this homily in the Energy Ministry’s just released 2017 Long-Term Electricity Plan, Delivering Fairness and Choice: “Wind power is also being produced more efficiently,” which distorts the truth!

Recent facts:

One day of wind power

Tuesday October 24, 2017 was a day when the wind was blowing strongly for 24 hours. IESO had forecast the approximately 4,220 MW of Tx (transmission-connected) capacity could have delivered 88,200 MWh of generation, meaning they would operate at over 86% of capacity.  Using that capacity value for the 580 MW of Dx (distributor-connected) turbines, another 12,080 MW were no doubt being generated at the same time — that meant almost 30% of Ontario’s total demand could have been supplied by wind.

As it stands, however, Ontario’s demand suggested we didn’t need all that power so IESO directed Tx connected turbine generators to curtail over 52,000 MWh. So, that same day, Ontario exported 40,300 MWh of free power to New York and Michigan, 11,700 MWh less than IESO curtailed.

The delivered and curtailed (paid for but not delivered) wind power on October 24th that wasn’t needed cost Ontario ratepayers $13.5 million or $280.60/MWh (28.1 cents/kWh).  If that happened every day the annual cost to Ontario’s ratepayers would be in excess of $5 billion.

Nine months of wind power

Let’s look at the nine months starting January 1, 2017 to the end of September and see what wind has contributed — and cost — Ontario ratepayers.  In the first nine months of 2017, industrial wind turbines could have produced about 9,820,000 megawatt hours (MWh) from Tx and Dx connected capacity — if curtailed generation was included! IESO however, forced curtailment of over 2,209,000* megawatt hours (MWh) or 22.5% of forecast generation to avoid compromising our grid and causing blackouts or brownouts.  Ontario ratepayers picked up the cost of curtailed power at $120 per/MWh costing them more than $265 million. The grid-accepted wind (7,620,395 MWh) cost; at $135/MWh added to the cost of curtailed wind brought the cost to ratepayers to almost $1.3 billion and more than $170/MWh (17cents/kWh). We would note when wind generation is high, IESO frequently instructs OPG to “spill water” and Bruce Nuclear to “steam off” power. Ratepayers also pick up those costs.

Nine months of (net) exports

From January 1, 2017 to September 30, 2017, Ontario’s net exports (exports minus imports) were 9,058,008 MWh. Those net exports were sold at somewhere close to the HOEP or hourly Ontario electricity price which to the end of September averaged $16.15MWh, so net exports sales generated about $146 million in revenue.  The sale price does not include the GA or Global Adjustment (the difference between contracted or regulated rates and the HOEP), meaning Ontario’s ratepayers picked up the average GA costs to the end of September.  The GA averaged $98.48/MWh for the first nine months of the current year, so the 9,058,008 MWh of net exports cost Ontario’s ratepayers just over $892 million dollars!   That is the equivalent of almost $200 per average residential ratepayer.

And the year isn’t over.

To put those net exports in context, Ontario’s net exports represented slightly over 92% of both the curtailed and delivered wind generation in the first nine months of the year, yet we were burdened with the cost of $892 million dollars for them, along with the costs of wind curtailment of $265 million.

The foregoing makes CanWEA’s claim of “low-cost electricity” and the Energy Ministry’s comments about wind power “being produced more efficiently” look to be simply fond hopes!

 

 

* My thanks to Scott Luft for his ability to generate reliable wind data using IESO’s files.