Weekends or weekdays: wind is a waste

October 20, 2017

Proof of the need to repeal the Unfair Green Energy Act

Tuesday October 17, 2017 was a typical Ontario fall weekday with electricity demand relatively low.

Total Ontario demand for power was slightly over 335,000* MWh for the whole day, peaking at hour 19 (7 PM) at 16,318 MW, according to the IESO’s Daily Market Summary.

That hour has significance as during weekdays, it signals the time when off-peak hours start. That Tuesday, it also was the hour when the Hourly Ontario Electricity Price (HOEP) reached its high for the day, getting all the way up to $5.01/MWh or ½ cent per kWh.

All through the day the wind was blowing. Based on the IESO’s Generator Report and Capability and their “wind generation forecast” it could have produced just over 57,000 MWh — that could have met 17% of Ontario’s demand.  IESO only accepted 20,900 MWh, however, and the other 36,100 MWh were curtailed or cut back.

The collective cost of the grid-delivered and curtailed wind generation over the 24 hours was almost $7.2 million, making the cost of the grid-accepted wind $344.50/MWh or 34 cents/kWh. Also because of a surplus of generated power, Ontario exported 38,200 MWh (almost double what IESO accepted from wind generators), principally to New York and Michigan — they had to pay them an average of $1.13 per MWh to take it.

All this makes it clear: Ontario’s electricity ratepayers don’t need any of wind’s intermittent and unreliable power, but are forced to pay for it anyway. To make matters worse, that power we subsidize gets delivered to our neighbours at negative prices. Those costs wind up on our electricity bills, too.

It’s time for Premier Wynne to stop the bleeding and kill the Unfair Green Energy Act.


* Numbers are rounded


Wynne government hydro discount means larger costs looming

IESO Connecting Today. Powering Tomorrow.

…and racking debt up for tomorrow, too

October 2, 2017

The Wynne government’s (apparent) 25% reduction in electricity rates for Class B ratepayers (ordinary folks, not huge corporations and businesses) under the Fair Hydro Act might have resulted in increased power consumption … but it doesn’t appear to have had that effect.  Should reduced demand for power continue in Ontario, the big discount will simply drive up the debt to be accumulated over the next ten years of the deferral (refinancing existing assets) under the act.

The Independent Electricity System Operator or IESO just released their Monthly Market Report for August 2017. Compared to the August 2016 report, overall consumption was down from 13,113,357 MWh to 11,350,008 MWh or 1,763,349 MWh (-13.4%). That’s enough to power about 200,000 average households for a year.

When one looks at the breakout between Class A and Class B ratepayers, however, IESO reports consumption by Class A ratepayers increased from 2.373 TWh (terawatt hours) in 2016 to 3.230 TWh in 2017 —  36.1% (.857 TWh).  Class B ratepayers consumed 22.9% less (2.515 TWh) reducing consumption from 10.962 TWh to 8.447 TWh.*

The lower consumption by Class B ratepayers was partially influenced by a slightly milder August in 2017; however, IESO notes in the recently released 18-Month Outlook “Weather-corrected demand was a similar 11.5 TWh and represents an all-time low for the month.”

Now looking at the Class A consumption, the combined rate (Global Adjustment + HOEP [hourly Ontario energy price]) dropped from $75.05/MWh to $70.53/MWh (-6%) from 2016 to 2017, and that ratepayer class appears to have taken advantage of the drop. Some of the increase was no doubt due to  an expansion of Class A ratepayers following a change in who qualifies under the Industrial Conservation Initiative program. That allowed companies with lower consumption to join the Class A group.  Energy Minister, Glenn Thibeault dropped the Class A attributes from peak consumption of 3 MWh to 1 MWh and then finally to 500 kWh* in an effort to mollify the numerous medium-sized companies and associations who lobbied hard to get a lower electricity price.

Costs are up for regular folks, down for business

The weighted average (GA+HOEP) cost for “B” class ratepayers is up $15.47/MWh year over year, but down for class A by $4.52/MWh. Costs (GA +HOEP) in August for B class ratepayers was $118.37/MWh and those costs for A class ratepayers were $70.53/MWh.  The additional costs of $47.84/MWh that B class ratepayers are responsible for was 67.8% higher than A class costs in August. Under the Fair Hydro Act, 17%** of the B class costs will be deferred and IESO tracks those under a “Variance Account”.  The latter increased in August by $210.8 million to reach $605.5 million for just the first two months.  The monthly variance is being refinanced cumulatively and will come back to haunt ratepayers and whoever is the government, in 10 years

According to my friend Scott Luft, wind power generation in August from grid- and distribution-connected industrial wind turbines (IWTs) produced 597,537 MWh. Another 78,265 MWh were curtailed, or paid for but not added to the grid.

All-in, the cost of IWTs in August was approximately $90 million and represented 79.7 % of our export of surplus power of 847,416 MWh to our neighbours in New York, Michigan and elsewhere.

While we don’t know specifically the source of the power included in the grid, if all the wind generation was exported, we were paid about $17/MWh or around $10 million, meaning a loss of $80 million. Without wind power generation, the August “Variance Account” addition could have been lower by that $80 million.

The future: more costs

So, despite “B” Class ratepayers experiencing the “benefits” of the Fair Hydro Plan, instead they reduced their consumption by 22.9%.


Maybe they are concerned about what will happen in 10 years’ time, when they will be billed for that Variance Account the Financial Accountability Office said would be a minimum of $45 billion and could balloon to as much as $93 billion.


* The difference of 165,000 MWh between the Market Report and the breakout is presumably due to line losses billed to each ratepayer class and the 22.9% drop is no doubt related to the expanded ICI

** 8% of the 25% reduction was due to the canceling of the 8% provincial portion of the HST.


And the winner (loser) is … Ontario!

Ontario ratepayers well ahead in international competition to see who pays more for nothing.

Ontario turbines near Comber: money for nothing

A recent article appearing in Energy Voice was all about the costs of “constraint” payments to onshore industrial wind developments in Scotland.  It started with the following bad news:

“According to figures received by Energy Voice, the cost of paying wind farm operators to power down in order to prevent the generation of excess energy is stacking up with more than £300million* paid out since 2010.”  (£300 million at the current exchange rate is equal to about CAD $500 million. ) 

What Scotland refers to as “constrained” Ontario calls “curtailed,” but they mean exactly the same thing. Ontario didn’t start constraining/curtailing generation until mid-September 2013, or almost three full years after the article’s reference date for Scotland. Curtailment prevents the grid from breaking down and causing blackout or brownouts.

The article from Energy Voice goes on: “In 2016 alone, Scottish onshore wind farms received £69million in constraint payments for limiting 1,048,890MWh worth of energy”.

Ontario in 2016, curtailed 2,327,228 MWh (megawatt hours). That figure comes from Scott Luft who uses data supplied by IESO (Independent Electricity System Operator) for grid-connected wind power projects and conservatively estimates curtailed wind for distributor-connected turbines to compile the information.

What that means: in 2016 it cost Ontario’s ratepayers CAD $$279.2 million** versus £69 million (CAD equivalent $115.2 million) for Scottish ratepayers. So, Ontario easily beat Scotland in both the amount of constrained wind generation as well as the subsidy cost for ratepayers who in both cases paid handsomely for the non-delivery of power!

The article went on to note: “By August 2017, the bill had already reached in excess of £55million in payments for 800,000MWh”!

Once again Ontario’s ratepayers easily took the subsidy title by curtailing 2.1 million MWh in the first eight months of the current year, coughing up over $252.5 million Canadian versus the equivalent of CAD $92 million by Scottish ratepayers.

In fact, since September 2013, Ontario has curtailed about 5.5 million MWh and ratepayers picked up subsidy costs of over $660 million.

Ratepayers in both Ontario and Scotland are victims of government mismanagement and wind power industry propaganda, and are paying to subsidize the intermittent and unreliable generation of electricity by industrial wind turbines.

(C) Parker Gallant

* One British Pound is currently equal to approximately CAD $1.67.

**Industrial wind generators are strongly rumored to be paid $120 per MWh for curtailed generation.

Wind power: if this is “reliable,” get ready for lights out!

The wind power developers’ lobbyist/trade association is proposing a tripling of Ontario’s wind turbine capacity. What would that look like?

A June 5, 2017 article by Brandy Giannetta, the Ontario Regional Director at the Canadian Wind Energy Association (CanWEA), states that “Ontario could reliably integrate 16,000 megawatts of wind energy” . Later in the article, she says wind power would be “low-cost, emission-free and increasingly reliable”.

The 16,000 MW of wind capacity suggested in the article would more than triple the current 4,000 MW of grid-connected industrial wind turbines (IWT) and the 600 MW of embedded (approximately) capacity.   CanWEA just recently repeated this suggestion in a Tweet, so apparently the lobbyist/trade association thinks it’s a real idea.

Let’s see how “reliable” wind power is, right now.

It is important to look at the pattern of wind power generation.  In the four hours from 10 AM to 2 PM on September 12th , the grid-connected industrial wind turbine (IWT) capacity of 4,000 MW generated almost 340 MWh, according to the IESO’s Generator Output and Capability report of September 12, 2017.   During those four hours, Ontario demand totaled about 58,500 MW, so the 340 MWh delivered by wind turbines provided .58% of Ontario’s power demand — yet they represent 10.9% of Ontario’s grid-connected capacity of 36.563 MW!

It is hard to fathom how delivering just over ½ % of Ontario’s demand can be vaguely considered as reliable.   The full CanWEA article suggests tripling the current contracted industrial wind so that .58% delivered during those four hours would have generated 1.7% of demand over the same four hours.   Connecting the additional 10,400 MW to the grid would mean major expenditures (and by that I mean, billions of dollars) on the transmission system, while neglecting spending on truly reliable generation and the various parts of the transmission system that have been neglected.

It would also cost ratepayers for additional reliable back-up generation.

The CanWEA article also suggests wind at the 16,000 MW level would avoid “about $49 per megawatt-hour of production costs” if it supplied 35% of Ontario’s electricity demand.  If the four-hour experience of power generation on September 12 shows wind turbines would supply only 1.7% of our demand, it also demonstrates one thing clearly: the last thing we need in Ontario is more wind turbines, generating intermittent unreliable power!

Ontario’s ratepayers can’t afford any more wind.

Parker Gallant

September 12, 2017

Labour Day weekend stats show up Wynne government power folly

Mr Thibeault: If you sell the lemonade for 6.5 cents but it costs you 13 cents … oh, never mind

The Labour Day weekend was a disappointment for many as the last summer holiday featured below-normal temperatures in most of Ontario. The cool weather meant Ontario’s demand for electricity was only 904,000* megawatts (MWh) for the three days.

The “weighted” average of the hourly Ontario electricity price (HOEP) averaged a meagre $6.13/MWh (0.61 cents/kWh), meaning the market value for that consumption was only $5.542 million.

At the same time, however, Ontario was exporting 168,000 MWh (net exports i.e., exports minus imports) to New York, Michigan, etc. at about the same price. Ontario got $1.03 million from the sale of that power, which brought the total market value of Ontario’s consumption and exports to $6.572 million.


If the $6.57 million figure was the true cost of power generation, then Ontario’s ratepayers would have been delighted; however, we know the HOEP makes up only a small portion of the cost. The Global Adjustment (GA) represents the bulk of costs.

What the power REALLY cost

The GA includes the difference between the contracted rate and the market or HOEP value and many other costs.   As is the normal process of IESO (Independent Electricity System Operator) they provide a forecast of the GA at the start of each month. For September of this year, it was the highest ever at $127.39/MWh** or 12.7 cents/kWh.    Should IESO’s forecast prove correct, the total cost of those Labour Day megawatt hours for September will be $133.52 or 13.3 cents/kWh.

In other words, the 1,072,000 MWh consumed and exported over the three days of the Labour Day weekend had an all-in cost of over $143 million.

Ontario’s ratepayers in the interim were enjoying TOU (time of use) off-peak rates of 6.5cents/kWh meaning they will be billed $58,760,000 (904,000 X $65/MWh = $58,760,000).  That $58.760 million plus the $1.03 million from the export of the 168,000 MWh will produce revenue of only $59,793,000.

That leaves a shortfall in the costs of contracted generation of $83,340,440. ($143,133,440 – $59,793,000 = $83,340,440)

The $83 million shortfall for those three days winds up in what is referred to as a “variance” account and is normally reflected in the resetting of the rates semi-annually by the Ontario Energy Board on May 1st and November 1st. The Fair Hydro Act however kicked these costs down the road and will accumulate with all the other shortfalls and reflect themselves in future rate increases.

Still digging the hole

Despite these crazy financials, Energy Minister Glenn Thibeault has not cancelled the renewable energy contracts issued in 2016 that are now chasing their Renewable Energy Approvals from the Ministry of the Environment and Climate Change. The amount of exported power on the Labour Day weekend combined with the 36,000 MWh of curtailed wind power represented more than one-fifth (22.6%) of Ontario’s demand.

Ontario clearly does not need any more intermittent wind power generated out of phase with demand.

Time for the Minister of Energy to brush up on his Grade 6 Math and stop punishing Ontario’s ratepayers.

Parker Gallant


* Ontario’s demand for the 2016 Labour Day was 1,197,000 MWh

**Hopefully the IESO forecast includes an allowance for curtailed wind which was approximately 36,000 MWh over the three days of the weekend and which Ontario ratepayers pay $120/MWh.


Electricity in Ontario: save more, pay more

Consumption went down, costs went up!

The IESO (Independent Electricity System Operator) released their July 2017 Monthly Market Report several days ago, including Class B ratepayer consumption levels along with the cost of electricity by MWh (megawatt hour) and kWh (kilowatt hour).

Compared to the July 2016 report, it shows Ontario’s ratepayers used 910,000 MWh less (down 7.2%) in 2017 than 2016 (enough to power 100,000 average residential homes for one year) yet the cost* of the electricity generated jumped, from $106.47/MWh (10.6 cents/kWh) to $126.41/MWh (12.6 cents/kWh) or 18.7%!

To put this in context, Ontario’s Class B ratepayers reduced their consumption from 10.495 TWh (terawatt hours) in 2016 to 8.858 TWh (down 15.6%), while Class A ratepayers increased their consumption from 2.284 TWh to 3.062 TWh (up 34.1%). The cost of power consumed by both Class A and Class B ratepayers increased substantially year over year.

The impact on Class B ratepayers is being tempered by the debt being accumulated under the Fair Hydro Act that will eventually result in a new and higher debt retirement charge. Some of the additional costs can be attributed to losses on our export of surplus power increasing its cost from $88 million in 2016 to $105 million in 2017.   Wind curtailed (21.3% of potential generation in 2017) costs also increased from $13.2 million to $14.4 million in 2017.

What it means: despite a reduction in consumption of 15.6 %, total costs increased!

Looking at the IESO’s “Global Adjustment Components and Costs” for July 2017, you see that dividing the published Class B costs of the GA for July of $913.4 million by the consumption figure of 8.858 TWh results in a GA cost of $103.11/MWh (10.3 cents/kWh). That cost is $9.71/MWh less than the GA Monthly Market Report of $112.80.  The difference of $86 million** in additional costs was allocated to Class B ratepayers for the month of July.

When I saw that apparent difference, I inquired why.   What I got back was this:

“Regarding the discrepancy you’ve identified on the Global Adjustment Components and Costs web page, the reason for the difference is because of adjustments between Preliminary Settlement Statements and Final Settlement Statements for previous months. Page 28 of Market Manual 5.5 explains this. The rate as posted in the monthly market report, is not the Class B GA amount divided by TWh. Rather, it is set to cover all payments made through GA including those held in the variance account.”

The “variance account” referenced in the response from the IESO spokesperson is cleared every six months when the Ontario Energy Board (OEB) set future rates and would have been cleared when they reset the new rates under the Fair Hydro Act that applied to Class B ratepayers as of May 1, 2017. As a result of the reply, I undertook similar calculations for other months as a test and all of them wound up within pennies … not the almost $10/MWh difference for July 2017.

What I get from all this is, transparency may not be all it is claimed to be when a mistake is made, or alternately $86 million for one month being billed to ratepayers is considered a rounding error!  What is obvious is that “conservation” costs Class B ratepayers a lot of money.

Parker Gallant,

September 3, 2017


* GA (Global Adjustment) + HOEP (Hourly Ontario Energy Price).

** Calculation is 8.858 TWh X $9.71 million/TWh

The Fair Hydro Act: Ontario’s unfair future

Wynne government’s “Fair Hydro” plan: another $3 billion a year. Fair?

The Fair Hydro Act kicked in July 1, 2017: we can now look at the first month of the 25% reduction Premier Wynne and her Minister of Energy Glenn Thibeault, gave us, and determine if the projected costs look reasonable.

The cost forecast for the Act according to the Financial Accountability Office (FAO) of Ontario, was: “the Province is proposing to borrow an estimated average of $2.5 billion per year through 2027 to pay a portion of electricity costs, thereby temporarily reducing the amount paid by eligible ratepayers. The Province would recover the borrowed funds, including interest, from ratepayers over an estimated 18-year period starting in 2028.” 

The FAO’s estimate includes: the 8% provincial portion of the HST, the reduction of 17% in electricity costs and the additional 6% promised to 800,000 rural customers (principally Hydro One ratepayers) who will pay less. The latter is related to taxpayers picking up the costs of the RRRP (rural and remote rate protection plan) and the OESP (Ontario Electricity Support Program) under the Fair Hydro Act.

While the estimate by the FAO for the deferral appears significant at $189 million per month* (plus interest), it may turn out to be much higher, based on what we see in the very first month.

The first month’s deferral has been reported by IESO as $394.7 million. According to IESO it includes adjustments for May ($110.2 million) and June ($136.6 million) that represent the “partial reduction” granted by the OEB to “eligible customers.”  That puts the monthly costs for July 2017 at $147.9 million.

The IESO spokesperson also noted due to billing cycles of the various local distribution companies (LDC), the full monthly cost will not become evident until August submissions are made by the LDC.

The $147.9 million will obviously be higher in the months and years ahead and well exceed the FAO’s estimates. For example, the July deferred GA amount would not include monies related to the different billing cycles, or include the 8% provincial portion of the HST.   Making a calculated guess, these would add another $100 million, meaning the monthly cost will be approximately $250 million or $3 billion annually.  As well, the OEB April 30, 2017 RPP (regulated price plan) report noted rates would have increased 3.1% May 1st had the Fair Hydro Act not altered normal procedures.

The 3.1% increase mentioned in the OEB report becomes clearer from this report excerpt: “After taking into account the reduction in the forecast amount of the Global Adjustment of approximately $1B, the average supply cost drops by $13.79/MWh relative to May 2016 prices, or $17.28/MWh relative to what RPP consumers otherwise would have paid starting on May 1, 2017.”

That 3.1% increase we avoided (deferred) and other rate increases approved by the OEB over the next several years will also be deferred, but accrued to appear on our future electricity bills.

Hydro One alone has nine rate applications either before the OEB or in the hopper, so we should expect a future whiplash from rate increases that will make the recent past look good!

And to think we thought the gas plant moves were costly!

Parker Gallant,

August 27, 2017


* The FAO chart 6-1 estimates a monthly impact of $41.00 per “average” residential ratepayer per month so the math equation is: $41.00 X 4,612,551 residential ratepayers (OEB Yearbook of Distributors for 2016) = $189,114.591 or $2.3 billion annually plus interest.