Stuff that drives me crazy…

Tall tales about electricity management in Ontario

March 13, 2018

What drives me crazy are false claims from the proponents of renewable energy (wind and solar) and bureaucrats running Ontario’s electricity system. Here are a few examples of false claims and, dare I say, “fake news.”

  1. Hydro One and all other electricity distributors submit an annual report to the OEB and the information is posted under the heading “Yearbook of Distributors”. Hydro One’s 2016 filing states “Total Service Area (sq km) 962,274 sq km”. In a video Ferio Pugliese, VP Customer Care & Corporate Affairs, clearly states during a Regulatory Commission of Alaska special public conference/panel discussion that “we have a very large base in Ontario with over 650,000 square kilometers of territory”! Mr. Pugliese was trying to convince the Alaska regulator and the concerned citizens that nothing related to their electricity bills would change if, and when, they acquire Avista. I think most would agree that losing 362,000 sq. km of service area is major.
  2. CanWEA the wind power trade association claims “Wind is delivering clean, reliable and low-cost electricity,” but express their unmitigated thanks for the recent Federal Budget by noting: “The Canadian Wind Energy Association commends the federal government for extending the ability of investors to utilize Class 43.2 of the Income Tax Act by five years, from 2020 to 2025. This fiscal measure allows investors to accelerate deductions of eligible capital costs associated with clean energy generation. This helps renewable energy developers to lower their costs”! This effectively means owners of industrial wind projects get to write off their capital costs fast and don’t have to pay income taxes. One must assume they need taxpayer support to deliver their claimed “low-cost electricity.”
  3. The government suggests “cap and trade” revenue is being handed back to us: “We’re investing all of our carbon market proceeds into projects to reduce greenhouse gas pollution.”   When the announcement was made in May 2009 about passing legislation, the press release noted: “The United States is moving to put a national program in place that could begin as early as 2012.” But that never happened, so Ontario has little company in North America with only Quebec and California also collecting this tax. The press release from the MOECC on February 28, 2018 bragged about the first joint auction with Quebec & California stating: “Ontario is now part of the largest carbon market in North America.” To the best of this writer’s knowledge it is the only carbon market in North America! Reviewing the Ontario-based companies on the recent auction list, one notes those compelled to purchase allowances include Hydro One, OPG, greenhouse operators and municipalities amongst others. Those allowances will find their way into the cost of living stream resulting in increases to electricity bills and any product emitting CO2; and will even raise your municipal taxes. The Cap & Trade tax will touch our lives in many ways. While the press release said, “All of the proceeds raised from the carbon market are being invested into Ontario’s economy through green initiatives that fight climate change and help make life better for Ontario residents.” Most taxpayers would disagree the “cap and trade” tax will make life better!
  4. IESO, which manages Ontario’s electricity grid and negotiates generation contracts with private and public companies, seems to talk out of both sides of their mouth. As an example, their forward looking planning documents suggest wind generation’s capability of delivering power (referred to as “capacity factor”) to the grid during peak demand periods is a miserly 12.9% whereas CanWEA claims: “Capacity factors of potential wind plants range from 34 per cent in British Columbia to 40 per cent in Nova Scotia.”. Additionally L. Kula, IESO’s COO and VP Planning Acquisition and Operations in a February 28, 2018 speech stated: “Ontario is at the forefront of decarbonizing our grid, something we should be proud of.   In the almost two decades since the market was established, we have retired coal as a generation source. In doing so, we have increased the amount of variable generation on the transmission system and on the distribution system. At the wholesale level alone, wind and solar combined met about seven percent of Ontario’s supply needs in 2017.” While generating 7% of Ontario’s supply wind represented 12.5% of installed capacity and performed poorly during our summer’s high demand periods. During June, July and August of 2017 it generated an average of only 4% of demand and generally when it wasn’t needed in the middle of the night! Decarbonizing our grid at a huge cost to ratepayers should not be something IESO brags about.
  5. IESO also makes claims which support the 100+ “directives” from the Minister of Energy responsible for driving up energy prices as the following example illustrates. Terry Young’s (VP, Policy, Engagement and Innovation), speech of January 23, 2018  to ROMA stated: “The conservation and energy-efficiency programs we offer help consumers of all types take greater control of their energy use and reduce energy costs. This is the most cost-effective supply resource available, at less than four cents per kilowatt-hour. Conservation savings, growing embedded generation and demand reduction programs have offset increased demand.” Mr. Young has obviously not noticed “increased demand” is fake news as it has fallen 10.7% since 2008, but the average price for Class B ratepayers has increased 99%. Most voters are under the impression bureaucrats are supposed to be neutral and just execute the directions of their political bosses and not brag about results. Spending $400 million annually on “conservation” is a direct hit to ratepayer’s pocketbooks.
  6. IESO now considers it is better to pacify their political masters rather than work to keep costs from rising. Recent examples include their ability to cancel contracts for non-compliance but for some reason they ignored their legal right to do so. Examples include: the Windlectric 75 MW wind development on Amherst Island (a major pathway for migratory birds and bats) and an 18.4 MW wind project known as White Pines in Prince Edward County. Those two projects alone will cost ratepayers almost $700 million over the 20 years in their contracts. Generation from wind turbines continues to be a waste of ratepayer dollars as easily seen in 2017 data. During the high demand months of June, July and August, wind power generation amounted to 4% of demand despite representing over 12% of Ontario’s generating capacity. During those three months turbines generated 1.355 TWh, yet Ontario exported 4.731 TWh to our neighbours in New York, Michigan, etc. at bargain basement prices. Despite the obvious, IESO’s current President and CEO Peter Gregg of IESO said in a speech to the Ontario Energy Network on January 19, 2018: “With respect to the development of new resources, we are cognizant of some of the concerns expressed by representatives of renewable resources like wind and solar and emerging technologies like storage.” Perhaps Mr. Gregg could be more “cognizant” of the effects of wind turbines on such things as human health, the killing of birds and bats and the economic hardship caused by electricity prices that have climbed by over 100% over the past few years caused by the addition of wind and solar generation being added to the grid and embedded within local distribution companies.

The points I’ve raised are not all the fake or false news emanating from the electricity bureaucrats, but hopefully the reader will understand the gist of what has happened to the electricity sector in Ontario.

Parker Gallant


How much does wind power cost us?

March 5, 2018

Ontario turbines near Comber: wind is not free

Being asked to do a presentation at Wind Concerns Ontario’s annual conference this past Saturday to describe the costs associated with industrial wind turbines was something I relished!

The presentation I developed used IESO information for 2017.

Discovered in the preparation of my presentation was the fact that nuclear and hydro power alone could have supplied over 100% of all grid-connected consumption for 2017, at a average cost of about 5.9 cents per kilowatt hour.

The cost for Class B ratepayers in 2017 however, was almost double, coming in at 11.55 cents per kwh.

So why the big jump? Have a look at the presentation to see why and look at Slide 6 in particular where you get an inkling of how IESO views the reliability of industrial wind generation in their forward planning process!



Ontario’s IESO: keeping the lights on (and the champagne flowing for some)

Mild weather might mean lower power demand and savings for electricity customers … but not in Ontario

February 28, 2018

The IESO has responsibility for ensuring the electricity system in Ontario keeps the lights on. They must manage the flow of generated electricity and keep it within the confines of producing too much or too little which could lead to either brownouts or blackouts.

That task has become more difficult as frequent Energy Minister directives, mandating the acquisition of more and more intermittent and unreliable wind and solar power generation, have made reliability an issue of concern, particularly during times of low demand. They are concerned with “surplus base-load” which in the past generally meant nuclear and “must-run” hydro. Wind and solar generation joined that latter group under those mandated directives pushing the potential “must run” power generation much higher.

Higher base-load on low demand hours/days could cause the system to fail.   And, it’s obvious that managing the system today has a much higher cost.

Example: February 25, 2018

The 25th of February saw higher than normal temperatures in Ontario, resulting in lower demand.  Demand in one hour was only 12,716 MW and the average was 14,390 MW/per hour for the day according to IESO’s daily summary.  Total Ontario demand for the day was only 345,000 MWh.  The IESO summary discloses the market valued all generation (including surplus exports) on that day at “0” meaning our net exports (exports minus imports) of 48,000 MWh were sold at a substantial loss.

Another issue facing IESO on the 25th was the fact it was a windy day. The forecast was for wind turbines to generate 89,100 MWh.  But only 49,500 MWh were accepted into the grid and the balance (39,600 MWh) were curtailed (paid for but not used).  Ratepayers pick up the costs for both accepted and curtailed wind.  It is worth noting our net exports of 48,000 MWh for the day, were only slightly less than the grid-accepted wind power generation.

Because of low demand and excess wind power generation, OPG were no doubt spilling water at IESO’s instructions. IESO don’t disclose spilled water, but a reasonable estimate for this day would be 45,000 MWh — which ratepayers are obliged to pay for.

Yet another source of power would have been our gas plants which receive payment(s) for idling at a contracted amount (payable monthly per MW of capacity). As one would expect, they were not called on to produce any power for the day which would have been cheap (fuel costs plus a small markup). Gas plants are essentially the back-up for the approximately 7,700 MW of intermittent wind and solar capacity now either grid- or distributor-connected in the province.

So let’s look at what ratepayers paid just for wind power for the day:


One day’s cost for unreliable intermittent wind!

Wind accepted: 49.500 MWh at $135/MWh =                                      $ 6,682,500.

Wiind curtailed: 39,600 MWh at $120/MWh =                                    $ 4,752,000.

Total wind costs:                                                                                $ 11,434,500.

Spilled Water (estimated): 45,000 MWh at $45/MWh =            $   2,025,000

Gas plant idling costs (estimated):                                                       $   2,500,000

Gross wind costs:                                                                                $ 15,959,500


Less: Recovered from net exports (estimated):                                  $     720,000

            True net wind generation cost:                                                     $ 15,239,500


Cost per MWh: $15,239,500/49,500 = $307.87/MWh or 30.8 cents/kWh


If all the days in a year were like last Sunday, annual costs would be well over $5 billion for unneeded high priced generation from wind power projects.

This all just goes to show, Ontario ratepayers were filling the pockets of IWT developers so they could sip the champagne while IESO kept did its best to keep the lights on!



NB: All of the numbers above are rounded to the nearest hundred.

Multi-million-dollar power contracts IESO style

Or, how the IESO could have saved Ontario ratepayers more than $400 million by cancelling one wind power project, but didn’t 

Surplus power in Ontario: why not get out of a contract if you could?[Photo: IESO]
February 6, 2018

On March 10, 2016 the Independent Electricity System Operator or IESO announced the outcome of the “Competitive Bids for Large Renewable Projects” via a news release which, among other issues claimed, they said they would award “five wind contracts totalling 299.5 MW, with a weighted average price of 8.59 cents/kWh”. The news release also described the contracting process: “The LRP process was administered by the IESO and overseen by an external fairness advisor. Robust and transparent public procurement practices were followed throughout the process, and each proposal was carefully evaluated for compliance against a list of specific mandatory requirements and rated criteria.”

Fast forward to October 26, 2017 and the release of Energy Minister Glenn Thibeault’s “Long-Term Energy Plan 2017 Delivering Fairness and Choice,” which offers some context for power contracts currently.

“Due to the substantial decline in the cost of wind and solar technologies over the last decade, renewables are increasingly competitive with conventional energy sources and will continue to play a key role in helping Ontario meet its climate change goals.”


“Ontario is Canada’s leader in installed wind and solar power.”

Economics of power procurement

Further on in the Plan are examples of how the Ministry, via the institutions under it, is working with communities. This one suggests the IESO is cognizant of the costs affecting ratepayers: “Ontario Power Generation (OPG) and Gull Bay First Nation (GBFN) are in the early stages of building an advanced renewable microgrid on the GBFN reserve on the western shore of Lake Nipigon. GBFN has an on-reserve population of 300 people and is one of the four remote First Nation communities that the IESO has determined to be economically unfeasible to connect to the provincial grid at this time.”

IESO recently issued their 18-Month Outlook for the period January 2018 to June 2019 and this report also noted the situation in respect to surplus power: “Conditions for surplus baseload generation (SBG) will continue over the Outlook period. It is expected that SBG will continue to be managed effectively through existing market mechanisms, which include intertie scheduling, the dispatch of grid-connected renewable resources and nuclear manoeuvres or shutdowns.”

Those manoeuvres or shutdowns in 2017 caused over 10 TWh (terawatt hours) to be wasted, but their costs were added to ratepayers’ bills and included 3.3 TWh of curtailed wind.

So, the province has a surplus of power, and the costs of wind and solar have become more competitive. Why would the IESO then not seize upon the opportunity to deal with a high-cost industrial-scale wind power project, when they had the ability to cancel it due to non-compliance with the original contract? At the very least shouldn’t they have renegotiated the contract to reduce the impact on ratepayers?

They did neither.

The White Pines story is a curious exercise in contract law, to be sure. A successful appeal* to the Environmental Review Tribunal by the community group the Alliance to Protect Prince Edward County** resulted in the project being reduced from 59.45 MW to 18.45 MW last fall. IESO could have simply canceled it because it was clearly unable to meet a condition requiring delivery of 75% of the capacity agreed to in the contract. At the very least, IESO could have renegotiated the terms of the contract to fulfill the Energy Minister’s claim that “renewables are increasingly competitive”.

But the IESO amended the contract for the reduced project, and granted waivers to the original conditions of performance, it was learned in a Belleville courtroom recently.

Cancelling would save millions

If IESO had canceled the contract, the Ministry could have claimed they reduced future rate increases saving ratepayers $21 million annually or $420 million over the full 20-year term. Even if IESO had only renegotiated the contract to the 8.59 cents/kWh achieved via the competitive bidding process instead of the 13.5 cents/kWh of the original contract, the Ministry could have claimed savings of about $5 million over the full term of the contract based on the currently approved 18.45 MW of capacity.

Has the IESO forgotten this line in in its Mission Statement ?

“Planning for and competitively procuring the resources that meet Ontario’s electricity needs today and tomorrow”

Cancelling just this one project*** would have helped to reduce surplus baseload and therefore the costs kicked down the road under the Fair Hydro Plan to be paid for in the future.



*The appeal was one on the grounds that the project would cause serious and irreversible harm to wildlife

**Disclosure: I am a member of the community group

*** The IESO has five contracts for more wind power projects totaling $3 billion, for power Ontario does not need.

IESO: pick a number, any number

February 4, 2018

The Independent Electricity System Operator seems have different ideas about its power statistics, which raises questions about how it manages contracts

The IESO’s 2017–2019 business plan (February 1, 2017) opened with this statement: “The Independent Electricity System Operator (IESO) operates within a complex and changing energy sector environment. Its broad mandate includes real-time operations of Ontario’s bulk power system, province-wide and regional planning, conservation, resource development and contract management.”

Further on in the business plan is this: “Over the next five years, 27 per cent of the IESO managerial staff and 12 per cent of the senior professional level staff will be eligible for retirement with unreduced pensions. Well over half of these staff are in Information and Technology Services and Market and System Operations.”

With more than 75% of all of IESO’s staff appearing on the 2016 “Sunshine List,” one would hope they were competent and able to provide reliable information, particularly when it comes to “contract management” and knowing what the capacity level is for that contracted generation!

However, some recent events suggest that may not be the case.

Contracted capacity of “embedded generation” (DX) is…?

Recent information from IESO suggests they don’t know how much they have contracted for distribution-connected (DX) capacity.  Here are three recent examples:

First we have the 18 Month Outlook for the period: January 2018 to June 2019 dated December 12, 2017 that stated: “By the end of the Outlook period, [June 2019] embedded wind capacity will exceed 600 MW and embedded solar will surpass 2,200 MW. Overall contracted embedded capacity will reach 3,300 MW over the Outlook horizon.”

Second this speech by IESO’s President and CEO, Peter Gregg on January 19, 2018 to the Ontario Energy Network upped the “Outlook” number by 1,000 MW as per this excerpt: “We now have over 4,300 MW of distributed energy resources in Ontario, over half of which is solar. This makes up roughly 12% of our total installed resource capacity.”

Finally, four days after the CEO’s speech, IESO’s Vice President Terry Young delivered a speech to ROMA, the Rural Ontario Municipal Association with yet another DX claim: “At the end of 2017, there were more than 3,800 MW of embedded generation within local distribution systems, a 25-percent increase over the previous year. These generators supply electricity to local distribution systems, which in turn reduces demand on the transmission grid.”

What they don’t know may hurt you

One of the issues troubling to those assessing IESO is their apparent inability to provide annual DX generation as a result of the embedded capacity. IESO are required to settle (pay) monthly to local distribution companies for DX generated electricity.  That being the case, why is the generation from those contracted DX entities not readily available?

That raises other questions such as:

IESO reported grid connected consumption dropped in 2017 by 3.6% (4.9 TWh), but did it?  Did DX generation increase more than grid-connected consumption dropped?  If the latter is true, then  consumption is still increasing, despite spending $400 million annually on conservation initiatives.

Almost eight years ago, IESO made it known they were developing a “smart grid” at a cost of $1.6 billion to utilize “smart meter” data. Ratepayers have been paying a monthly fee via the regulatory line on their bills to cover that cost since then yet for some reason IESO seem unable to deliver basic information.   Is this yet another example of wasted spending?

And, another disturbing issue surrounding the unknown amount of contracted and installed DX generation is this: IESO is obligated to follow directives issued by Energy Ministers telling them how much “renewable” energy is to be contracted. How is the general public to know if IESO has acquired too much or too little if three claims of DX generation may be out by as much as 1,000 MW?

If the contract management function is in such disarray that two senior officers of IESO are in serious conflict with a regular quarterly report issued by their staff, you have to wonder how well IESO is managing not only those contracts, but also “Ontario’s bulk power system, province-wide and regional planning, conservation, resource development”?

It also begs the question, why has IESO not audited contracted DX nor used its regulatory power to cancel contracts for power projects that have not yet broken ground or have failed to meet agreed milestones?

Perhaps the time has come for Ontario’s Auditor General to audit IESO.

Numbers don’t lie: intermittent wind and solar surplus to Ontario’s energy needs

The IESO (Independent Electricity System Operator) released 2017 data for grid-connected* generation and consumption and, surprise! The data reveal that power from wind and solar is surplus to Ontario’s  energy needs.

IESO reported Ontario’s consumption/demand fell 4.9 TWh (terawatt hours) in 2017 to 132.1 TWh. That’s a drop equivalent to 3.6% from the prior year.

Nuclear (90.6 TWh) and hydro (37.7 TWh) power generation was 128.3 TWh, making up 97.1% of Ontario’s total demand (without including dispatched power from either nuclear or hydro). The cost to Ontario ratepayers for the 128.3 TWh was approximately $7.6 billion or 5.9 cents/kWh.

Spilled hydro (paid for by Ontario’s ratepayers but not used) reported by Ontario Power Generation or OPG was 4.5 TWh for the first nine months of 2017. Out that together with 511 nuclear manoeuvres and the number is 959.2 GWh (gigawatt hours) wasted but paid for by Ontario’s ratepayers. Add in three nuclear shutdowns and it means Ontario’s nuclear and hydro generation alone could have easily supplied more than 136 TWh of power or over 103% of demand.

That doesn’t include spilled hydro in the last quarter of 2017 which will probably exceed at least one TWh.

Nuclear and hydro does it all

Nuclear and hydro could also have supplied a large portion of net exports (exports less imports) had all the generation potential actually been delivered to the grid. Net exports totaled 12.5 TWh in 2017.  Grid connected wind (9.2 TWh) and solar (0.5 TWh) in 2017 supplied 9.7 TWh and their back-up generation: from gas plants, supplied 5.9 TWh.  In all, the latter three sources delivered 15.6 TWh or 124.8% of net exports.  Net exports were sold well below the average cost of generation. Exports brought in revenue of about $400 million, but here’s the kicker: that surplus power cost Ontario’s ratepayers $1.4 billion, which is really a loss of $1 billion.

Grid-connected wind, solar and gas generation collectively cost approximately $3.5 billion for the 15.6 TWh they delivered to the grid, included curtailed (paid for but not used) wind power generation of 3.3 TWh. The cost of the wind power was more than $220 million per TWh, or 22 cents/kWh. That’s almost double the Class B average rate of 11.55 cents/kWh cited in IESO’s 2017 year-end results.

The 9.7 TWh generated by wind and solar was unneeded. If it had been required, it could have been replaced by gas power generation at a cost of only around two cents per kWh. Why? Gas generators are guaranteed payment of  about $10K per MW (average) of their capacity per month to be at the ready and if called on to generate power are paid fuel costs plus a small markup.

Price tag: $2 billion

In other words, if no grid-connected wind or solar generation existed in Ontario in 2017 the bill to ratepayers would have been about $2 billion** less! Grid-connected wind generation (including curtailed) cost ratepayers in excess of $1.7 billion and grid-connected solar added another $250 million!

That $2 billion, coincidentally, is about the same cost estimate of the annual amount to be deferred, and paid by future rate increases via the Fair Hydro Plan! In other words the current government could have easily saved future generations the estimated $40 billion plus cost of the Fair Hydro Plan by having never contracted for wind and solar generation!

The IESO results for 2017 sure makes me wonder: why hasn’t the Ontario Ministry of Energy canceled all the wind power projects that have not yet broken ground?


*   Distributor connected solar (2,200 MW) and wind (600 MW) added over $1.4 billion to the GA.

** The first 6 months of the variance account under the Fair Hydro Plan in 2017 was $1,378.4 million.


A few dollars more: ordinary electricity customers pay for new conservation measures

Ontario’s Class B ratepayers will be digging deeper into their pockets to find more dollars to help universities, hospitals, court houses and other public buildings pay their electricity bills.

That fact has not been formally announced by the Ontario government; however, the IESO 18-month outlook said this about the Industrial Conservation Initiative or ICI.

“The changes to the ICI program this year have opened the door for participation from the commercial sector. Hospitals, office buildings, hotels, universities and other large commercial buildings with peaks greater than 1 MW can now minimize their electricity costs by shifting loads during the ICI peak day periods. The success of these changes from the perspective of the commercial sector comes back to their load flexibility and their ability to follow the system peaks. The commercial sector impacts are not visible to the IESO as all of these participants would be distributor customers. The ICI program is estimated to have reduced peak demand by about 1,300 MW in the summer of 2016 and with the changes to the program the expectation is that those savings will have increased in 2017.”

What does this change in the ICI program do? It allows public and private entities to pick the highest five peak demand hours in a year (or come close to the five highest) in order to receive subsidized electricity rates. The subsidy is basically a transfer of costs from the Class A ratepayers to the Class B ratepayers—Class B being ordinary folks like you and me.

Class B ratepayers are all residential households along with thousands of small businesses and franchised businesses (who are also struggling with how to manage the increase in the minimum wage which came into effect January 1, 2018).

In 2017, the ICI transfer added $1.2 billion to the costs of electricity for Class B ratepayers while reducing the Class A costs by the same amount. The addition of the business option to choose the ICI program is substantial and will increase the subsidy, but it doesn’t appear the Energy Ministry has bothered to provide that information, or completed a cost/benefit analysis to assess the effects.

Scott Luft noted the ICI cost shift for 2017 in a Tweet a few days ago:

Cold Air‏@ScottLuft Jan 6

yesterday I noted an ICI Hi5 hour being set – and noting the program shifted about $1.2 billion from large to small consumers in Ontario last year. Today’s hour 18 may also end up in the Hi5”

So, reducing “peak demand” by 1,300 MW for five hours is equal to 6,500 MWh and cost $1.2 billion, making the cost of reducing “peak demand” $184,615 per/MWh! ($1.2 billion divided by 6,500MWh).

We should expect this Class B to Class A shift to increase substantially in 2018 as the effects of lowering the ICI to the lower level of 1MW will provide an incentive to those who qualify.

If you happen to be in a hospital or university and notice the lights suddenly dimming you can guess it is probably one of the anticipated high five hours.

It also means, your electricity bill just went up.

Parker Gallant