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.


Found! Where the Wynne government spent $36 billion!

Not all of it useful.

March 26, 2017

Ontario Energy Minister Thibeault claimed the government spent $35 billion on the electricity sector while Premier Wynne says it was $50 billion. But neither of them provided an accounting as to exactly what the money was spent on, and what the value was for ratepayers.   They both claim the system was “broken” when the Liberals took over governing, and the money spent fixed the system.

If Minister Thibeault’s $35 billion is factual it would represent spending $8,000 per residential ratepayer; if Premier Wynne’s $50 billion is true it means $11,000 per ratepayer. Bear that in mind as you travel through my computations.

The spending via directives from the Energy Minister’s office were, and continue to be, frequent (well over 100 to the OPA [merged with IESO], OPG, OEB and Hydro One); the directives often had no connection to fixing anything, or generating electricity.

Here’s a look by category. Some of these are estimates but the estimates come from reasonable and reliable sources. 

Billions Spent to December 31, 2016

Category: Frills and shiny baubles *

1.Spending on “smart meters”!                                      $2 B

(Ontario’s Auditor General in her report of December 2014 basically said we have wasted the money spent!)

2.The “smart grid” aimed to work with smart meters!  $1.2 B

(We are all billed for the costs of developing the “smart grid” but the benefits accrue to only a few select individuals and companies.)

3. “Closing the coal plants” requiring OPG to write off the     $ .6 B

(This meant the OPG had to write off the remaining value of those plants including their scrubbers for removing emissions!)

4.“Conservation” spending, $3-4 million/year       $2.5 B

5. Moving the gas plants                  $1.1 B

TOTAL spending for frills and shiny baubles: $7.4B

Category: The unreliable and intermittent**    

The IESO’s 18 Month Outlook covering April 2017 to September 2018 provides approximations of grid and distribution connected wind and solar which are:

Wind generation as at March 31, 2017 will be approximately 4,650 MW and at a capitalcost of $2.2 million per MW had a cost of                                                                             $10.2 B

Solar generation as at March 31, 2017 will be approximately 2,389 MW and at a capital cost of $2.6 million per MW had a cost of                                                                             $ 5.2 B

Transmission spending by Hydro One to connect wind and solar to the grid and for embedded connection expenditures is estimated to have had a cost of                                  $5.0 B

TOTAL spending for unreliable and intermittent $20.4B 

Category: Photo-op generation***

1.“Big Becky” which went $600 million over budget in an effort to squeeze 150 MWs of capacity from Niagara Falls at a cost of   $ 1.5 billion

2.“Mattagami” originally a $1.6 billion dollar project to increase the rated capacity by 438 MW (NB) it went over budget by $1 billion reaching a cost of    $ 2.6 billion

TOTAL spending for Photo-Op generation $4.1B

Note: In 2010, before both of the above were completed, OPG produced 30.6 TWh (terawatt hours) of hydro generation; so, despite adding the above 588 MW of capacity, hydro generation in 2016 fell to 29.5 TWh.  A quick look at the generation from the Mattagami units on March 21st indicates they generated power at about 8% of rated capacity, while all other hydro was operating at an average of about 50% of rated capacity.

Category: Value for money

It appears that some of the claimed investments in generation did actually provide some value. The Bruce Nuclear refurbishment (NBB) of two units came at a cost of $4.8 billion but according to Ben Chin, former VP of the OPA, the cost to ratepayers was limited to   …        $ 3.4B

Note: Bruce Nuclear over the four (4) years (2013 to 2016) have annually generated an average of 10 TWh above their 2012 generation, prior to the refurbishment, at a cost of about 6.6 cents per kWh.

TOTAL spending for Value for money: $3.4B

TOTAL estimate for all spending to the end of 2016:                                                            $36.7 B                                                   

This estimate comes reasonably close to the $35 billion Energy Minister, Glenn Thibeault claimed was spent in his September 13, 2016 press release.

Category: What’s still to come?

The IESO Outlook referenced above indicates we have contracted for additional generation which will be added to the grid in the next 18 months (April 2017 to September 2018) including:

Another 500 MW of wind capacity with an estimated capital cost of                                   $ 1.1 billion

Another 100 MW of solar capacity with an estimated capital cost of                                    $   .3 billion

Another 1,300 MW of gas (assumption is single cycle @ $.75 million/MW) at a cost of $0.9B  

TOTAL for What’s still to come? $2.3B

 Even if one includes the money still to be spent, the total investments (most of them wasted) is shy of the $50 billion Premier Wynne claims has been spent, by $11 B.

We still need to see Minister Thibeault’s accounting, and Premier Wynne’s too, to allow the taxpayers and ratepayers of the province to determine whether all of the spending has provided the value for our tax dollars claimed by the Premier and Energy Minister.



*Money spent that created no generation nor improved transmission nor reduced blackouts or brownouts.

**Refers to the intermittent and unreliable nature of wind and solar, which are unable to deliver generation when the wind isn’t blowing and the sun’s not shining.

***Money spent on large hydro infrastructure projects that produce little power but presented great photo-op situations for Ontario Liberal Energy Ministers and even Premiers.