OPG on their way to Record Profits for 2020

Having missed OPG’s press release on their 2nd Quarter financial results a few days ago, a post on Scott Luft’s twitter account stating: “OPG released Q2 results. Net income during the first half of 2020 is $775 million – which is greater than their full year net income in all but one year from 1999-2015” alerted me!

What the above suggests is OPG will finish the year with record profits despite most of Ontario’s industrial companies being negatively affected by the Covid-19 lock-down. It seems ironic one of the province’s wholly owned companies will achieve record results with the economy brutalized and electricity consumption falling.  For the first six months of 2019 Class A and B consumption was 68.7 TWh and for 2020 it fell to 65.5 TWh for a drop of 3.2 TWh or 4,7%.

OPG’s revenue in the first six months was up from $2,992 million in 2019 to $3,569 million or $577 million (+19.3%). In 2019 OPG generated 39.3 TWh versus 41.6 TWh in 2020. OPG provided 63.5% of all ratepayer consumption in 2020 versus 57.2% in 2019. It seems incongruous the increased generation of 2.3 TWh produced additional revenue of $548 million (net of fuel expenses).

On closer examination of the foregoing the commentary in the report states OPG spilled 1.9 TWh of hydro in 2019 whereas in 2020 it was 2.5 TWh due to SBG (surplus baseload generation) so that would have added some revenue.  The additional spilled hydro payments however would only account for about $30 million of the $548 million increase so why did gross revenue climb by so much?

As it turns out most of the huge jump in revenue came about because of a rate approval from the OEB in 2018 related to OPG’s nuclear plants. The OEB had, for some reason, been sitting on the rate application for a considerable period.  While OPG generated an additional 1.6 TWh from nuclear plants it accounted for about $150 million in additional revenue.  The rate increase for the balance of the nuclear generation added approximately $260 million and the rest of the increase in revenue came from gas generation facilities (some recently acquired by OPG) and the balance from their US hydroelectric owned facilities purchased in October 2019.

The average cost per MWh of nuclear power generated by OPG in the first six months of 2019 was 81.80/MWh and jumped to 94.20/MWh in 2020 for an increase of 15.1%.

The upsetting part about the results is OPG has, so far in 2020, produced a ROE (return on equity) of 9.2% during the pandemic lock-down on the $775 million of after tax* ($199 million) net profit! Most private sector businesses are losing money meaning their return on equity is negative and has/will result in many of them declaring bankruptcy or being forced to lay off employees.  Those they lay off will continue to have to pay their electricity bills which are among the highest in Canada and the US.

OPG’s favourable ROE does nothing to alleviate the expensive electricity bills which businesses (small and medium) and residential ratepayers must pay.  The Provincial government should use the $199 million of tax revenue from OPG to reduce ratepayer costs and instruct the OEB to consider lowering the allowed ROE to prevent further increases on our extremely high electricity bills.

The Provincial Government should also move to subvert those high cost wind and solar contracts handed out by the McGuinty/Wynne government that are a continuing burden on all ratepayers.

*While OPG allocates tax costs they are actually referenced as PIL (payments in lieu) of actual taxes and are simply recorded as revenue within the Provincial budget.

MaRS Discovery District lives on Government Grants and miss Fundraising Targets by Miles

The MaRS Discovery District (MDD) is a registered charity owned by the Ontario Provincial Government. MDD was one of the major issues (together with the expanding electricity mess) that resulted in turning the majority McGuinty led Ontario Liberal Party in the 2011 election into a minority!  MDD was conceived in “2001 to develop a world-class innovation and convergence centre (the MaRS Centre) in Toronto dedicated to improving Canada’s economic prosperity from innovation in the life sciences sector.”

MDD didn’t get rolling until the Liberals gained power in 2003 but from that point on MDD took off with incredible support from Provincial taxpayers. As evidence, Provincial support to the end of 2011 was in excess of $150 million and reviewing the 10 years from 2010 to 2019, MDD received $228 million in provincial funding as well as $9.4 million in Federal funds. Actual donations, for which MDD issued tax receipts, were a paltry $4.6 million or an average of $460K annually for those 10 years.

MDD had originally arranged financing for their Phase 2 expansion via IO (Infrastructure Ontario) another provincial entity established by the McGuinty led government but it was never clear* how the $235 million they arranged to borrow via IO would be able to pay the estimated cost of the building of $344 million.  As it turned out IO’s 2015 annual report noted: “The Loan receivable from the Medical and Related Sciences (MaRS) was transferred to the Ministry of Research and Innovation on March 31, 2015.”  The money supplied by the Provincial government at that time reached at least $400 million to cover the expansion.  As time went on and the building was completed Brad Duguid, then Ontario Economic Development Minister, was finally able to announce MaRS had  “completed a $290-million private financing of its west tower building project, which has enabled it to repay three-quarters of the nearly $400-million in loans received from Ontario to complete the stalled project.”  The Globe and Mail carried the story on February 9, 2017. Ironically one of the “premier” tenants in the Phase 2 building is none other than Public Health Ontario (PHO) an outgrowth of the 2003 SARS epidemic! PHO is now guiding the Ford led government on the Covid-19 pandemic!

Just months before the foregoing announcement the Globe ran an article stating: “The long-time CEO of Toronto’s MaRS Discovery District, Ilse Treurnicht, has informed its board she will be stepping down as of June, 2017, ending a 12-year run at the head of the non-profit innovation hub funded primarily by the province.”  If one looks at the “Sunshine list” it is obvious Ms. Treurnicht was extremely well paid particularly when one realizes that she was the CEO of a “charity”! In most years she was paid over $500K.  Comparing her salary to the average annual tax receipted donations of $460K indicates they didn’t even receive enough to pay her salary.  From 2010 the number of employees at MaRS grew from 51 to 211 and compensation costs in 2019 were $23.5 million meaning the average salary for all employees was $111,000!

The foregoing is humorous as when MDD were finally able to arrange partial private financing for their Phase 2 expansion and repaid the Province $290 million of the $400 million of debt they had incurred, Ms. Treurnicht was quoted in a Globe article and presumably the reporter obtained all of the following information from her in addition to her quote.

When the building is fully occupied later this year, it will generate about $20-million in annualized net operating income, enough to make it self-sustaining, MaRS CEO Ilse Treurnicht said.

MaRS will now focus on fundraising, with a goal of bringing in more than $50-million from private donors for programming to help startups. MaRS board members have personally pledged close to $7-million of that amount.

“It’s really exciting because we now have what we always needed – long-term stable financial base for the infrastructure of Mars,” Ms. Treurnicht said.”

MDD have recently released their March 31, 2020 Annual Report but haven’t filed it with the CRA.  Nevertheless, there are parts of the report that make for interesting reading including the fact they once again they finished their year without showing a profit.

What is also interesting is reading the auditor’s notes which indicate their realty and other holdings.  Note 1 tells us about “MaRS Phase 1 Investment Trust, MaRS Phase 1 Inc. and 2550106 Ontario Inc.” as well as “Phase 2 Investment Trust and MaRS Phase 2 Inc.”. They note those realty holdings are “Ontario for-profit” companies.  Other “for profits” owned by MDD include: MaRS Discovery Enterprises Inc., MaRS Catalyst Fund and MaRS 101 Investments. The “not for profits” under the MaRS wing are; MaRS Investment Accelerator Fund Inc. and MaRS Discovery Services Inc. The latter owns 100% of MaRS 101 Ventures and 100% of MaRS Catalyst General Partner Inc. There are companies, etc. MDD claim an interest in but for the sake of brevity let’s stop there.

After reviewing the “not-for-profits” and the “for-profits” owned by a “charity” owned by the taxpayers of the Province of Ontario one wonders; did the Kielburgers’ get their WE to ME organization abilities from the former Ontario Liberals who for 15 years were running the Province?  Just saying!

In reviewing the 2018 and 2019 CRA filing’s for MDD the $50 million goal of donations, cited by their former CEO, Ms. Treurnicht as noted above, appears to be “pie in the sky” as receipted donations in 2018 were $704K and in 2019 were $538K.  That’s a big miss by any planning standards and brings to light an article Peter Foster had in the Financial Post in June 2014 about MDD where he wrote!

MaRS DD was based on the zombie delusion that governments can pick winners or, in this case, carefully select those whom they will guide across the so-called “valley of death” – a place littered with the bleached bones of brilliant innovators who couldn’t sell their dreams to blinkered, flinty-eyed financiers.”

Six years later and MaRS Discovery District is still convinced they can pick the winners out of the clouds of their organization and guide them over the “valley of death”!

The time has come for Ontario’s Auditor General to examine this labyrinth and give Ontario taxpayers the facts about their charity; MaRS Discovery District!  From the outside MaRS looks more like a realty company than a Charity!

*Refer an article by the author in the Financial Post on June 10, 2014.

Industrial Wind Turbines Flat-line

My friend Scott Luft posted on his Twitter account how IESO reported wind, on July 21, 2020 at hours  11 AM and the following hour of 12 PM credited IWT with generating:

“2 MW output for 2 hours”.

Image

Noting the foregoing intrigued the writer to have a look at the “peak” Ontario Demand for those two hours.  According to IESO hour 11 had a peak demand of 17,591 MWh and for hour 12 it increased to 17,874 MWh.  For both hours IWT generation represented about 0.01% of demand.

IWT “capacity”* of approximately 4,800 MW represents about 12% of total grid connected capacity and all they could deliver in those 2 hours was 4 MWh or 0.01% of demand!  I suspect they would have drawn more power from the grid than they generated just to keep their lights on in those turbines and their electronics working.

For some reason eco-warriors such as the Gerald Butts’s and Bruce Lourie’s of this world were able to convince the naïve former ruling Ontario Liberals, McGuinty and Wynne, that IWT’s and solar panels were the solution to solving the unproven claims associated with the perceived “climate change” forecasts of the UNIPCC!  The GEA was the creation they believed would save Ontario from global warming by loading up on wind and solar at rates well in excess of the market! Ontario ratepayers know how well that worked out!

The prior McGuinty/Wynne buy-in has cost Ontario ratepayers and taxpayers billions of dollars and will continue unless the Ford led government enacts legislation to cancel the contracts or amend them to stop the bleeding.

*Grid connected wind capacity posted by IESO, for an unknown reason, does not include several larger developments as Scott Luft notes in the tweet cited above.

No “high fives” for Industrial Wind Turbines

Since late June, Ontario has experienced almost two weeks of very hot humid weather resulting in increased electricity demand as air conditioners throughout most of the province became almost a necessity. As a result, IESO’s “Peak Tracker” of high demand hours for the current year as of the morning of July 10th consisted entirely of 10 hours beginning June 29, 2020 with the latest happening at “hour 17” on July 9th. The latter was the highest, so far, in the current year.

Picking the “high five” peak hours plays an important role for Ontario’s largest industrial clients referenced as Class A ratepayers. If they successfully pick the hours and reduce their consumption during that hour they are rewarded with lower rates. Those lower rates have benefited the Class A ratepayers for many years as they avoid paying a portion of the Global Adjustment (GA). The Class B ratepayers have been obligated to pay for that portion of the GA which in turn raises their rates.  The principal reason industrial ratepayers lobbied for lower rates was due to the above market contracts signed with wind and solar companies by the McGuinty/Wynne led government.  In turn the “B” to “A” subsidy is affected by the amount of generation coming from the power produced by those expensive wind and solar contracts as it drives up the GA pot by hundreds of millions of dollars every month.

So a question arising about the recent 10 high demand hours IESO recorded is, how much power did those IWT (industrial wind turbines) generate to alleviate demand on the grid during those hours?

The total Ontario demand over the 10 hours was 224,826 MWh and in those 10 hours wind produced 4,329 MWh or 1.9%!   What that meant is IWT generation was what one would call a “rounding error”.  When demand is high IWT have this bad habit of being absent and in those 10 hours they demonstrated their failure.  The 4,800 MW of IWT produced power at only 9% of their capacity.  Thankfully nuclear, hydro and gas were available and generated the bulk of our demand.  In several of those hours we also depended on imported power from Quebec paying as much as $203.46/MWh on July 9, 2020.

The current # 1 peak hour occurred July 9th ending on hour 17 when Ontario demand reached 24,446 MW.  Nuclear (10,375 MWh) hydro (5,753 MWh) and gas (6,688 MWh) contributed the bulk of the power with wind producing only 389 MWh or 1.6% % of that hour’s demand.  Grid connected solar contributed 217 MWh and the balance was provided by imports (principally from Quebec).

What the foregoing clearly demonstrates is IWT fail to deliver power when needed.  It is a financial burden on all Ontario ratepayers and requires gas generators to be constantly at the ready as their backup, doubling up on the costs!

The Ford led Ontario government needs to deal with the fact that IWT fail to perform when needed and deliver excess power when it’s not needed which IESO then sell for pennies of their cost.

Ontario’s Minister of Energy, Northern Development and Mines should work to cancel those lucrative contracts and/or penalize them for their failure to perform during those “high five” hours and for the many times they produce unneeded power.

How About Charitable Receipts for Ontario Ratepayers?

Another costly weekend for Ontario ratepayers/taxpayers came and went as we exported 163,566 MWh to our neighbours in NY, Michigan, Quebec, etc. Those MWh were sold at a probable cost to Ontarians of $137/MWh (minimum)* and we received an average of $0/MWh for the sale price meaning the cost to Ontario’s ratepayers and taxpayers was north of $22 million for nothing on June 13th and June 14th!

The above $22 million doesn’t include costs associated with spilled hydro, steamed off nuclear or idling gas plants which also occurred and paid for by us benevolent ratepayers/taxpayers.

Interestingly enough the almost 164 thousand MWh exported was equal to 28.9% of the 566 thousand MWh Ontario ratepayers actually consumed over those two days and equates to what 3.2 million average households in Ontario would consume over two days.  This smacks of bad planning by IESO or perhaps it’s the combined effects of the pandemic and the GEA instituted by the McGuinty/Wynne led governments. The bad planning was influenced by eco-warriors such as Bruce Lourie and Gerald Butts who pushed for intermittent and unreliable renewable energy in the form of wind and solar generation!

So, a high percentage of generation was exported over the two June days and much of the blame can be laid at the feet of wind and solar which often presents itself at times of the year when consumption falls.  Over the two days, wind was generating at around 27% of its capacity and solar at about 31%. Solar somehow even generated a few MWh in the middle of the night during those two days? In total wind generated around 38,500 MWh and additionally just under 20,000 MWh was curtailed, collectively costing $8.1 million. Solar’s (grid connected only) generation of almost 6,700 MWh cost another $3 million.  Together wind (including curtailed) and solar generation represented just over 39% of our net exports and close to 50% of their costs.

Without wind and solar generation, we would have saved just over $11 million and due to a smaller surplus may have actually generated some revenue based on the market driven HOEP (hourly Ontario electricity price) helping reduce costs for Ontario’s ratepayers and taxpayers.

Since implementation of the Green Energy Act and it’s poor planning (no cost benefit study) it has cost billions of dollars to supply our neighbours with cheap electricity.  Those billions of dollars paid by ratepayers and taxpayers over the past ten years have been paid with after-tax dollars by residential and sole ownership businesses so perhaps the Ford government should consider implementation of a charitable receipt for each of us to acknowledge our generosity over the years!

An alternative would be; amend the contracts, via legislation/regulations to eliminate wind and solar’s “first to the grid” rights! We should pay for power, as and when needed, not be forced to accept it when unneeded!

 

*The $137/MWh GA is an estimate as IESO now only uses the rate for the GA imposed by the Ford government set at $115/MWh or 11.5 cents/kWh with the difference accumulating in the Ontario Electricity Rebate program (previously called the Fair Hydro Plan) appearing on electricity bills.

OPG reports 1st Quarter Net Revenue Growth of 22.6% and No One Noticed

The 2020 1st Quarter results by OPG were reported May 12, 2020 and showed  their “gross margin” (revenue less fuel expense) increased $289 million or 22.6% over the comparable 2019 Quarter.  Net profit was up $96 million (+45%) to $309 million but the MSM didn’t notice as they were no doubt busy reporting on the pandemic and ignoring any other news!

Net Generation was up 1.6 TWh and 1.3 TWh of the addition came from the nuclear sector (up from 9.8 TWh to 11.1 TWh) and was the primary reason for the increased revenue.  The nuclear generation also included an increase per MWh delivered; jumping from 89.70/MWh to 94.96/MWh and added $58.3 million to revenue while fuel expenses increased by only $6 million.  Gross revenue from nuclear generation increased by $242 million.

Hydro generation was flat in comparison with the prior year at 8.2 TWh and a revenue gain of $11 million was due to a slight increase in an OEB approved rate application.  OPG also spilled 0.7 TWh in 2020 versus 0.3 TWh in 2019 adding about $20 million to revenue.  One should correctly assume the spilling of hydro in both years was caused by SBG (surplus baseload generation) as industrial wind turbines or solar panels delivered power when it wasn’t needed! In the past OPG wasn’t paid for spilling hydro but when wind and solar were found to reduce OPG’s revenue because of wind and solar’s “first to the grid” rights, OPG complained.  They got the McGuinty/Wynne led OLP and the OEB to agree and since 2011 Ontario ratepayers have paid for double and often triple the cost of power.  The tripling comes from gas plants whose primary purpose is to provide peaking power to back-up to wind and solar when there is no wind or sunshine.  Gas plants are paid to idle and OPG is paid to spill hydro!

Now if one does the simple math to determine the cost to ratepayers for a single kWh (kilowatt hour) in the 2020 first quarter delivered by OPG simply divide the “revenue” by the TWh delivered! For the first quarter of 2019 it is $1,426 million divided by 19.1 TWh indicating an average cost of $74.66/MWh or 7.5 cents/kWh.  For 2020 revenue was $1,720 million so dividing that by 20.7 TWh produces an average cost of $82.81/MWh or 8.3 cents/kWh.  That implies a year over year increase of $8.15/MWh which translates to a jump of 10.9 % for each and every kilowatt hour consumed. This additional cost comes in the middle of the Covid-19 pandemic so has serious implications on affordability as many from the private sector struggle with simply trying to economically survive.  If it doesn’t hit the ratepayers it will surely hit the taxpayers as the Ford government has either decreed it will be deferred or taxpayers will pick up the costs.

If it is any consolation, OPG is 100% owned by the province (we are the shareholders) so the net profit of $309 million and the $87 million in taxes (actually they are “payments in lieu of taxes) contributes $396 million to the provincial treasury.  On top of that the hydro “fuel costs” used to generate the 8.2 TWh of hydro was $67 million and will allow the provincial treasury to record revenue from OPG of $463 million for just one quarter. That money comes from the pockets of the ratepayers of the province and will clearly help to supplement the “Ontario Electricity Rebate” program.

As a ratepayer/taxpayer it is both annoying and expensive to realize we pay for unreliable wind and solar generation as well as spilled hydro and those idling gas plants needed to back-up them up!

The time has come to recognize the facts and cancel wind and solar contracts or only pay them when they deliver NEEDED power.  That action would help keep OPG’s rates down at the same time.

Ontario’s ratepayers eat $50 million extra costs for Victoria Day Weekend

As the expression goes; “the hits just keep on coming” and the three days of the Victoria Day weekend did that!  Ratepayers, as is typical in the spring, don’t consume as many kilowatt hours (kWh) daily as they do in the cold winter months or the hot summer days so they just got hit big-time!  The past weekend demonstrated the foregoing in spades, no doubt partially due to the Covid-19 pandemic, but mainly due to renewable energy generation and its required back-up support.

Gathering the information disclosing the $50 million cost for the three days was made easy as my friend Scott Luft sent me an easy to read chart disclosing: generation by source, the estimated cost of the generation and generation steamed-off, spilled or curtailed.  The chart also had the HOEP (Hourly Ontario Energy Price) or “market price” at the time of delivery and total exports over the three days.  Scott also estimated and included DX (distributor connected) generation (mainly solar and wind) and he is always very close to the actual generation delivered when that data is finally available.

It turns out total generation from all sources was 884,000 MWh (estimated) net of the 266,210 MWh (24.4% of grid accepted generation) exported. What that reflects is; average daily consumption was 294,668 MWh or about 10% below prior years.  The 1,090,210 MWh (884,000 MWh + 266,210 MWh) generated and delivered to the TX (transmission connected) and DX grids cost $126,773,990. or $147/MWh including costs of the exports we gave away for a negative value of -$11/MWh.

It is worth pointing out, the HOEP value for the 1,090,210 MWh accepted over those three days was $1,271,203 meaning market value was $1.16/MWh* compared to $147/MWh it cost ratepayers.

That should give those who manage our electricity system and our politicians something to ponder as it suggests the mess our electricity system is in.

The $147/MWh cost of generation over the three days means the total loss for the 266,210 MWh exported was $42,061,180 of the $127 million total cost!  Without the supply of surplus power and the cost to pay our neighbours to take them, our per MWh cost would have been $96/MWh (9.6 cents/kWh).  That would be less than the 10.1 cents/kWh we are charged for off-peak consumption.

So, the above raises the question why did we need to export 24.4% of accepted generation. Well, a small portion of it was due to a decrease in consumption (the pandemic perhaps) but the principal reason is we are obliged to accept wind and solar generation and pay for its curtailment.  At the same time, we also pay for steamed-off nuclear and spilled hydro caused by excess wind and solar generation.

The data from Scott disclosed the 884,000 MWh consumed by Ontarians over the three days could have been easily supplied by nuclear (688,535 MWh) and hydro (267,057 MWh) still leaving almost 72,000 MWh available to export.  On top of that over the three days we also paid for steamed-off nuclear (3,473 MWh) and spilled hydro (96,078 MWh).  While those two wastes also cost us money it wasn’t as much as the 59,119 MWh of curtailed wind whose cost was north of $7 million.

It’s past the time the ruling Premier Ford led government did something to stop the bleeding.  Either cancel the industrial wind and solar contracts or tax them for delivering power to the grid when it’s not needed which is the bulk of the time.

Ontario’s ratepayers are fed up with the burden placed on them by the Green Energy Act!

*The average household in Ontario consumes 9 MWh annually so if we could have purchased those 9 MWh last weekend it would have cost $10.44 for our annual electricity consumption.

Ontario’s Classy “A” electricity customers accept donations from the lowly Class “B” ones

A recent article penned by yours truly, outlined how industrial wind turbines cost Ontario’s ratepayers and taxpayers as much as $2 billion annually while contributing little to ratepayer needs or grid reliability. Those costs, however, are not the only impact on electricity bills in Ontario for residential and small and medium sized commercial businesses who are labeled as “Class B” ratepayers!

Back in 2010 the McGuinty led Ontario Liberal government were hearing about the effects of the GEA via climbing electricity prices as well as issues with TOU (time-of-use) pricing.  The loudest voice came from AMPCO (Association of Major Power Consumers of Ontario) who lobbied for lower prices for their members.  As a result of their lobbying, Brad Duguid, than Minister of Energy and Infrastructure issued a directive to IESO, March 4, 2010 instructing them to create an industrial energy efficiency program.  The program was developed and labeled the ICI (industrial conservation initiative).  The ICI allowed large industrial electricity users to pick five (5) “peak” demand hours and they would be rewarded with lower rates.  Kind of like winning the “Lottery” but much easier.  During those 5 hours they would go off-grid, perhaps by shutting down or simply firing up a gas generator or two to get them through that hour. IESO labeled them “Class A” ratepayers. *

IESO’s design of the ICI has resulted in the claim; due to lower “peak demand” periods, ratepayers have been spared from higher electricity prices.  The claim is made as the sector would reputedly have had to spend big dollars to acquire additional “capacity” to ensure we avoid grid failure due to those 5 “high demand hours”. That being the claim IESO don’t tell us; why we export (19.8 TWh) more TWh (terawatt hours) annually than the AMPCO members use (15 TWh).  IESO also don’t tell us why we are obliged to pay for spilled hydro, curtailed wind and steamed-off nuclear whose costs are added to the Global Adjustment (GA).

What the ICI program accomplishes for AMPCO members is related to the GA, ie; the pot adding dollars on a continuing basis! The GA is the difference between contracted prices and market prices.  As an example; if the contracted price for wind is 13,5 cents a kWh but when it enters the grid the HOEP (Hourly Ontario Electricity Price) or market trading price is only 2 cents/kWh the difference of 11.5 cents is allocated to the GA. The ICI works on the basis of the higher the GA is, the bigger the benefit to ICI members.  As a result, the continuing annual decline in HOEP values has resulted in Class B ratepayers picking up a greater portion of the contracted or regulated price.  In other words; if demand falls and the HOEP price tanks, Class B ratepayers are obliged to pay more not less.

The foregoing was evident during the first three months of the current year compared to the first three months of 2019. Class A ratepayers consumed slightly more year-over-year, and saw their GA allocation increase from $51.94 MWh in 2019 to $59.66 MWh in 2020 for an increase of 14.9%.  Class B ratepayers however, saw their GA rate allocations increase $30.59/MWh or 37.8% from $80.85/MWh to $111.44/MWh.

The net result of the above was an allocation from Class B to Class A in 2019 for the three months of $211.5 million.  For the comparable three months of 2020 the allocation increased to $374.4 million or an additional $162.9 million (+77%) in just one comparative year-over-year quarter.

It is kind of shocking to realize and understand Class B ratepayers actually consumed 1.3 TWh less in the first three months of 2020 than 2019 but are being held responsible for payment of $162.9 million more than they paid in the 2019 quarter to subsidize “Class A” ratepayers!

Maybe the time has come to create another Class of ratepayers to stop the diatribe emanating from IESO whose CEO and President has the nerve to proclaim in their just released annual report that : “our focus has stayed the same: ensuring Ontarians have affordable electricity, where and when they need it.”

We must ask the question:  which Ontarians truly have affordable electricity and why only them?

* The availability to reference an operation/company as Class A was expanded by further directives from the Energy Ministry (Bob Chiarelli) but many of the additional ones are not members of AMPCO.

The OEB and IESO are Coming After us Ratepayers Again

It appears the almost 200 employees at the OEB and the over 700 employees at IESO who collectively must survive on an average annual salary, plus benefits, of only $150K are concerned as the Covid-19 pandemic has affected people in the province.

If for some reason you felt their concerns were related to all the people who have been laid off or will lose their jobs or businesses because of the pandemic you would be sadly mistaken!

The concern, as expressed by the OEB is with OPG and electricity transmitters, ie: Hydro One!  Their recent letter of April 29, 2020 instructs those two parties to:  establish “Deferral Accounts to Record Impacts Arising from the COVID-19 Emergency”.  The letter notes; “electricity and natural gas distributors* may incur incremental costs as a result of the ongoing COVID-19 pandemic.”  As a result, the “OEB ordered the establishment of a deferral account with sub-accounts for electricity and natural gas distributors to use to track any incremental costs and lost revenues related to the COVID-19 pandemic effective March 24, 2020.”

NB: deferral accounts are set up to recoup lost revenue!

The IESO held a webinar April 23, 2020 titled: “An overview of COVID-19 impacts on electricity system operations” to also deal with the issues.

IESO disclosed some interesting pieces of information in their webinar such as:  “IESO and stakeholders have been limiting staff on-site, deferring non-essential work, and focusing on core operations” and “A third control room was built and successfully deployed in 10 days, which can be used to further maintain physical separation of control room operators”.

The latter disclosure is a big wow, as many of us have been after IESO to provide up-to-date disclosure information on issues such as: curtailed wind, spilled hydro, embedded generation etc. etc. for years without success but show them a “pandemic” and they can apparently accomplish a new “control room” in 10 days!  A simple search on the IESO website of “transparency” generates 2,290 hits but for some reason they have difficulty generating the foregoing information for those of us with a curious mind!

IESO’s webinar does provide some interesting information and the following stands out not so much for its truthfulness as much as for what IESO ignores.  First, what they posted: “High surplus baseload generation (SBG) conditions are often observed in the spring when demand is low and there are large amounts of energy from hydroelectric resources caused by higher water levels”.  The foregoing comes as no surprise however, what is surprising is, they make no mention of either wind or solar’s penchant to produce much higher generation during the Spring!  Why focus on what we all know and avoid what we would like to know?

Needless to say, the webinar info discloses (with the exception of residential consumption increasing by 4%) all segments: small commercial, industrial, etc. are showing decreased consumption in the double digit category meaning surplus baseload generation is being exported (at very cheap prices) or (non-disclosed) we are curtailing wind or spilling hydro and it will appear in our future bills and we must pay for it.

Add the above to the OEB and IESO efforts to ensure OPG and Hydro One employees (as well as themselves) can maintain their lifestyles and watch those OEB “deferral accounts” bound upwards.

Ratepayers should prepare themselves for future rate increases to ensure all those overworked and underpaid “public service” employees in the electricity sector receive their entitlements!

*While the word “distributors” is used we are unsure if that applies to all of the almost 70 LDC (local distribution companies) in the province.

Another Day and over $15 million was Tossed Away

Once again Ontario ratepayers and taxpayers were forced to throw $15 million plus into the garbage.

Yesterday, April 21, 2020, our electricity system operator, IESO, managed the grid in a way that treats ratepayers and taxpayers as bottomless pits. The wind was blowing strong throughout the province and if all their generation was accepted into the grid it would have generated more power than hydro did.

IESO accepted 48,100 MWh of wind generation and curtailed 47,200 MWh.  At the same time, they gave away 70,000 MWh to our neighbours! Yes “gave away” is correct as yesterday’s market price or HOEP was -0.05 ($/MWh) according to IESO’s Daily Market Summary.

The 48,100 MWh of wind cost us $6.5 million and curtailed wind another $5.7 million so the total cost of wind generation for the day was $12.2 million or $254/MWh (25.4 cents/kWh) for the grid accepted portion.  Almost all of the 70,000 MWh was given away to New York and Michigan so effectively we are helping them financially cope with the costs of the Covid-19 pandemic by providing them with FREE energy. The 70,000 MWh we gave away was about what 2.8 million average Ontario households (over 50% of all households in the province) would consume in one day.

If we calculate the MWh we gave away in excess of the grid accepted wind (70,000 MWh – 48,100 MWh = 21,900 MWh) at IESO’s first estimate of the Global Adjustment* (GA) of $137.07 we can add another $2.9 million to the monies we were forced to toss away yesterday. That makes the total hit to Ontario’s residential and small and medium sized businesses over $15.2 million above what electricity should have cost us for the day.

If we did this every day of the year the cost to Ontario’s taxpayers and ratepayers would be over $5 billion annually.

Time for Ontario’s current government to put an end to this and pass legislation to stop this craziness!

*April’s GA is likely to be north of $160/MWh according to my friend Scott Luft.