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.

Ratepayers get Dinged Again for Nothing

Ratepayers get Dinged Again for Nothing

If the $43.4 million Ontario ratepayers and taxpayers paid for nothing Easter weekend wasn’t bad enough news, unfortunately, the bad news keeps on coming!

Monday April 13th added another big chunk of money to the coffers of generators (mainly those who own the industrial wind turbines [IWT]).  The wind was blowing when it wasn’t needed but IESO took 58,700 MWh of it, added it to the grid and also paid for another 20,800 MWh of curtailed wind with our dollars.  Together IWT, (grid accepted and curtailed) added $10.5 million to the costs of generating power for the day.

Total “Ontario Demand” was 313,295 MWh but IESO accepted 406,320 MWh (IESO refer to that as “Market Demand”) even though the additional 93,025 MWh wasn’t needed.  IESO sold off the excess generation via the HOEP (hourly Ontario electricity price) market and the maximum price they got for it was 0.00 cents/MWh.

The above easily demonstrates wind generation wasn’t needed. Grid accepted wind represented 62.4% of what was sold for -0.03 cents/MWh according to IESO’s Daily Market Summary, but it cost us $10.5 million.  As if to add to the grief, the additional 36,414 MWh we sold for nothing cost another $5 million, using IESO’s first GA estimate of $137.07/MWh for the month.  It’s also worth mentioning idling gas plants added approximately $3.2 million to the day’s costs to back-up wind and solar generation.

The total dollar amount of $18.7 million for another day of waste added $60/MWh to the costs of Ontario’s Demand of 313,295 MWh pushing costs close to $200/MWh or .20cents/kWh. We also probably got dinged for spilled hydro which would add further costs but IESO don’t disclose that information.

It’s time our current government recognized the catastrophe the McGuinty/Wynne governments created in respect to the electricity sector. I’m confident the ratepayers and taxpayers of Ontario would be delighted if the Ford government used their power to end this insane result of the Ontario Liberal’s Green Energy Act.

Fix it please as we taxpayers and ratepayers are tired of paying for NOTHING!

During the pandemic Federal and Provincial Governments should save real “charitable” jobs not those related to “climate change”

One of the fallouts resulting from the Covid-19 pandemic as recently reported was: “Canada’s charities say they have begun laying off staff and shutting down their services, which are usually in high demand during economic downturns, as the sector feels the financial sting from COVID-19.”

What is a “charity?

As most of us know the institutions referred to in Canada as charities, has changed, as much wider regulations were brought in by Prime Minister Trudeau’s government. The change now allows charities to “carry out unlimited “public policy dialogue and development activities”.  This means they are free to spend money on partisan issues favouring political parties. The charities of the “climate change” religion love the change and many of them have expanded those partisan activities.  Many of us however don’t think charities of their ilk are what we feel are real charities!

Merriam Webster’s dictionary defines the word “charity” as, 1. benevolent goodwill toward or love of humanity and 2. generosity and helpfulness esp. toward the needy or suffering.

These aren’t charities!

Back in 2014 the CRA (Canadian Revenue Agency) was investigating seven* (7) environmental charities however as soon as the Liberal Party was swept into power the investigation was cancelled.  Reviewing the most recent CRA filings and a news report (Pembina) for those seven charities one discovers in the latest year they received $7,449,747 in grants or contracts ($183,000) from the government.  If the foregoing isn’t disturbing enough, their latest CRA filings indicate they collectively received $22,107,186 in donations from other charities.  It is difficult to understand exactly how that almost $30 million is somehow remotely associated with the Merriam Webster definition of what constitutes a “charity”!

The other galling piece of information about the almost $30 million of charitable donations that “group of seven” received is; some of it came from charities owned by the Province such as the Trillium Foundation and the Greenbelt Foundation which are both dependent on funding from Ontario taxpayers.  Gross revenue for the seven was just under $39 million.  Six of the seven charities (Pembina attributed no salary costs to their charity in CRA flings) reported salaries for their top 10 employees in a range from $40K to $350K and the average salary of each of the 54 of them, would appear to be just shy of $100K per annum.  Those salaries are not what one would expect from those who are benevolent and want to help the needy,

It should also be noted those seven “environmental” charities are just a few of the thousands of environmental groups active in Canada and registered with the CRA as charities.  Many of them can be found on “RECEN” (The Canadian Environmental Network) and many others can be found listed on the Canadian Directory for Environmental Groups. Additionally a number of major corporations such as TD Bank and Suncor have established charities that hand out money to many environmental charities such as the Clean Economy Fund (a Bruce Lourie creation) who in turn hand it out to other environmental charities.  Another example is “Evergreen” a Pan-Canadian Expert collaborator who received  $375K from the Suncor Foundation and additional funds from MaRS Discovery District. The latter (a provincially owned charity) also received funds from Suncor.  It’s become a game of “follow the money” for a lot of us taxpayers.

How Dare They!

The Federal and Provincial governments in Canada need to take some time and speak with those who are engaged in real philanthropy and stop calling climate change activates, charitable institutions.

Save the jobs of real charitable workers and let the eco-warriors figure out how to keep their lights on!

*The David Suzuki Foundation, Tides Canada, West Coast Environmental Law, The Pembina Foundation, Environmental      Defence, Equiterre and the Ecology Action Centre