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

Using less drives up Electricity Prices again, signaling the Province should act

The IESO (Independent Electricity System Operator) just released their Monthly Electricity Report for February 2020 and surprise, surprise, costs went up and ratepayers and taxpayers will pay up!

While Ontario consumption was down by 51,938 MWh (what 75,000 average households would consume in one month) in February 2020, we should also note it had 29 days versus 28 days in 2019. That extra day would add approximately another 400,000 MWh of demand meaning daily consumption decreased by about 15,000 MWh.

So, if we consumed less how come the costs of generation went up?  

As Ontarians know the previous McGuinty/Wynne led governments bungled the electricity sector up so badly that it will take years to sort out.  A combination of things made costs of generation increase this February despite reduced consumption.

Let’s start with wind which, according to my friend Scott Luft, generated 1.555 TWh (TX and DX connected) in February 2020 versus 1.379 TWh in 2019. To cap things off we curtailed almost 96,000 MWh in 2020 versus about 52,000 MWh in 2019.  The combined costs in 2019 of wind generated and curtailed, was approximately $192.4 million (13.9 cents/kwh) and in 2020 it was $234.3 million (15.5 cents/kWh) or $41.9 million higher.  As if to make wind’s unneeded production obvious we exported 1.651 TWh in 2020 and 1.478 TWh in 2019.  One will note in both years wind generated less power than electricity exported—ie; it wasn’t needed!  To make the foregoing (surplus generation) sink-in, the exports in 2019 were sold at an average HOEP (market price) of $27.89/MWh (2.8cents/kWh) and in 2020 we sold them at a lower HOEP price of $14.68/MWh (1.5 cents/kWh).  What this means is our net exports* in 2019 generated $3.3 million more in revenue ($19.9 million) than 2020 ($16.6 million) despite having exported 61.4% less.

The results of the above means Class B ratepayers saw an increase in their February costs up from 11.6 cents/kWh to 12.8 cents/kWh (HOEP plus the Global Adjustment) whereas Class A ratepayers (by picking the “high 5” peak hours annually) saw their costs reduced from 8.22 cent/kWh to 7.46 cents/kWh.

What does the future hold?

With March having signaled the start of a shutdown of much of the economy due to the Covid-19 pandemic one should expect consumption will drop further. The drop in consumption in Ontario will also occur in neighbouring states and provinces meaning exports will drop as will the HOEP market price.  The result will be more wind and solar curtailment, more spilled hydro, more steamed-off nuclear at the time of year when our consumption always falls as warmer weather arrives but we have more sunlight and don’t need our air conditioners or furnaces on to the same extent.  All of that foregone generation and reduced exports will drive up the price of the delivered and consumed electricity. The result will bring further substantial costs for the ratepayers and taxpayers of the province.

While I believe we should be thankful Premier Ford on March 24, 2019 announced electricity rates for the ensuing 45 days would be billed at the off-peak rates for residential (annual average consumption of 9,000 kWh) and small business (annual consumption of 150,000 kWh or less) ratepayers, it is not a big deal! The one-time savings per “average” household will amount to about $50.00 and possibly $2,000 for the largest “small business”!

The question becomes why, under the “State of Emergency” the Ford governement declared, didn’t they act to reduce “first to the grid” rights of wind and solar and stop paying for curtailed power?   At the same time, they should have reduced time-of-use rates more than they did to encourage consumption which may eliminate some of the wasted generation we will undoubtedly experience for the next three months.

The time has come for the contracted suppliers of our electricity generation sector to join the rest of us during this pandemic and if they don’t, the Province should legislate them to show the world: “We are all in this together”!

*Total exports minus imports

MaRS Discovery District, Greenbelt Foundation and Ontario Trillium Foundation redefine the word “charity”

With all that is going on in Ontario and the rest of the world associated with the pandemic perhaps it is time for some of our politicians to look inward and try to determine if their past creations make sense and if those creations should be tossed aside.  The result might be to save some hard-earned tax dollars that could be re-deployed to cope with some of today’s Covid-19 fallout.  This looks at just three of those creations.

All three of the captioned companies were creations of the Ontario provincial government and annually receive tens of millions of taxpayer funds which they then reputedly hand out in a “charitable” way.

Their annual reports filed for just the year ended March 31, 2019 indicates they collectively received almost $155 million from the province and $3.7 million from the Federal government. Those funds in turn supposedly resulted in $153 million expended on “charitable activities”.

It’s unclear how many employees the three charities have in total but a review of the recently released Ontario “Sunshine List” indicates 78 employees made the list and received just over $12.7 million in compensation indicating, the “average” salary received was just shy of $163,000 each.*

While the Ontario Trillium Foundation appears incorporated as a “not-for-profit” both MaRS and the Greenbelt are registered charities and their files can be found on the CRA Charities list under the names of “Greenbelt Foundation” and “MaRS Discovery District”.  Let’s examine the three!

Greenbelt Foundation:

In Greenbelt’s filings with the CRA for the March 31, 2019 year-end they provide a list of other “charities” whom they granted funds to and on that list are several towns, municipalities and even Ryerson University.  Also, on that list can be found donations made to the David Suzuki Foundation (revenue of $12.7 million in the most recent year-end), Environmental Defence (annual revenue $3.7 million) and the World Wildlife Fund (annual revenue of almost $25 million).  The other amusing (not for taxpayers) thing about Greenbelt is they spent $564,854 on advertising and promotion and received a miserly $2,929 in actual charitable donations for which they issued tax receipts. What the foregoing infers is our tax dollars are being wasted and also handed out to help charities (we may not willingly support) and municipalities but we taxpayers have no say in the matter.

MaRS Discovery District:

In the case of MaRS we should recall that it was $50.5 million of Ontario taxpayer dollars that first funded them when Dalton McGuinty was the Premier as noted in a 2005 Press Release.  Another $20 million came from the Federal Government.  Since then the province has annually provided them with $20/30 million and the Federal Government with a few million more.  Additionally most will recall the taxpayers back in 2014 bailed them out of their “Phase 2” $344 million expansion.  In their latest CRA filing they record spending $653 thousand on advertising and promotion and raised $528 thousand for which they issued charitable receipts.  Better than Greenbelt but, they still didn’t cover their “A and D spending”!  Major expenditures included $7.5 million on office supplies, $4.4 million on consulting and professional fees, $23.1 million on compensation, $12,3 million on management and administration and $14.4 million on “other expenditures”!  They then have the audacity to suggest and report $40.6 was spent on “charitable activities” but for some unknown reason are not required to report who the beneficiaries were of their largess with our tax dollars.  Needless to say, they lost $3.4 million yet they have 62 people on the recent Sunshine list! Many of those** they funded or provided with their “expert” advice and our tax dollars are reputedly connected to the MaRS “cleantech” sector.

Ontario Trillium Foundation:

As noted above the Ontario Trillium Foundation (OTF) is not registered as a charity however, in their most recent year-end financial statement they record having pledged $108,148,100 in grants to numerous parties.  Their year-end, March 31, 2019, discloses over 410 grants averaging approximately $263,000 with several spread over 2 or 3 years and many of them are true “charities”.  Never-the-less sprinkled among them are grants to the likes of Tides Canada (annual revenue of $35.9 million) and the IISD (International Institute for Sustainable Development) with annual revenue of $29.8 million and a few smaller ones. Donations to other “climate change” charities in the past were much higher and went to: David Suzuki Foundation, Pembina, WWF, Environmental Defence, Sierra Club, etc. etc. Perhaps those now responsible for handing out our hard-earned tax dollars at OTF realized the meaning of what a “charitable institution” really is? Despite the foregoing it should be up to us taxpayers to pick the charity we would support which would eliminate the approximately $30 million of expenses they incur for administration, compensation, etc. Let us decide where some of our taxes should go!

At the present time the three “charities”, briefly reviewed, are providing no meaningful contribution to the pandemic and instead are consuming tax dollars that may be better applied to keep the province from collapsing in an economic heap.  Those 78 employees on the “Sunshine” list could be redeployed to actually contribute to the real charitable activities currently needed.

Our governments must make decisions now to consider our economic future and not penalize our younger generation by creating insurmountable debt.

*Full disclosure.  The writer is a member of a small charitable organization (40 members) and each and every member is paid absolutely NOTHING.

**Represented by 56 “startups” whom MaRS reputedly helped to reach that stage.

Social Distancing for Covid-19 affects electricity costs

The economic effects of Covid-19 are driving up the costs of electricity for residential and small businesses in jurisdictions, like Ontario, where time-of-use pricing is the standard.  As many businesses shut down temporally, lay off their employees or get them to work from home, electricity consumption will drop.  That drop will have little effect on the generators of that power, be they crown corporations or privately contracted ones. They receive guaranteed prices for their generation and for curtailed power (wind and solar), spilled hydro or steamed-off nuclear.  To add fuel to the fire we export surplus power to our neighbours at a price of about 10% of its cost.

The “social distancing” resulting from business closures, etc. will result in a power consumption drop. Despite the drop, however, costs to ratepayers and taxpayers will climb.  The effect; resulting from that social distancing and those milder temperatures during the Spring Freshet, means, demand will fall and consumption will drop even more than it always does during April, May and June.

Ironically those three months is when the wind is blowing and the sun is shining meaning industrial wind and solar generation is high and those contracted generators have “must-take” contracts and are also paid handsomely to curtail their generation.

As an example of the foregoing Scott Luft tracks wind generation and its curtailment and in 2019 during those three months ratepayers picked up the $111 million cost of 938,244 MWh (megawatt hours) of curtailed wind.  That curtailed generation represented what 447,000 average households would consume in three months.  To make matters worse Ontario exported 5,145,700 MWh (what 2.4 million average households would consume) to our neighbours and sold it for an average of $8/MWh but the costs of that generation was north of $120/MWh. A rough estimate of the cost of selling off that surplus is $575 million. So, ratepayers in Ontario, during last Spring, paid almost $700 million for nothing!  During those same three months 2,266,700 MWh of wind generation was accepted and paid for at a cost to the ratepayers/taxpayers of approximately $330 million and solar’s 1 TWh or so of generation, added costs of over $500 million. We clearly didn’t need any of that!

As if to exacerbate the foregoing (during this pandemic) our system of control, over pricing, via the Ontario Energy Board, allows our major generators, OPG and others, the ability to generate a ROE (return on equity) in the 9% range.

Ratepayers represented by small and medium sized businesses are fighting to stay alive during this pandemic and must pay the full time-of-use rates which during high demand hours are 20.8 cents/kWh to keep the revenue flowing to those in the electricity sector.

Time to use the “State of Emergency”

Perhaps it’s time for Premier Ford to use the recently declared “State of Emergency” for the electricity sector to ease the pain for our small and medium sized businesses as well as all of those residential customers who have been temporally laid off.   Pass legislation that will get our contracted and crown owned electricity generators to reduce their generation prices during this pandemic.

It’s time for all of us to equally share the pain!

OPG’s Record Results for 2019

The Ontario Power Generation (OPG) announced their financial results March 12, 2020 for the year ended December 31, 2019 and the media appears to have been so focused on Covid-19 to even notice.  At first glance the $1,126 million of after-tax income reported appears to be less than 2018’s $1,195 million but the latter includes after-tax income of $205 million associated with the sale of the Lakeview Generating Station and unrelated to earnings from power generation.

Power generation was 77.8 TWh (terawatt hours) in 2019 versus 74 TWh in 2018 and gross revenue climbed by $485 million from $5,537 million to $6,022 million.  Payments, in lieu of taxes, were $190 million versus $141 million in 2019. All-in, the province will be able to include $1,316 million as revenue.  That, as Scott Luft points out, is a long way from covering the $5.5 billion in costs for the “Ontario Electricity Rebate”* (OER) for the upcoming March 31st year-end budget.

Noted in the financial report is the following: “The Enterprise Total Generating Cost (TGC) per megawatt hour (MWh) was $50.82 for 2019, compared to $53.24 for 2018.”  While it appears the claim in this statement is the cost of generating a MWh decreased on a year over year basis, OPG do not define what is included in the “TGC” calculation.  One should suspect a number of substantial costs, paid by ratepayers, are not included in the TGC!

This writer’s preference is to calculate the actual costs per MWh by simply dividing gross revenue by actual generation.  If one does that calculation for 2019 for OPG; the per MWh cost is simply $6,022 million (total revenue) divided by 77.8 TWh (generation reported).  Resulting from this calculation; the cost per MWh for 2019 was $77.40/MWh or 7.74 cents/kWh (kilowatt hour).  Ratepayers in the province would be happy if that was the average of TOU (time-of-use) rates, but ratepayers know, other factors played a role in increasing costs.  Wind and solar generation have driven prices up over the past 10 years by over 100% due to above market, contracted prices and the inability of wind and solar to generate power when it is actually needed causing us to export surplus generation for pennies on the dollar to our neighbours.

Looking back in OPG’s past is interesting.  If one reviews their financial statements for 2009 (the year the GEA was passed) the same calculation as noted above indicates a per MWh cost of $60.97 (6.1 cent/kWh). That means we have seen an increase of $16.43 per MWh or 26.9% over the 10 years!   Ontario’s inflation rate over those same 10 years was 17.97% so the cost of OPG’s generation over that time-frame was slightly above Ontario’s inflation rate.

While we can commend OPG for keeping their costs of generation at reasonable levels it is unclear why they suddenly went south of the border to acquire a string of hydro electric generating stations at a cost of C$1.12 billion. The acquisition of Cube Hydro (merged with Eagle Creek Renewable Energy) adds 627 MW of (mainly) hydro electric capacity but does absolutely nothing (on its surface) to benefit Ontario ratepayers.  As a provincial crown corporation their focus should be to ensure the delivery of cheap reliable power to Ontario ratepayers!

We ratepayers will need to keep our eyes fixed on OPG to ensure they don’t loose sight of their mission which is noted on their website as “ Ontario Power Generation’s mission is to provide low-cost power in a safe, clean, reliable and sustainable manner for the benefit of our customers and shareholder.”

*The OER replaced the Wynne led governments “Fair Hydro Plan” subsidizing rates for residential customers.

Ontario’s industrial wind turbines many costs

Wind’s visible costs

An article posted February 10, 2020 highlighted how wind generation, on its own, represented a cost of $12.760 billion over the ten years from 2010 to 2019 to Ontario ratepayers. Industrial wind turbines (IWT) had delivered 83.3 TWh and curtailed 10.5 TWh over that time.  The combined cost of the generation and curtailment represented an average delivered cost per kWh of 15.32 cents without factoring in costs of gas plants being at the ready when the wind wasn’t blowing or spilling clean hydro.

Over the same ten years, exports of surplus power to our neighbours cost ratepayers about $12.5 billion dollars. Wind’s habit of generating power in the middle of the night and spring and fall when demand is low drives down the market price; HOEP (Hourly Ontario Energy Price), resulting in export sales at prices well below contracted rates. This results in ratepayers having to pay the difference.

Last weekend (February 22nd and 23rd) was no exception.  The wind was blowing for the two days but Ontario Demand was low averaging 341,800 MWh.  IWT however, were generating power we didn’t need with grid accepted wind at 148,175 MWh and 14,900 MWh curtailed.  The cost of both, was $24 million or 16.2 cents/kWh. IESO was busy exporting surplus power of 141,648 MWh or 96% of grid accepted wind. On top of that we were probably spilling water (and paying for it) at the same time.

The question the foregoing elicits is; how much were we paid for those exports?  Exports sold February 22nd were at the average price of $1.99/MWh and $1.64/MWh on the 23rd so total revenue earned was a miserly $239 thousand versus a cost to ratepayers and taxpayers of the province of over $24 million just for what the IWT delivered.  Our neighbours must love us!

Winds hidden costs

While the foregoing confirms IWT have the habit of being unreliable and intermittent and require backup from gas plants they also have other bad habits.  One example is their killing of birds. The Audubon Society has suggested it is anywhere from 140,000 to 328,000 annually. They also kill bats in large numbers. Bird Studies Canada in 2016 estimated the kill rate in Ontario was 18.5 kills per turbine (over 50,000 annually). Many killed are on the endangered list!  Additionally, tourism areas may also be negatively affected by IWT as noted in a poll in Scotland by the “John Muir Trust (JMT) found that 55% of respondents were “less likely” to venture into areas of the countryside industrialised by giant turbines”.

A recent report from Wind Concerns Ontario (WCO) raises many other negative issues related to IWT!  The report is a synopsis of complaints about IWT submitted by rural residents of Ontario living within close proximity of IWT.  Those complaints were submitted to the MOECC (now the MOECP. The report titled: “Response to Wind Turbine Noise Complaints” analyzed 674 complaints made during 2017.  The shocking issue revealed is: “Only nine of the 674 complaints, or 1.3% of total records, indicated that there was a field response.”  What that suggests is the MOECP’s field offices are either not equipped to deal with complaints or believe the IWT contracted parties will somehow resolve them.  In excess of 5,200 complaints have been logged by WCO since IWT first started to appear in the province and most of them were related to audible and inaudible (infrasound) noise levels. Other complaints have been associated with aquifer (water) contamination, shadow flicker, ice throws, etc.

Approximately 15% of the population will experience negative health effects from the proximity of IWT; a similar percentage to those who suffer from motion sickness.  The effects of audible and infrasound noise will produce; nausea, headaches, anxiety, ringing ears, feeling of exhaustion, etc.  Those individuals will naturally contact their doctors or other health care professionals for treatment adding to the cost of Ontario’s health care system. Those costs are not attributed to the cause, which are the IWT!

Other outcomes where IWT add (hidden) costs is in respect to property values as they are driven lower.  Many studies have confirmed values drop and an Ontario Superior Court ruling suggested the drop was from 22% to 55%.  The drop in values affects the realty tax base in municipalities hosting IWT and could result in lost services due to declining revenue or a substantial increase in realty taxes.

Let’s summarize the visible and invisible costs of IWT:

  1. Increased electricity costs due to the need for duplicate power sources such as gas plants.
  2. Increased surplus power which must be curtailed or sold for pennies on the dollar.
  3. Increased costs due to IWT inability to generate power when actually needed.
  4. Increased surplus power from IWT often means other clean sources must either spill (hydro) or steam off (nuclear) power which adds costs to our electricity bills.
  5. IWT kill birds and bats, many of whom are “species at risk” meaning insects, damaging to crops, are not eaten and farmers must spray their crops with insecticides adding costs to produce.
  6. IWT may affect tourism areas driving away tourists and thereby affect income to those regions.
  7. IWT cause various health problems requiring our health system to respond to individuals affected, thereby adding to health care costs.
  8. IWT cause property values to fall affecting the realty tax base where they operate and the value of the property should the occupants try to sell after the installation of those IWT has occurred.
  9. IWT lifespan is relatively short (20 years at most) compared to traditional sources of electricity generation and when unable to perform, create costs of remediation and disposal of recyclable and non-recyclable materials they consumed when built and erected.

While CanWEA will brag  about the fact that the “fuel” powering IWT is free they ignore all of the other costs.  Is it any wonder, even though electricity from a wind turbine was first created by Sir James Blyth in 1887, it failed to have an influence on the “electrification” of either the UK or anywhere else in the world. Until the UNIPCC forecast their purported concern about “global warming”, IWT were generally found only in very remote locations.  The technology is 133 years old but the “climate emergency” advocates think it’s still relevant!

My forecast is IWT will never, ever, fully replace fossil fuels due to their costs, unreliability, the harm they cause to humans and to birds, bats and turtles! This old technology should be disregarded in the effort to reduce greenhouse gases.

Ontario electricity ratepayers paid up big-time to reduce emissions

The “Ontario Energy Quarterly” is a report containing a myriad of information related to the Ontario electricity sector and seems to be a collective production of the Province, the OEB and IESO.  It includes a chart tracking Ontario’s electricity sector emissions from 2010.  The report always appears six or seven months after the actual reporting date.  Their recent report indicates as of the end of the 2nd Quarter of 2019 Ontario’s emissions had fallen from 20 megatonnes (MT) in 2010 to only 2 MT by June 30, 2019

To put the foregoing in perspective the Ontario Environment Commissioner in 2016 indicated Ontario’s emissions peaked at 208 MT in 2000 and according to the Federal Ministry of the Environment and Climate Change Ontario’s emissions in 2017 had fallen to 158.7 MT.  So, Ontario’s emissions fell 49.3 MT meaning the 18 MT drop in emissions from the electricity sector represented 36.5% of it. At the end of the 2019 2nd Quarter, emissions from the electricity sector represented only 1.25% of total Ontario emissions in 2017 versus 11.5% in 2010 when total Ontario emissions were 174.1 MT.

The above was achieved without a “carbon tax” but it’s been an expensive proposition for ratepayers.

Costs of reducing 18 MT of emissions in the Ontario electricity sector

Many reports and articles related to reduction of emissions in Ontario’s electricity sector suggest wind and solar generation was responsible for eliminating coal generation in Ontario.  Those purveying the claims avoid the facts and fail to mention costs. The decade beginning in 2010 was the advent of above market contracts signed under the GEA for wind and solar that began to appear on our landscape.  Those contracts drove electricity costs up generating unreliable intermittent generation necessitating back-up from gas plants* including the TransCanada Oakville gas plant move which cost $1 billion.

Looking at generation for the past decade (2010-2019) from wind and solar is a relatively simple task as Scott Luft using IESO data, posted generation by source and estimated costs in charts (complete with text) starting with 2008.  He also charts our exports and its revenue over the same time period.

Wind: Let’s start with industrial wind turbine generation which in the ten-year period (2010-2019) resulted in accepted wind of 83.3 TWh and 10.5 TWh of curtailed wind.  The combined cost of the generation and curtailment was $12.760 billion representing an average cost per kWh of 15.32 cents.

Solar: Over the decade solar panels generated 21,9 TWh with most generation delivered to local distribution companies.  The costs of those 21.9 TWh was $10.504 billion or 48 cents/kWh.

Spilling water: As if to make matters worse, as Ontarians reduced their demand for electricity dropping it from 139 TWh in 2010 to 135.1 TWh in 2019 the generation coming from wind and solar created numerous situations causing SBG (surplus baseload generation) and IESO instructed OPG and other hydro generators to spill water rather than generate clean hydro power.  Once again Scott Luft has summarized available data and estimated the cost of the SBG for just OPG over the past five years. The cost was almost $500 million and was billed to ratepayers.

If one accepts the premise, wind and solar are responsible for the 18 MT reduction, then one must accept the emission reduction represented a cost to Ontario ratepayers of $23.764 billion including the $500 million from hydro spillage. That translates to an emission reduction cost of $1,320/tonne, well above the current carbon tax of $20/tonne and the one proposed by the Ecofiscal Commission of $210/tonne.

Exports: Over the past 10 years, IESO were busy selling our surplus power to NY, Michigan and other provinces and states.  In total, 182 TWh went south, east and west to our neighbours for the market price (HOEP).  Funds lost from those sales (net of transmission costs recovered) were the GA (Global Adjustment) costs of almost $12.5 billion or 6.8 cents/kWh.

It is worth noting; exports of 182 TWh were 173% of the 105.2 TWh of accepted wind and solar generation so, exporting less could have saved us that loss of $12.5 billion.

The foregoing clearly demonstrates the 83.3 TWh wind generated plus the 21.9 TWh solar generated power over the past 10 years wasn’t needed to reduce emissions in Ontario’s electricity sector!  We needed less intermittent unreliable generation as our nuclear and hydro generation (supported by less gas plant capacity) could have supplied our needs and we could still have exported 76.8 TWh.

Ontario Premier Doug Ford should demand the federal government recognize the above “facts” and reimburse the province’s ratepayers by either issuing 182 million tradeable “carbon credits” or pay the province the $23.7 billion we have paid to reduce our emissions. Either one would prove beneficial and when applied to the sector would serve to reduce Ontario’s electricity rates making the province more competitive, thereby improving our economic future.

Failing the above we residential ratepayers should all be looking forward to receipt of our rebate cheque even its only 90% of the $1,320 per tonne we have paid over the past 10 years!

*Gas plants generated 160.6 TWh from 2010 to 2019 at an estimated cost of $19.726 billion or about 12.3 cents/kW.

 

Ontario’s three Classes of electricity ratepayers

The title above is intentionally misleading.

Ontario has only two classes of ratepayers which are: large industrial users referred to as, Class A and the rest as simply Class B!

Class A’s do have sub-categories related to their peak demands and in order to obtain lower rates, they must pick the “high five” hours of the year when Ontario’s demand reaches its highest level(s).  Picking those hours and reducing their demand (by firing up a diesel generator) allows them to achieve significant savings. Reference to IESO’s report for 2019 detailing Class A consumption and the cost of the GA allocated, indicates the average cost of the GA (Global Adjustment) was 5.89 cents/kwh. That GA cost plus the average HOEP of 1.83 cents/kWh for 2019 produced an average cost of electricity for Class A ratepayers of 7.72 cents/kWh.  The substantial all-in lower cost of electricity for Class A ratepayers is due to the allocation (subsidy) of the GA costs being charged to Class B ratepayers.

The Ontario Liberal Party during its time in power piled up electricity costs by signing contracts well above market rates for intermittent and unreliable power from wind and solar which needed back-up power from gas plants.  The combination of the three sources of power drove rates up resulting in large industrial customers making the point: Ontario’s cost of electricity made them uncompetitive.  The result was the Liberals simply reallocated costs to residential and small/medium sized companies.

The all-in Class B rate (GA plus HOEP) for 2019 was 12.63 cents/kWh.

Recently, not all Class B ratepayers had to pay the foregoing average rate, as “residential ratepayers” * now receive a taxpayer subsidy, appearing on our electricity bills as the “Ontario Electricity Rebate”.   A “rebate” of 25% off of the electricity line on our bills was initially referenced as the “Fair Hydro Plan” and enacted by the Wynne led government mere months prior to the last provincial election.  The Liberal government, under Wynne, noted voters were extremely upset with electricity rates climbing by over 100% in just several years. They felt it would affect the outcome of the election without the rebate.  Despite the rebate Ontario’s Liberal Party felt the wrath of the electorate and lost party status.  The Ford government moved the rebate to taxpayers and added other allocations such as:  conservation spending ($400 million annually), low income support programs ($200 million annually), Northern Ontario tax credit ($120 million annually) etc. to the taxpayer pot.  As a result (based on the writer’s calculation) taxpayers are now picking up almost 40% of the GA allocated costs for residential ratepayers under the “Electricity Cost Relief Program” recently estimated to cost $5.5 billion.

Second class, Class B ratepayers

The small and medium sized businesses** in Ontario are still bearing the full brunt of the increased electricity costs as they get no relief.  They are treated as second class citizens of Class B which are already regarded as second class citizens by our electricity operator. A significant factor affecting them is related to Ontario’s time-of use rates with the highest costs (20.8 cents/kWh during On-Peak hours) applied to when most small/medium sized businesses are operating and consuming electricity.

A recent occurrence allowed me to review an electricity bill for a company with just under 100 employees.  Their electricity costs were 18.9 cents/kWh.  A comparable company operating in the USA would pay (average of all US states) 10.8 cents/kWh according to the US Energy Information Administration.  The net difference of 8.1 cents/kWh would have saved the company almost $200,000 annually which may have resulted in the hiring of additional staff.  Those employees would have produced additional taxes for the Provincial and Federal coffers.

Bear in mind this is only one of the hundreds of thousands of small/medium sized businesses in Ontario.  Imagine what would have happened if we had not contracted at those above market rates for the intermittent and expensive power generated by those many foreign wind and solar generators that rushed to Ontario to take our hard-earned dollars.

The time has come to treat Ontario’s largest employers with the respect they deserve by axing the Global Adjustment and the time-of-use pricing mechanism!

We should surmise those small/medium sized companies are not in favour of subsidizing large industrial complexes or those greenhouse operators producing marijuana!  Let’s level the playing field!

*Full disclosure! I calculated my average electricity line cost from my recent bill (adjusted for the “Electricity Cost Relief Program”) and it worked out to 9.11 cents/kWh

**The CFIB in a 2016 report stated Ontario had 1.4 million small/medium sized businesses.

IESO and their colourful 2019 Year-end Data

IESO, the Independent Electricity System Operator, finally released the data for 2019 related to generation, consumption and costs for electricity in Ontario within the TX (transmission connected) grid. Unless one understands how the system operates (along with basic math knowledge) you would be inclined to think—wow, we are so lucky to have such an awesome institution managing our electricity system.  A good amount of the dialogue in the report seems meant to tell the reader how well IESO managed the system during a few erratic weather days when clouds suddenly blocked the sun and the wind either dropped or increased substantially without warning.

When you dive a little deeper into the data, you realize rates climbed again for Class B customers, be they residential, or small/medium sized businesses.

Those rates climbed despite Class B ratepayers reducing their consumption* from 101.0 TWh (terawatt hours) in 2018 to 98.4 TWh in 2019 for a decrease of 2.6 TWh (about what 300,000 average households consume annually) or 2.6%.

The 98.4 TWh in 2019, cost Class B ratepayers** $12,425.6 million versus $11,616.7 million in 2018 for the 101 TWh Class B ratepayers consumed.  The $808.9 million in additional costs (up 6.9%) added 9.8% (1.13 cents/kWh) to electricity costs for Class B ratepayers bills but IESO’s rhetoric skips over that data!

As a coincidence (?) to the $808.9 million increase; IESO’s diatribe under the heading “Other 2019 Highlights” claims: “The Market Renewal Program business case confirmed a $800 million net benefits over ten years.”  A quick math calculation suggests the annual savings of the “Program” was/is $80 million annually versus the costs for the one-year jump Class B ratepayers experienced.  The 10 year savings IESO’s brags about were blown away in only one year.

So, what caused the $808.9 Million jump?                                                                                     A goodly portion of the additional costs were a result of recovering less on sales of surplus generation to our neighbours in NY, Michigan and elsewhere.  When we export our electricity, we are only able to recover the HOEP (hourly Ontario energy price) as it Is market driven!  The HOEP for 2019 was 1.83 cents/kWh versus 2.43 cents/kWh in 2018 so we recovered less despite exporting more. The 19.779 TWh (about what 2.2 million average Ontario household consume annually) we exported, cost us about $333 million more to generate than last year’s exports. Those costs were included in the Global Adjustment which increased to 10.8 cents/kWh or $108 million per TWh.  The balance of the increase ($477 million) was principally related to the OEB (Ontario Energy Board) approving substantial rate increases for Bruce Power and OPG’s nuclear generation and refurbishment.  Scott Luft has done a great job of focusing on what was behind that big jump in a recent post.

IESO should do some real planning producing results that actually reduce rates!

*IESO in the report under the heading: “Energy-Efficiency Savings” brag about their Save on Energy programs which have reputedly contributed “to overall savings of 7.4 TWh since 2015”                          

**A large portion of costs to Class B “residential” ratepayers ONLY is now paid by taxpayers via the “Electricity Cost Relief Programs” and will total $5.5 billion for the current year. Unfortunately, small and medium sized businesses in the province are paying the full costs causing many to raise their prices and/or move their businesses to other jurisdictions.