OPG: generating less power, but earning more

Lots more. A record, in fact.

K2 Wind: first-to-the-grid rights for wind and solar, and lucrative 20-year contracts added to costs

Ontario Power Generation (OPG) released its 3rd Quarter report in mid-November, and it was impressive!

Revenue was up $156 million to $1,373 million (+12.8%) and after-tax income was 113% higher, increasing from $131 million to $279 million. For the first nine months of 2018, OPG reports RoE (return on equity) of 10.8% and will easily generate record after-tax profits for the full year of well over $1 billion. Nine-month profits sit at $948 million, up 84% or $433 million—that’s a record.

Revenue is also poised to crack the $5 billion-dollar level (nine-month revenue is $4,062 million) as it has many times in the past; however, after-tax profits have never been this high since the creation of OPG in 1999 when Ontario Hydro was broken up into several different entities.

What’s interesting about those record profits? OPG is record profits despite a substantial decline in generation.

Look at year-end December 31 2000: OPG generated and sold (into the grid) 139.8 TWh (terawatt hours) and earned revenue of $5,978 million for an after-tax profit of $605 million.   What that means is, back in 2000, OPG’s approximate cost to generate 1 TWh was $42.7 million (4.3 cents/kWh). In 2018 (so far) the cost has jumped to $74.8 million (7.5 cents/kWh) for the 54.3 TWh delivered in the first 9 months.

The 54.3 TWh delivered so far in 2018 is down from the comparable 2017 period by 1.7 TWh or 3% and from 2000 (9 months) by 49.4 TWh* or 46%!   Comparing the first nine months of 2018 to 2000, net income is up $405 million or 74.6%

With such significant drops in generation one would expect net income to drop so what happened?

Some five years ago (December 4, 2013) an article I wrote for Energy Probe was headed up: “OPG-whipping boy for the Ministry of Energy” and it outlined how the GEA (Green Energy Act) had a detrimental effect on OPG’s electricity generation and its revenue, which resulted in declining profits.

I noted how their many “unregulated hydro” assets received only the HOEP (hourly Ontario energy prices) which produced revenue of just over 2 cents/kWh, and how they had been instructed to build “Big Becky” (cost of $1.5 billion) and the Mattagami run-of-river project (cost of $2.6 billion).  Falling out of the GEA also was the rise in prices caused by wind and solar generation with first-to-the-grid rights and had resulted in declines in consumption. That meant much of OPG’s power generation was called on less and less.

OPG were also instructed by the Liberal Minister of Energy to convert power plants such as Atikokan and Thunder Bay from coal to biomass and to close the remaining coal-fired plants, one of which required a multi-million dollar write-down for prior expenditures on “scrubbers” to eliminate emissions.

As all this was happening, over the subsequent years, OPG applied for rate increases such as being paid “regulated prices” for all of their hydro assets and for revenue when they were forced to spill hydro. Those were eventually approved along with other increases to cover pension contribution shortfalls, increases in operational management and administrative costs (OMA), and for refurbishment of some nuclear plants.

OPG’s capacity has fallen from 25,800 MW in 2000** to 16,218 MW today, yet in 2000 they generated electricity at a capacity level of almost 62%. So far in 2018, they are operating at a capacity level of just under 51%.

OPG power could have eliminated excessive costs for wind and solar

If OPG were granted the rights to operate at the 62% level of capacity as they did in 2000, they could have generated 65.8 TWh easily, replacing all the generation produced by industrial wind turbines and solar panels. That generation would have resulted in a cost of electricity of less than 7.5 cents/kWh and eliminated the excessive costs for wind and solar under those 20-year contracts!

Today, OPG seems to no longer look like the “whipping boy” but still produces power at prices well below the costs of contracted generation under the GEA and should earn over $1 billion for 2018!

PARKER GALLANT

*Enough to power all of Ontario’s 4.9 million households for a full year with over 5 TWh left over.         **Staffing levels have dropped from 12,250 (including 650 under contract) in 2000 to 7,700 in 2018 meaning the ratio of employees to capacity has remained static at 2.1 employees per MW.

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Former Ontario Liberal energy ministers: your turn to eat crow

More enlightening facts from the Lennox gas plant, and how billions have been wasted

There have been a few problems with wind power, former Energy Minister Glenn Thibeault told a business audience almost two years ago. We had no idea how bad.

My earlier article briefly described my recent tour of the Lennox natural gas power facility in Bath, Ontario, and also provided the costs of wind power generation—including what was “curtailed” (wasted; paid for but not used).

The period covered was nine years (2009 to 2017) during which grid-delivered wind power generation was 53.1 TWh* (terawatt hours) and its costs (including 6.9 TWh curtailed) were approximately $8 billion.

What I didn’t note earlier was, as we were paying for power generated by wind turbines and curtailed power, we were also paying for spilled hydro and steamed-off nuclear which added additional costs to the GA (Global Adjustment) pot, driving up electricity costs. We started paying for “spilled hydro” in 2011 when the OEB (Ontario Energy Board) allowed OPG to establish a “variance” account.  Since that time 18.7 TWh have been spilled by OPG and the cost of $875 million (4.7 cents/kWh) was placed in the GA and paid for by Ontario ratepayers.

Likewise, the cost of 2 TWh of steamed-off nuclear was (about) $140 million (7 cents/kWh) and also became part of the GA. Adding that to the $8 billion costs of wind power in those nine years brings the total to slightly more than $9 billion, as the hydro spilled and nuclear steam-off were due to “surplus baseload generation” (SBG)!

In 95 percent plus of the surplus events, SBG conditions were caused by wind power generation because it is granted “first to the grid” rights.

So, you might ask on reading this, is, how does/could Lennox fit into this situation?

Well, the fact is Lennox is treated as “the leper” in generation sources within the province and is called on only when something untoward or unusual happens, despite its ability to generate power at relatively low cost. Examples of Lennox doing more than idling include this past summer’s Lake Ontario algae problem which caused the shutdown of a Pickering nuclear unit (the water intake was clogged) and the winter of 2014 when we experienced the “polar vortex” causing gas prices to spike.  As it happens, wind wasn’t there for either event and Lennox was called on to provide the power necessary to keep our electricity system functioning.  (Wind turbines cannot be turned on when demand suddenly increases when the wind isn’t blowing.)

Ontario without wind

If the then Liberal Ontario government had decided not to proceed with the GEA (Green Energy Act) which focused on wind and solar sources, one could justififably wonder how the cost of electricity might have been affected.   If we had instead focused on reliability and reasonable costs, Lennox coupled with our other sources, could have easily replaced the intermittent and unreliable generation from wind turbines.

The math: Taking the wind power generation of 53.1 TWh over the nine years out of the picture would have meant those 18.7 TWh of spilled hydro and the 2 TWh of steamed-off nuclear could have reduced the net contribution of wind to 32.4 TWh. That would have saved ratepayers $1.8 billion i.e., (cost of 20.7 TWh of IWT generation @ $135 million/TWh = $2.8 billion, less the cost of 18.7 TWh of spilled hydro @ $46 million/TWh [$875 million] and less the cost of 2 TWh steamed off nuclear @ $70 million/TWh [$140 million])

The remaining 32.4 TWh of wind power generation could have been provided by generation from the OPG Lennox plant (capacity of 2,100 MW). It would have eliminated the $800 million cost of the 6.9 TWh of curtailed wind as it would have produced power only when needed.  Now if it ran at only 20 percent of its capacity (gas or oil,) it could have easily generated the remaining 32.4 TWh generated by IWY and accepted into the grid.

Note: No doubt much of that 32.4 TWh wind power generation was presented at times IESO were forced to export it at a substantial loss. For the sake of this calculation we will assume Ontario demand would have required it.

More math: As noted in the earlier article “idling” ** costs for Lennox are fixed at $4.200 per MW per month, making the annual idling costs about $106 million or $8.8 million per month. Running at 20 percent of capacity would result in idling costs per MWh of generation of about $30/MWh.

Adding fuel costs*** of about $40/MWh would result in total costs (on average) of approximately $70/MWh or 7 cents/kWh.  Generation at 300,000 MWh per month on average would have generated 32.4 TWh over those nine years (2009–2017).  The cost of that generation would be approximately $2.3 billion whereas the 32.4 TWh generated by IWT in those same nine years cost ratepayers about $4.4 billion.

So, without any wind power generation at a cost of $8 billion over the nine years, Ontario ratepayers would have saved almost $4.9 billion:

  • $1.8 billion using spilled hydro
  • $200 million using steamed-off nuclear
  • $800 million paying for curtailed IWT generation and
  • $2.1 billion by utilizing Lennox

Beyond the dollar savings, the lack of subsidized wind power would also have other effects like:

  • zero (0) noise complaints, instead of the thousands reported,
  • elimination of the slaughter of thousands of birds, bats and butterflies
  • prevented the possible disturbance/contamination of well water

Again, that cost-benefit study might have proved useful!

PARKER GALLANT                                                                

*1 TWh is about the amount of energy 110,000 average households in Ontario consume annually.

**Idling costs of the TransCanada gas plant next door to Lennox is $15,200 per month per MW or 3.7 times more costly than Lennox.

***Lennox has the ability to generate electricity using either natural gas or oil meaning if a fuel priced spikes, as natural gas did during the “polar vortex” in 2014, Lennox can shift to the cheaper fuel.

Parker Gallant eats crow on gas power generation (really!)

An eye-opening tour of the Lennox plant in Eastern Ontario leads to starting calculations, too

Lennox power station in Bath–fast, efficient, low cost …what the heck did we need wind power for? [Photo: OPG]
Back in late May and just before the Ontario provincial election, I wrote a “what if” post titled; “If I were Ontario’s new Minister of Energy ” which was suggested how I would undertake to reduce the costs of electricity.

So far, a few of my recommendations have actually happened.

I won’t linger over the enacted or missed ones but I will focus instead on my suggestion that we close the “Lennox oil/gas plant in Napanee/Bath with a capacity of 2,200 MW that is never used.”

I received an invitation to tour the Lennox plant and I accepted! The tour was led by John Hefford, VP Regional Operations-Eastern Region, who has responsibility for not only Lennox but for all the hydro generating facilities located in the eastern part of Ontario, which (including Lennox), totals about 4,800 MW — that’s about 30% of OPG’s total capacity.

Driving toward the Lennox plant one can’t help but notice, in the distance, the industrial wind turbines (IWTs) recently built on Amherst Island (“owl capital” of North America).  That project is considered one of the most divisive wind power projects ever awarded a contract by IESO under the McGuinty/Wynne  governments.

The tour combined with a takeaway “Overview” of Lennox was truly enlightening.  The most noteworthy bits of information picked up were related to the ability of each of the four 525-MW turbines to ramp up quickly from their minimum load point of only 28 MW or 5%.  To put that into perspective, the other gas plants operating in Ontario are mainly CCGTs (Combined Cycle Gas Turbines) and they have to idle at minimum loads that are six to 14 times higher.

The ramping load point at Lennox logically translates to much lower emissions than the units added to Ontario’s grid(s) backing up industrial wind turbines (IWT) and solar under the FIT (feed-in-tariff) program.

The other significant difference between the CCGTs and single-cycle Combustion Turbines (CTs) is in respect to idling costs: for Lennox the cost is about $4,200 MW per month versus CCGT generators with costs of $10,000 MW per month to $20,000 MW per month, and CTs which average about $10,000 MW.

Another impressive piece of information picked up on the tour is the ability of the units to operate on either natural gas or residual oil (or both). That means, if a fuel cost spikes due to high demand (e.g., gas in the “Polar Vortex” winter of 2014) Lennox can switch to the other fuel. Lennox was also recently called on when a Pickering nuclear unit was shut down due to the 2018 Lake Ontario algae situation.

IESO forecasted shortfall                                                                                                         It appears likely Lennox will be called on to provide the capacity during the shortfall that  the IESO projects during the upcoming nuclear refurbishment years. From a ratepayer perspective, it makes sense.

Carbon tax calculations

Completing the tour and driving home led me to the questions of how much Ontario’s ratepayers might have saved if Lennox had been deemed the back-up for wind and solar power generation or had been used to generate electricity instead of handing out high priced 20-year contracts under the FIT program.  The first question would take an inordinate amount of research, so I opted for the latter!

A report (IESO prepared?) titled the Ontario Energy Report has a chart showing emissions generated by the electricity sector and the report for year-end 2017 indicated emissions in Ontario were 14 mt* in 2009 and 3 mt in 2017, for a decline of 11 mt in 9 years. The decline was touted by the Wynne government as attributable to renewable energy in the form of wind and solar.

Looking only at the wind power generation and its associated cost in those nine years provides an indication of just how much Ontario’s ratepayers have paid on a per ton basis to achieve that 11 mt drop! According to the IESO, from 2009 to 2017, wind turbines generated 53.1 TWh (terawatt hours) and since we commenced paying for curtailed power (paid for but not used), ratepayers picked up those costs for about 6.9 TWh.

So, the approximate costs of the grid-accepted wind power generation was about $7.2 billion, and for the curtailed generation was another $800 million. That brings the overall costs of the 11 mt reduction to about $8 billion!

The cost of that reduction of 11 mt looking at IWT (generation and curtailed) only and without solar, works out to $655/ton!

Ontario’s ratepayers have obviously done their bit to reduce emissions and will continue to pay more until the wind turbines and those 20-year FIT contracts finally expire.

We don’t need a carbon tax.

PARKER GALLANT

P.S. The second in this two-part series about Lennox will follow shortly, covering off how much we might have saved without wind power

*mt denotes “megaton” equal to one million tons.

Class distinctions in Ontario’s electricity sector

Ordinary consumers try to conserve while …

Ontario: where the energy ministry robs Peter to benefit Paul

April 15, 2018

The data is out for the first two months of 2018 for both the consumption of electricity as well as the costs to Ontario’s upper and lower class of consumers.

According to Independent Electricity System Operator or IESO, consumption increased by 4.7% or 1.084 terawatts (TWh). That’s what 725,000 average households would consume for two months.

The annoying thing about the increase in consumption, however, is while Class B (that is, regular folks) ratepayers reduced consumption by 729,000 MWh Class A ratepayers (customers with higher demand such as businesses) increased their consumption by 1.813 million MWh.

So, why did consumption increase? If you guessed, Ontario’s energy ministry launched a “Black Friday” or a post “Boxing Day” sale, you would be heading in the right direction!  To explain: if one travels back to the days when Brad Duguid was the Minister of Energy he issued a directive to the OPA (Ontario Power Authority) instructing them to create and deliver an “industrial energy efficiency program” specifically for large transmission-connected (TX) ratepayers. He issued that directive and, as they say, the rest is history.   The resulting ICI (Industrial Conservation Initiative) granted the “A” ratepayers the ability to reduce their consumption during the “high five” peak hours and the reward was the GA (Global Adjustment) component would drop significantly for them.

Originally, Class A ratepayers were only the largest industrial clients (approximately 170) whose peak hourly demand was 5 megawatts (MW) per hour, or higher.   Since the launch of the new class distinction in January 2011, however, Class A clients have evolved further, to allow those with peak demand exceeding 500 kilowatts (kW) per hour. In other words, because industrial jobs were fleeing Ontario and various associations such as the Chamber of Commerce, the Canadian Federation of Independent Business, the Association of Major Power Consumers of Ontario, etc., made their concerns known, the ability to “opt in”’ to Class A was lowered. The results should have been obvious: Class B electricity costs would climb higher!

January and February 2018 saw the “B” to “A” Global Adjustment or GA subsidy transfer increase to $201 million compared to $179 million in the same two months of 2017. The full cost of the transfer and the extra $22 million (+ 12.3%) is allocated to Class B ratepayers, and probably includes some newly classified “A” ratepayers.

When you review the GA subsidy Class B ratepayers provided in 2017 compared to 2016, the increase year over year is up $369 million or 30%.   In 2016 Class B ratepayers absorbed $1.222 billion of the GA subsidizing Class A ratepayers and that support jumped to $1.591 billion in 2017. The $369 million increase occurred despite Class B ratepayers reducing their consumption by 9,976,000 MWh (what 1.1 million average households would consume in a full year) while Class A consumption went up by 5.146 million MWh.

No doubt most of this increase can be attributed to the lower “A” qualification level but IESO does not disclose that information.

For those of you who like to “connect the dots” here’s the puzzle: the almost $1.6 billion annual Class B subsidy added to the $400 million spent on “conservation” comes to $2 billion.   That $2 billion annual cost of 2017 comes very close to the Financial Accountability Office’s estimate of the annual cost of the Fair Hydro Plan at $2.1 billion.

Coincidence?

As it turns out, the outcry from Class B ratepayers about high electricity costs started to result in negative media attention which presumably brought about the concept of the “Fair Hydro Plan” which actually kicks about $2 billion of annual costs down the road for the next ten years.

Despite the obvious Class B to Class A subsidy highlighted above, the Fraser Institute’s* recent report on Ontario’s electricity system notes in the Executive Summary: “In 2016, large industrial users paid almost three times more than consumers in Montreal and Calgary and almost twice the prices paid by large consumers in Vancouver.” So, even though Class B ratepayers contributed $1.222 billion in 2016 to help reduce electricity rates for Ontario’s large industrial users, they still paid almost three times more than their counterparts in Montreal and Calgary.

Parker Gallant

*From the Fraser Institute report: “The centerpiece of the GEA was a Feed-In-Tariff program, which provides long-term guaranteed contracts to generators with renewable sources (wind, solar, etc.) at a fixed price above market rates. In order to fund these commitments, as well as the cost of conservation programs, Ontario levied a non-market surcharge on electricity called the Global Adjustment (GA).”

Sales of public assets: benefits for Ontarians or kudos for bureaucrats?

Selling off assets shouldn’t mean bonus time for senior bureaucrats

SOLD! But where did the money go?

April 9, 2018

Back on December 14, 2015 Energy Minister Bob Chiarelli directed OPG to sell its head office on University Avenue in Toronto, also directing them to pay all of the net proceeds “to the government”.

Just before Minister Chiarelli was moved from the Energy portfolio he issued yet another directive to OPG: sell off the Lakeview lands and pay all of the net proceeds to the government, “subject to any requirements under the Trillium Trust Act (2014) Ontario”.

In both cases the minister was using his authority as an elected representative of the province with responsibility for managing certain government-owned assets, which the government had presumably decided were not core assets of OPG.

The Head Office was sold in 2017 as stated in OPG’s annual report where they noted: “Higher earnings of $377 million from the Services, Trading, and Other Non-Generation segment, primarily as a result of the gain on sale of OPG’s head office premises and associated parking facility, a non-core asset of the business. A gain on sale of $283 million, which is net of tax effects of $95 million, was recognized in net income upon completion of the transaction in the second quarter of 2017.”

So, the payment(s) under that sale to be made to the province were $283 million plus the PIL (payments in lieu of taxes) or $378 million.

OPG’s press release of January 9, 2017 announcing the sale said not much more than “OPG would lease back four floors plus ancillary space.”

A couple of weeks ago in 2018, OPG announced in a press release they had sold the Lakeview lands for $275 million, subject to closing adjustments, and stated “The net proceeds from the sale of Lakeview lands will be transferred to Ontario’s Trillium Trust to fund transit, transportation and other key infrastructure projects across the province.”

The press release went on with quotes from Finance Minister Charles Sousa, Ehren Cory, CEO of Infrastructure Ontario, the Mayor of Mississauga, the President of the buyers group, Lakeview Community Partners Limited and Jeff Lyash, OPG President and Chief Executive Officer. (No quote came from the current Minister of Energy.)

The quote from Jeff Lyash, OPG’s CEO, was particularly laudatory: “OPG is proud of its role to transform Lakeview, a major source of carbon emissions for over 40 years, to a vibrant mixed-use community that will become the jewel of Mississauga’s waterfront. This site is one of the largest undeveloped parcel of waterfront lands left in the GTHA and the fourth former OPG coal plant site to transition to a new, environmentally friendly use.”

All ratepayers, who are also taxpayers, should be upset with how the sale proceeds of OPG’s two properties, were/are either being paid into the Ontario Treasury or into Trillium Trust. Those assets were paid for by ratepayers through their electricity bills, but they will see no benefit as the $653 million generated from the sale presumably went towards balancing the budget just concluded on March 31st.

Is it too much to ask that the electricity system be managed for the benefit of ratepayers?

Parker Gallant

Side note: Mr. Lyash topped the Sunshine List and was paid $1,554,456.95 last year up almost $400,000 from the prior year while Ehren Cory, CEO of Infrastructure Ontario’s bump was $60,000 to $470,758. Both received nice year over year increases!

Selling the furniture: what’s behind the Wynne government sell-off

SOLD! OPG HQ sale makes the profit report look good, but …

Back in April 2015, the Wynne-led Ontario Liberal government announced they had created the Trillium Trust and would be selling off assets to generate $130 billion dollars that would be allocated “across the province over 10 years to fund projects in public transit”.

The news release for the announcement stated an additional $200 million generated from the sale of the GM shares would be placed in the trust; it also announced plans to sell off Hydro One.

OPG’s 2nd Quarter report was released August 11, 2017. The media paid no attention despite a very successful quarter, reporting an after-tax profit of $307 million — well up from $132 million of the comparable 2016 quarter.

But if you look deeper into their results, you learn $283 million of the reported profit came from the sale of their head office.

What the OPG results signify is that profitability from their share of total Ontario power generation (52.2% or 18 TWh/terawatt hours out of the total 34.5 TWh) for those three months in that quarter produced only $24 million in after-tax profit. OPG blamed the reduced income on lower nuclear power generation.

I think there is much more to the story.

OPG, as I have said before, has become the “whipping boy” for the Ontario Liberal government and apparently it still is, as observations will confirm comparing their 2017 quarterly results with those of the same quarter in 2007. Here’s proof.

Renewables and Conservation
It would be remiss to not mention first that both the addition of renewable energy such as wind and solar (in excess of 6,700 MW) were granted “first to the grid” rights thereby superseding much of OPG’s (previously called “unregulated”) hydro (3,629 MW as of December 31, 2007) as well as other generation such as Lennox, an oil/gas fueled generating station with a capacity of 2,100 MW which is seldom called on to produce electricity. Likewise, biomass-converted coal plants in Atitikokan (180 MW) and Thunder Bay (165 MW) are idle most of the time. The other issue is the fact that consumption in 2007 was reported by IESO as 152 TWh; by 2016 that had dropped by 15 TWh (enough to supply about 1.7 million average households for a full year) supposedly due to conservation, but more likely due to the high prices.

Ten years later
Now let’s look at the ten-year comparisons for the 2nd Quarter.

  • Gross revenue in 2007 for the quarter was $1,393 million versus $1,146 million in 2017; a drop of $247 million or 17.7% and for the first six month (2017 versus 2007) was $691 million lower (-22.9%)
  • Spilled hydro generation in the 2nd Quarter of 2017 was 2.6 TWh (enough to power about 290,000 average households for a year) but not mentioned in 2007
  • Water fuel taxes in the 2nd Quarter of 2017 were $97 million to generate 8.2 TWh whereas in 2007 the 9.3 TWh generated resulted in water fuel taxes of only $67 million
  • Electricity generated in the 2nd Quarter of 2017 was 18 TWh (-25.4%) versus 25.4 TWh in the same quarter of 2007 and for the comparable six months generation was down from 54.2 TWh to
    36.6 TWh a drop of 17.6 TWh or more than the 2007/2016 consumption decline of 15 TWh
  • Payments in Lieu of Taxes (PIL) in the 2nd Quarter of 2017 were $97 million versus $29 million in the comparable 2007 Quarter.
  • Operations, maintenance and administration costs dropped from $776 million in the 2nd Quarter of 2007 to $711 million (-8.4%) in the comparable 2017 Quarter however the average costs of generation per kWh (kilowatt hour) increased from 4.6 cents/kWh to 4.83 cents/kWh
  • OPG were also listed as a participant in the recent “cap and trade” auction of “Greenhouse Gas Allowances” but their purchase or cost of allowances was not disclosed

All this suggests only a few ways the Ontario Liberal government and the Energy Ministry are removing money from ratepayers’ pockets to fund the Consolidated Revenue Fund, etc.

The sale of OPG’s head office is another. The fact that OPG produced an after-tax profit of $283 million by the sale of its head office will do nothing to reduce electricity rates as the following note from the 2nd Quarter 2017 report states:

“Pursuant to the Shareholder Declaration and Shareholder Resolution, and as prescribed in the Trillium Trust Act, 2014, OPG is required to transfer the proceeds from this disposition, net of prescribed deductions under the Act, into the Province’s Consolidated Revenue Fund.”

What that means is, the pre-tax profit on the sale of OPG’s head office of $378 million (including the PIL or payment in lieu of taxes) will do nothing to reduce electricity rates and instead will be applied to the budgetary deficit. Perhaps some of it will be spent on transit projects or even to pave a road in a (Liberal) riding.

The profit on the sale of OPG’s head office plus all the other payments extracted from them could have gone a long way to defray the costs that the Fair Hydro Plan will accumulate and which we will have to pay for in the near future.

Next up for OPG to sell off: per the Shareholder declaration from former Energy Minister, Bob Chiarelli is “the Lakeview Site”, comprised of an approximately 67-acre portion running along the shoreline and along the southwesterly portion of the Lakeview Site and the adjacent water lots, more particularly identified” and “the remaining approximately 110 acres of the Lakeview Site”.

The Wynne-led government is doing its best to sell off any remaining assets owned by Ontario’s taxpayers to the detriment of ratepayers.

Parker Gallant,
September 18, 2017

Ontario Power Generation report: good news and bad news

Ontario Power Generation (OPG) just released its annual report for the year ended December 31, 2016.

It’s a mix of good and bad news.

For example, gross revenue (net of fuel expenses) increased by $137 million and $34 million of that increase found its way to the bottom line, for a $436 million profit.

Generation from 2015 increased slightly from 78 terawatt hours (TWh) to 78.2 TWh, with nuclear generation increasing by 1.1 TWh and hydro decreasing by .9 TWh, which was further exacerbated (see next paragraph) by spillage due to surplus base-load conditions.

The bad news was that 4.7 TWh of hydro was “spilled” or wasted in 2016, up from 3.7 TWh in 2015. Those wasted 4.7 TWh of power could have supplied more than 500,000 (approximately 11% of all residential ratepayers) average Ontario homes with electricity for the full year.

The spillage by OPG didn’t affect their revenue, however, as they are paid for spillage at an average of about $44/MWh or $44 million/TWh. That means they received $207 million for wasted power and paid the Ontario Ministry of Finance the “water rental” fee for the spillage (although the latter wasn’t disclosed in the report).

Other “good/bad” news indicates OPG sold their Head Office on University Avenue in Toronto with closing scheduled for the second quarter of 2017. They expect the sale will generate an after-tax profit of $200 million.  The bad news is, OPG is obligated to turn over the profit to the Consolidated Revenue Fund. The land, building and maintenance costs fell to the ratepayers of Ontario to pay for via the electricity rates, yet the profit generated on its sale will be tossed into the bottomless pit of the Finance Ministry, instead of going towards reducing OPG’s costs of generation which could have benefited ratepayers.  That $200 million won’t even pay the interest on Ontario’s debt for a week!

SOLD! But the money won’t help you ..

The previous Energy Minister Bob Chiarelli on June 9, 2016 (four days before he was replaced by Glenn Thibeault) also issued a “declaration” to OPG instructing them: “to transfer, sell, dispose of or divest all of the Corporation’s interest in the Lakeview Site, comprised of the Municipal Park Lands and the Uplands”.  The Lakeview site is 67 acres running along the Lake Ontario shoreline and the Municipal Park Lands are the remaining 110 acres of the Lakeview Site.  Any excess revenues associated with the sale is to be transferred to the Government (Consolidated Revenue Fund), again rather than going to reduce electricity rates.

Ontario’s ratepayers absorbed the impairment costs of closing the coal plants in 2003, absorbing a “loss of $576 million as a result of the termination of cash flows from these stations after 2007.” The ratepayers of the province deserve to benefit from any recovery resulting from the write-off of the plant closings!

All this is more evidence of the “shell game” being perpetrated on Ontario ratepayers and taxpayers and the continuing legacy of the McGuinty/Wynne-led governments.

More to come …