Pleased to report the word about the high costs of Ontario’s electricity system are spreading. My efforts to get the bad news out has resulted in two recent events.
I was pleased to note Catherine Swift, an economist I admire and the former CEO of the CFIB (Canadian Federation of Independent Business) kindly picked up on some of my recent rants in an article she penned for The Niagara Independent titled; Bad News for Ontario Hydro Costs! It is worth a read.
In another case Marc Patrone the host of the 9AM to 11AM show on NEWSTALK Sauga 960 AM had me on again for another interview associated with a couple of articles I had written. Marc knows how to ask the right questions about the energy sector which I did my best to respond to. The interview has been now been posted on Newstalk Canada here: http://newstalkcanada.wpengine.com/
IESO has just released their March Monthly Market Summary and it hammered Ontario’s small and medium sized businesses where 42% (2..4 million) of Ontario’s private sector employees work, according to the CFIB (Canadian Federation of Independent Business).
The lock-down imposed by the Ontario and Federal governments, related to the pandemic, has driven down electricity consumption in the province with March being an early warning to the extended shutdown. The March 2020 Monthly Market Summary when compared to the March 2019 summary indicates an overall drop in consumption of 5.7% or 669.3 GWh* (gigawatt hours) and 86.6% (580 GWh) of the drop was by Class B ratepayers.
While consumption dropped, Ontario’s net exports increased from 2019 by 664.1 GWh but as we ratepayers know that is not a good thing as those exports are sold at the market price or HOEP which fell 49% from an average of $27.34/MWh in 2019 to $13.93/MWh in 2020. What that means is even though net exports increased by 80% revenues decreased from $22.7 million to $20.8 million. That implies; because of the way energy costs are allocated in Ontario, generating excess power (principally wind and solar) and selling it to our neighbours is akin to simply giving it away.
Now looking at the cost of consumption in the province and the transfer of support from Class B to Class A ratepayers the results are worse. In March 2019 Class B ratepayers consumed 8.629 GWh and the GA (Global Adjustment) costs were $692.2 million meaning the average GA per MWh was $80.41/MWh and the HOEP added $27.34 making the overall cost of a MWh/$107.75 (10.7 cents/kWh). In 2020 it grew to a GA of $119.42/MWh and with the HOEP of $13.93/MWh added, it came to $133.35/MWh (13.3 cents/kWh) or an increase of $26.60/MWh. Class A ratepayers on the other hand had an all-in rate in 2019 of $75.76/MWh and $75.87/MWh in 2020, an increase of only 9 cents/MWh.
Included in the Class B customer base are all residential customers (and farmers) but the Ford Government froze those rates at 10.1 cents/kWh due to the Covid-19 pandemic. The government did nothing for all of the remaining small and medium sized Class B businesses who are shouldering more than just high electricity rates due to the lock-down. Their livelihood is at stake!
How can the government expect Class B small and medium sized businesses to continue to support the larger Class A customers via the cost shift and hope they will survive the pandemic?
The time has come for the province to recognize how important to Ontario those businesses and their 2.4 million employees really are! Either they should fix the mess those contracted wind and solar generators have created, amend the methodology of the Global Adjustment, or, offer relief to the rest of the Class B ratepayers.
April looks to be even worse for those businesses so the Government should fix it now!
*A GWh is 1,000 MWh and the 669.3 GWh is what 890,000 average Ontario households consume monthly.
Since the McGuinty led, Ontario Liberal government, passed the Green Energy Act in 2009 handing out lucrative above market contracts, Ontario ratepayers have been saddled with increasing costs. Industrial wind generators tend to produce more energy in the middle of the night and during the Spring and Fall when demand is at its lowest levels. Easter weekend was atypical!
Average demand during a mid-January or mid-July weekend typically has a daily average of just under 400,000 MWh but in the Spring and Fall Ontario’s weekend demand is normally 100,000 MWh less and the past Easter weekend was no exception. According to IESO’s Daily Market Summaries for April 10th, 11th and 12th the average daily Ontario demand was 293,400 MWh. If one does the math the hourly average demand over the three days was 12,225 MWh, easily supplied by nuclear which averaged over 10,000 MW over the 72 hours and hydro at an average of less than 4,000 MW. In one hour when wind generation dropped and demand increased hydro ramped up to over 4,800 MW so together nuclear and hydro could have easily supplied all of our needs even when Ontario demand peaked at 14,174 MW.
Unfortunately, those “must take” contracts granted to wind and solar generators meant IESO were obliged to either accept their generation or pay to curtail what they might generate. Over those three days, lESO accepted approximately 125,000 MWh of wind generation to the grid and curtailed 84,400 MWh. The cost of the grid accepted and curtailed wind power works out to a cost of $213.44/MWh or about $26.9 million for unneeded power.
Saying the electricity wind generated was unneeded is not a misnomer, as over those three days we exported 250,000 MWh which was double grid accepted wind. To make the obvious more obvious IESO sold exports at an average price of $2.71/MWh so if we assume all of the wind generated electricity was exported it would have generated $339 thousand while costing $26.9 million. Even paying the idling costs (about $10K per month per MW) on the 9,500 MW capacity of gas plants (to back up wind and solar generation) only cost us about $9 million for the three days. The other exported power of 125,000 MWh over those three days cost us the GA (Global Adjustment). Based on IESO’s first estimate for April the forecast of the GA at $137.07/MWh would mean the additional 125,000 MWh exported; cost ratepayers/taxpayers another $17.1 million. I am confident we were spilling hydro and paying for it too but IESO don’t disclose that information (transparency is frequently not in their vocabulary).
Adding the costs of wind generation of $26.9 million to the costs of the other exported generation of $17.1 million and deducting the revenue from the sale of the exports of $600K would see Ontario ratepayers/taxpayers paying $43.4 million over the three days for NOTHING! Something is inherently wrong with the management of our electricity system despite all of those well-paid public servants operating it. Thank god it was a cloudy weekend or solar costs would have added to the burden.
While researching the above I was made aware of a letter sent to our esteemed (sarcasm intended) Prime Minister signed by over 250 people principally associated with universities. The letter was posted on the website of the National Observer and focused on telling the PM to not execute a “bail-out” for the oil and gas sector. The following paragraph with its obvious connection to what Ontario has experienced as a result of the Provincial Liberals passing the GEA, displays either their inability to see the obvious or, their complete lack of common sense! To wit:
“It is not acceptable to give privileged access to big business associations while excluding representatives from trade unions, universities, municipalities, Indigenous communities and non-profit organizations that work on behalf of the public interest.
Public investment in oil and gas at this time is a highly speculative proposition, and particularly unwise given the urgent need for strategic investments in economic recovery.”
Taxpayers annually hand out hundreds of billions to all of those groups they suggest are “excluded” and the money they receive is generated by the private sector including those in the oil and gas businesses and their supply stream.
Had those professors and reputed experts bothered to examine big business associations such as CanWEA or CanSIA to determine how much they extract from Canadian ratepayers/taxpayers in after-tax dollars they might have been shocked. The Easter weekend in Ontario demonstrates what “privileged access” really looks like!
Perhaps the time has arrived for Premier Ford to use the Province’s declaration of the “State of Emergency” to reduce payments to wind and solar generators as part of the pandemic exercise. Unlike so many other companies in Ontario the operators of wind and solar generation have not stepped forward to assist in the fight against Covid-19 and the economic cost to the country. They just want our money.
Time to take away wind and solar generators “privileged access”!
Hydro one just released their 3rd Quarter results and net income after taxes increased from $194 million to $241 million or 29.4%. Net income increased by only $14 million or 6.2% after adjusting the 2018 results upwards for the costs associated with the failed Avista acquisition.
Let’s look at those results by Hydro One’s client base of transmission (generators and local distribution companies or LDC) and distribution (ratepayers).
Transmission Revenue and Income Down What is interesting about their results is it shows transmission revenue decreased by $50 million (down 10.1%) as “peak demand” keeps falling. Year over year the latter fell by 1,805 GWh (gigawatt hours) or 7.9%. As a result, net income (before financing and taxes) from the transmission business dropped by $55 million or 19.2% from $287 million to $232 million.
Distribution Revenue and Income Up On the other side of their business Hydro One’s distribution revenue (net of purchased power) was up from $370 million to $403 million for a $33 million (+ 8.9%) gain and the revenue growth translated to a $33 million jump in net income (before financing and taxes). The latter increased from $120 million to $153 million (+27.5%) year over year.
The jump in distribution income occurred despite the fact Hydro One’s 1.4 million customers reduced their consumption from 6,817 GWh to 6,627 GWh for a decline 190 GWh or 2.8%. The forgoing means the average delivery cost per kWh increased from 5.43 cents/kWh to 6.08 cents/kWh year over year and amounts to a jump of 12%. The 12% increase is co-incidentally what we were promised to see as a reduction in our rates by the Ford government.
Summary While all customers are billed for both delivery and transmission costs, the latter tends to represent a very small charge whereas delivery costs represent (on average) about 30% of your monthly bill. Hydro One’s delivery costs however, are closer to 40% so it is disappointing to see that portion of the bill for their 1.4 million customers keeps climbing at rates well above inflation.
Getting rid of the $6 million man did nothing to reduce Hydro One’s delivery costs!
The IESO (Independent Electricity System Operator) released their September 2019 Monthly Market Report last week. Ontario’s total consumption was 10.319 TWh (terawatt hours). Looking back as far as September 2010 for comparison (the year following enactment of the GEA) Ontario consumption in September 2019 was lower than every year since then. Consumption by Class B ratepayers this past September was down 8.7% (690.000 MWh-750,000 average households’ annual consumption) from September 2018. Class A ratepayers also consumed less (102,000 MWh or 3%) compared to September 2019.
Consuming less means lower costs, right?
The foregoing question/assertion certainly applies to pretty well everything we consume, if the price remains stable.
Due to the perplexity of how the electricity system functions in Ontario consuming less has a limited ability to reduce our costs. Each and every generation source is basically treated differently in respect to their rank; on access to the grid, pricing (guaranteed or set by the OEB), length of contract term(s), and their perceived effect on global warming! Both solar and wind generation, as examples of the latter, are granted “first to the grid” rights meaning they rank higher than nuclear plants and hydro generation units. Additionally, original contract(s) offered prices in 2010 guaranteed for 20 years with large solar at 63.5 cents/kWh and wind at 13.5 cents/kWh along with a 20% guaranteed escalation clause related to increases in the cost of living (CoL). At the same time IESO must contend with a trading market referenced as HOEP (Hourly Ontario Energy Price). IESO buys or sells generation based on shortages or surpluses to our grid connected markets such as New York, Michigan, etc. What the HOEP values generation at and what we pay for it via those contracts evolved into what is known as the GA (Global Adjustment Mechanism) ie; contract value minus HOEP = GA. Contracting for unreliable intermittent generation like wind and solar has made Ontario a supplier of cheap power for Michigan, NY, Quebec and other connected markets as the GA is not a part of the HOEP sale price.
As noted, Class B ratepayers consumed 8.7% less power in September 2019 versus 2018 and IESO reports our all-in cost (GA+HOEP) was $136.97/MWh versus $115.78 in 2018 for a jump of $21.19/MWh or 18.4%! In the case of Class A ratepayers, because the HOEP fell from $29.94 in 2018 to $14.34 in 2019 they saw a reduction in their cost per MWh falling 7.7% from $77.70/MWh in 2018 to $71.73 in 2019. The methodology of Class A pricing results in Class B ratepayers paying more of the GA when the HOEP is lower.
The next question one should ask is why is the HOEP lower if we consume less?
That question is related to facts such as, wind and solar generation get “first to the grid” rights. As noted, September was a low consumption month as are most spring and fall months but that is when wind (in particular) generates the bulk of its power and is surplus to our needs. The result is IESO is obliged to accept it and sell via the HOEP market or curtail it, which we also pay for. IESO will also steam off nuclear or spill hydro both of which we also pay for. When they are selling off the surplus our neighbours may not need the power but if it is really cheap, they will snap it up. In September, as an example TX (transmission connected) and DX (distribution connected) wind combined was (according to my friend Scott Luft) 948,951 MWh including 141,485 MWh of curtailed wind. Together the costs of unneeded generation was $126 million. The accepted wind generation was HOEP valued at less than $7.4 million adding $118.6 million to the GA pool. As it turned out accepted wind represented 75.7% of our net exports of 1,067,040 MWh and 50.9% of our total exports of 1,586,880 MWh in September. We clearly didn’t need wind generation in September nor since we started handing out those contracts!
To make the foregoing much clearer a read of Scott Luft’s recent post provides an excellent review of how much wind (accepted and curtailed) he calculated, was not exported. It is truly shocking to see it is less than 10% in each year going back to 2006. Using September’s costs as the base to calculate how much it has affected ratepayers and taxpayers in Ontario for its output (over 37 TWh) since 2006 is a simple task.
Shockingly it represents a pocketbook cost of over $5.5 billion.
The electricity sector has taken $5.5 billion from the pockets of Ontario’s ratepayers/taxpayers just for wind related contracts. The $5.5 billion could have actually been used to provide things like; better health care, tax reduction, infrastructure investments, electricity price reduction or flattening which would have attracted investments and created jobs. Instead, we allowed our provincial government to hand out lucrative contracts to foreign wind and solar developers. Many of those who rushed here to obtain those contracts have taken our money and sold their projects to our government pension funds and left Ontario for “greener” fields!
What the above shows is the Green Energy and Green Economy Act was a disaster for Ontario and will continue to negatively affect us until the contracts expire or our current government acts to cancel or amend them!
Ontario’s six-month electricity summary shows that the new government’s promise of cutting costs is going to be tough to achieve. Is it impossible?
IESO finally released their June “Monthly Summary Report” allowing one to determine if Ontario ratepayers consumed more or less electricity in the first six months of 2019 compared to 2018. As it turns out, grid-connected (TX) consumption was down by 270,000 megawatt hours (MWh), dropping from 66,847 GWh (gigawatt hours) to 66,577 GWh.
Ontario’s gross exports also dropped nominally from 9,791 GWh to 9,718 GWh, but the cost to Ontario ratepayers (due to a higher GA [global adjustment])* in 2019 is approximately $1 billion, and in 2018 up to the end of June, the cost was less at approximately $920 million. The combined average as at June 30th of the HOEP and the GA jumped by $7.14 per MWh for Class B ratepayers from 2018, meaning it added about $346 million in additional costs in the six months. While most of those increased costs won’t suddenly show up in November when rates are reset by the OEB, it will accumulate in the “Global Adjustment Modifier”** and will hit ratepayers and taxpayers in the future.
Hydro One’s six-month results: Comparing the consumption drop IESO reported to Hydro One’s six-month report is interesting: they noted “Electricity distributed to Hydro One customers” actually increased by 294 GWh from 13,517 GWh to 13,811 GWh or 2.2%. Revenue (net of purchased power) from Hydro One’s local distribution customers however was up by $134 million*** or an impressive 17.7% mainly due to rate increases granted by the OEB. Transmission revenue was down $49 million (5.8%) as Hydro One stated: “due to cooler weather in the 2nd Quarter” and “lower peak demand”. Despite the overall $85 million revenue jump, Hydro One’s net income was down $96 million as they took the hit for the aborted Avista acquisition along with increases in financing charges and higher OMA costs.
The net income drop meant Hydro One paid out 84.2% ($282 million) of their net income via dividends to shareholders. This was in excess of their targeted payout rate of 70% – 80%. Ratepayers should hope the OEB takes this into account during present and future rate application reviews as, to the best of my knowledge, municipally owned LDC (local distribution companies) payout ratios are in the 50%-60% range! Toronto Hydro, as one example earned $167.3 million in 2018 and paid out $93.9 million in dividends to the City of Toronto for a 56.1% dividend rate. Retaining equity helps keep rates down!
OPG’s six-month results:
Ontario Power Generation just released their financial results for the first six months of 2019 and it looks like they are back in business, generating more electricity and big profits. For the first six months of the current year they generated 39.3 TWh versus 36 TWh in 2018 increasing their percentage of TX generation consumed by Ontario ratepayers from 53.9% to 59%.As well, “Income before interest and income taxes” for the “Electricity generating business segments” was up by 44.4% to $715 million from $496 million. While some of the increase was due to increased generation, most of it was due to the fact that the OEB granted substantial increases for both nuclear (increased to 8.1 cents/kWh from 7.5 cents/kWh [+8%]) and hydro (increased to 4.5 cents/kWh from 4.2 cents/kWh [+7.1%]) having sat on the rate application approvals**** for a considerable time. Additionally, OPG were paid for 2.2 TWh of spilled hydro in 2019 versus 2 TWh in 2018 adding $15 million to revenue; however, the real shocker in the reported results was the fact they show OMA costs dropped $35 million.
Industrial wind turbines six-month results: Thanks to Scott Luft’s data, wind power’s contribution (if one can call it that) for the six months for 2019 was up all-in (TX and DX [distribution connected] plus curtailed) slightly to 7.3 TWh versus 6.9 TWh in 2018. The overall cost however, was higher jumping from approximately $955 million to $1.079 billion. Coincidently, the 7.3 TWh of 2019 is 83% of gross exports versus 80.9% of 2018’s gross exports. That simply demonstrates the fact that wind turbines do nothing more than add to the costs of generating electricity in Ontario. We could have easily done without their generation and their added costs! Many people who have experienced health problems caused by the audible and inaudible noises produced by the turbines would also welcome their demise.
Conclusion: One can determine from all this that the rising cost of electricity generation in Ontario has not slowed or stopped despite the change of government just over one year ago.
The damage caused through implementation of the Green Energy and Green Economy Act in 2009 continues and it is difficult to see how the current government will reverse the harm the GEA caused.
*The GA pot only affects Ontario ratepayers as the market price (HOEP) is the price surplus electricity is sold at in the export market. **The Ontario Minister of Energy announced future rate increases would be held to the rate of inflation. ***In the 6-month comparison Hydro One’s average “Delivery” charge increased from 5.59 cents/kWh to 6.44 cents/kWh or 15.3% for their 1.3 million customers. ****This was noted by the Energy Minister when passing the “Fixing the Hydro Mess Act”.
An article posted on my blog on February 17, 2019 was related to IESO’s release of grid-connected (TX) 2018 Electricity Data. It disclosed the cost of electricity for the average Class B ratepayer had fallen ever so slightly from 2017, reducing costs by about $5 annually. The savings on the electricity portion of the average bill may have been eaten up by additional delivery and/or regulatory charges, so was probably not even noticed by most ratepayers.
As I noted then, what caused rates to drop was that we consumed more in 2018 than 2019, resulting in less wasted generation. In 2018, Ontario’s total demand was 137.4 TWh (terawatt hours) — up from 2017 when we consumed 130.3 TWh, for an increase of 7.1 TWh or 5.4%. Nuclear and hydroelectric generation in 2018 generated 92.5% of total Ontario demand, not including spilled hydro or steamed-off nuclear which is paid for via the GA (Global Adjustment).
As an example of less wasted generation, OPG reported in 2018 that due to SBG (surplus baseload generation) they spilled 3.5 TWh, whereas in 2017 they spilled 5.9 TWh. That was 2.4 TWh less wasted hydroelectric generation we didn’t have to pay for!
Since IESO’s release of the grid-connected data, we are now able to see exactly where all Ontario generation came from, including both grid (TX) and distribution-connected (DX) due to the recent release of the OEB report “Ontario’s System-Wide Electricity Supply Mix: 2018 Data”. The OEB report indicates total Ontario generation of 154.4 TWh in 2018 up from 2017 when it was 150.75 TWh.
About the same time as the OEB released their report, the Ontario Energy Report was also released and it includes both TX and DX generation in detail. It also includes specific information on our exports and imports of electricity plus individual capacities of our generation sources.
Looking at some of the specifics causing our electricity rates to soar since the advent of the Green Energy Act (GEA) in 2009, it is relatively easy to see the principal causes. Wind and solar generation’s inability to deliver power when needed, despite its “baseload” designation, has factored in rising costs in two ways. The first is its detrimental effect on the HOEP and the second is its preponderance to create surplus generation that must be exported, curtailed, spilled or steamed off.
The HOEP in 2017 was the lowest ever, averaging 1.58 cents/kWh increasing to 2.43 cents/kWh in 2018. That means our exports of 18.591 TWh in 2018 generated revenue of approximately $451.8 million ($24.3 million per TWh) but cost ratepayers around $2.138 billion.
That means we lost almost $1.7 billion. The bulk of our exports (15.531 TWh) were sold to New York and Michigan so $1.4 billion of the $1.7 billion in ratepayer costs went to provide cheap power to those two US States.
The further driver to increased costs can be blamed on what we pay wind** and solar generators. For wind it averages $135/MWh and for solar $445/MWh. In 2018 TX plus DX wind generation was 12.3 TWh and curtailed wind was 1.9 TWh for which we pay $120/MWh. Total wind generation costs in 2018 therefore were about $1.888 billion. Solar generation in 2018 from DX and TX connected plants was 3.5 TWh and cost $1.55 billion bringing costs for the two intermittent sources of “baseload” generation to $3.438 billion or about 22 cents/kWh.
The combined cost of losses on exports plus the costs of wind and solar was $5.1 billion. Is it any wonder our rates are so high?
Perhaps the time has come for all energy ministries to recognize wind and solar are not “baseload” power as defined due to their intermittent and unreliable nature.
Wind and solar power’s designation should logically be changed from “baseload” power to “abstract” or “symbolic” power! That change would better reflect their ability to deliver power when needed.
*Includes both the GA and the HOEP (hourly Ontario energy price).
**IESO suggests we can only count on wind to produce at a level of 13.6% of its capacity. For solar it’s at about the same level suggesting solar is (in IESO’s view) actually more dependable!
While the wind power lobby claims it could supply as much as one-third of our power, the hot summer days tell a different story — wind is pretty much nowhere to be found
A post on the wind power lobbyist the Canadian Wind Energy Association/ CanWEA’s website about seven months ago (December 6, 2018) stated: “The Pan Canadian Wind Integration Study* – the largest of its kind ever done in Canada – concluded that this country’s energy grid can be both highly reliable and one-third wind powered.”
Based on the hot days of July 2, 3, and 4 we have just experienced here in Ontario, the “one-third” of wind generation required would have been 482,430 MWh meaning wind capacity would have to be quite a bit larger than the 4,486 MW* currently grid-connected.
On top of that, the wind turbines would have to operate well in excess of the level they operated at during those three days.
Over the three days, total electricity demand was high-averaging just under 483,000 MWh per day. While nuclear, hydro and gas provided almost all of the power (1.448 TWh) needed the 4,486 MW of grid-connected wind generating capacity contributed 12,056 MWh in total over those three days.
That output represented a meagre 0.83% of total demand.
What that suggests is this: operating at that level would require in excess of 86,000 MW of wind capacity (2.3 times Ontario’s existing total grid connected capacity) to simply meet the “one-third” claim.
It would be a big stretch to ever see them contribute the self-proclaimed “one-third” of power the wind power lobby claims.
Hot muggy summer days and very cold winter days when electricity demand is at its highest is generally when industrial wind turbines take the day off!
One-third wind powered would be the antitheses of a “highly reliable” grid.
*Partially funded by taxpayer dollars
**4,486 MW of capacity operating at 100% would produce approximately 323,000 MWh over three days
The recent headline on the website North American Windpower read, “CanWEA Applauds New Carbon Pricing: ‘A Great Day For Canada’ “!
The article below the headline, as one would expect, had a cheering section from Robert Hornung, the President of CanWEA as follows:
“This measure sends a clear signal to investors,” comments Robert Hornung, president of CanWEA. “Ensuring that new natural gas-fired electricity generation will have all emissions exposed to the price on carbon by 2030 means that more carbon-free options like wind energy and solar energy will be deployed instead of fossil-fueled electricity generation, creating thousands of jobs and bringing investments into Canadian communities while protecting our climate. This is a great day for Canada.”
Instead of luring investors with the hope of riches in the wind, one might hope that Hornung’s diatribe sends a clear message to politicians and those responsible for managing the electricity grid (in the provinces affected) that they shouldn’t buy into the rhetoric! The reason most provinces have gas plants is to ensure there is power available when the wind doesn’t blow and those turbines sit idle (those forced to live close to the noisy machines love when that happens).
Ontario has seen high demand in recent days as temperatures rose and air conditioners were fired up to cool homes and businesses. On July 2, total demand was 463,656 MWh and wind generation delivered to the grid from the approximately 4,500 MW of wind capacity in Ontario was 4,054 MWh over 24 hours or — that’s less than 1% of total demand.
While wind turbines were sleeping on that day, gas generators were required to fill in for them and supplied almost 34,000 MWh (7.3% of total demand).
In my view, all ratepayers (industrial, commercial and residential) should lobby the federal and (affected) provincial governments to alter regulations in respect to the “carbon tax” charge. The regulations should require both the wind and solar generators to produce power when required and if they are unable to do so, the applicable “carbon tax” should be charged to them during hours when producing power surplus to demand.
Presently that surplus generation is disposed of by either exporting it or curtailing it. Both of those actions currently come at a substantial cost to ratepayers. The regulation change would direct revenue from the charge applied to offset the additional cost ratepayers would be picking up from the carbon tax charge on gas generators when wind and solar are not generating needed power and they are called on to fill the gap.
To paraphrase CanWEA’s president, then a carbon pricing announcement would “send a clear signal” to the intermittent and unreliable wind and solar power generators that ratepayers are fed up with electricity rates that have soared in part due to costly and intermittent renewable wind.
That “carbon-free option” touted by Robert Hornung has cost ratepayers in Canada billions, to the benefit of mainly foreign owned companies.
Enjoy the weekend and the balmy weather? Good: you paid millions for it.
Ontarians waited a while for Mother Nature to bless them with a good weekend and it finally happened. June 8th and 9th were beautiful days filled with sunshine and temperatures that were warm but not hot. A nice breeze added to the two spring days.
So, while Mother Nature treated us nicely, that meant people were out enjoying the weather and electricity consumption was, as it usually is during the Spring and Fall, low. Consumption at its lowest (Ontario demand) point over the weekend was 10,564 MW during one hour, and average Ontario demand over the 48 hours was a very low 12,975 MW*.
The combination of nice weather and low electricity consumption however, created an expensive weekend for Ontario ratepayers. Those breezes were generating surplus wind power from industrial wind turbines and water was flowing through our rivers and through and over our dams. The combination cost Ontario ratepayers lots!
For example, wind which delivered 39,870 MWh but the IESO (Independent Electricity System Operator) was, at the same time, getting IWT to curtail wind — that amounted to 58,870 MWh**. Those wind power operators were paid $120.00/MWh for curtailed wind and $135.00/MWh for grid-accepted wind.
Wind at 3.7 cents a kilowatt hour? How about 31?
So, collectively over the two days, wind generation and its curtailment alone cost ratepayer $12.448 million or over $312.00/MWh (31.2 cents/KWh).
Over those same two days our net exports (exports minus imports) were 123,960 MWh and most of it was sold at negative prices. Those 123,960 exported MWh cost Ontario’s ratepayers an average price in excess of $115/MWH, so that was another $14.3 million added to the weekend’s expenses!
It also appears IESO were spilling quite a bit of hydro as well. Scott Luft estimates hydro spillage was somewhere around 50,000 MWh** which would add a further $2.3 million to our expensive weekend.
As if these costs weren’t enough, we also shut one nuclear plant down early Saturday morning and steamed-off nuclear power at Bruce Nuclear — that resulted in another waste of around 43,700 MWh at a cost of $2.884 million which Ontario’s ratepayers are obliged to pay.
And just to put some icing on the cake, our 7,925 MW of gas plants (backing up renewable intermittent wind and solar generation) were idling all weekend at a cost (estimated) of $10,000 per MW of capacity per month. That cost ratepayers about $5.2 million for those two days.
So add up the waste of the two days for curtailed wind of 58,870 MWh, steamed-off nuclear of 50,000 MWh, spilled hydro of 43,700 MWh and net exports of 123,960 MWh you will see Ontario’s ratepayers will pay for 276,530 MWh of unneeded power, or 44.4% of what was actually consumed.
That’s almost $26 million. For one weekend.
If one includes idling gas plants, total costs were north of $31 million to be paid for, but provided absolutely no benefit to Ontario ratepayers!
*Nuclear power alone could have supplied about 85% of total consumption over the 48 hours.