A few days ago (July 11, 2017) Ontario’s Minister of Health and Long-Term Care Dr. Eric Hoskins issued a press release saying 131 hospitals would receive $175 million for “repairs and upgrades”. That’s an average of $1.3 million per hospital to be doled out, apparently because the Wynne government finally produced a “balanced budget”.
The press release states: “Funding from the province allows hospitals to make critical improvements to their facilities, including upgrades or replacements to roofs, windows, heating and air conditioning systems, fire alarms and back-up generators.”
One wonders if Minister Hoskins ever chats with Minister of Energy Glenn Thibeault who doles out money to industrial wind turbine (IWT) developments at a pace that would make his $1.3 million per hospital look like small potatoes! In the first six months of 2017, the bill to Ontario ratepayers was approximately $1.089 billion for accepted and curtailed industrial wind. That works out to approximately $475,000 per turbine … for six months! (That assumes there are about 2300 turbines with an average capacity of 2 MW or megawatts currently operating in the province.)
Also in the first six months of 2017, grid-connected and distributor-connected IWT collectively generated 6,143,000 MWh and curtailed 1,906,000 MWh* according to IESO data and curtailed estimates by Scott Luft. That means the cost per grid-accepted MWh was about $177 or 17.7 cents/kWh! If the next six months are similar to the first six, each average 2-MW wind turbine will cost $950,000** generating or curtailing the intermittent and unreliable power they are famous for.
Those wind turbines require back-up by gas plants and frequently cause the spilling of hydro power and the steam-off of nuclear plants. The costs of these grid managing activities to ratepayers easily drive the costs per turbine well past the hospital repair allocations.
Kicking the can down the road under the Fair Hydro Act will see the foregoing incredible waste of ratepayer dollars accumulate within OPG, and result in rate increases as high as those we have experienced over the past 10 years, once 2021 arrives.
Try to imagine how much better our health care system would be with that estimated annual waste of $2 billion ($40 billion over the 20-year terms of the contracts) allocated towards health care instead of handing it over to mainly foreign industrial wind developers.
The time has come to stop signing those contracts!
* The average curtailed wind for the first 6 months of 2017 was 23.6% and for May was 43.8%.
** This assumes accepted generation is paid $140/MWh and curtailed wind is paid $120/MWh.
Five months ago, Premier Kathleen Wynne admitted to the delegates at the annual Ontario Liberal Party convention her government “made a mistake” allowing electricity rates to rise so high. Those rates have actually soared, increasing by 80.9% from 2009.
Comparing Ontario electricity rates to other indicators such as inflation, shows just how bad the situation is. Comparing the IESO (Independent Electricity System Operator) Monthly Summaries for January and February 2009 with the same two months in 2017, the combined costs of HOEP (hourly Ontario energy price) plus the Global Adjustment (GA) show costs per kilowatt hour (kWh) have increased from 5.85 cents/kWh to 10.58 cents/kWh. That is an 80.9% increase. Average inflation over the same time-frame has increased about 14%. (The reader should note the 2009 and 2017 costs are before HST so the 8% reduction commenced January 1st has had no effect on contracted or regulated electricity rates.)
So how bad? The cost of the basic commodity has increased by almost six times the inflation rate!
Commodity cost is way up
Reviewing the IESO Monthly Summaries for the two-month periods in 2009 versus 2017 also shows Ontario demand fell by 7% or 1,713,000 MWh (1.7 TWh). The Summary reports indicate the 24.43 TWh representing Ontario demand in 2009 cost $58.49 million/TWh or $1,429 million for January and February. The 22.7 TWh of Ontario demand in 2017 cost $105.78 million/ TWh or $2,330 million for the same two months. That represents an increase in the commodity cost of electricity of $901 million for 7% less electricity — an average monthly increase of $450 million.
One of the reasons was the drop in the market price as the HOEP fell from an average of $51.93/MWh in 2009 for the two months to $21.56/MWh in 2017 while the GA jumped from an average of $6.56/MWh in 2009 to $82.27/MWH in 2017. What that means is, the loss on exports from Ontario in 2009 cost Ontario ratepayers $13.1 million and in 2017 cost ratepayers $174.2 million as the GA costs are not included in the sale of exports via the HOEP.
OK, of that $900+ million increase, we have $174 million found … $727 million to go!
► Wind power
Another obvious cause of the big jump was generation and payment for curtailment of power from industrial wind turbines (IWT). Back in the early part of 2009, Ontario had approximately 800 MW of IWT capacity; in the early 2017 we have about 4,550 MW of capacity. According to my friend Scott Luft, who uses IESO data to estimate the generation and curtailment of IWTs, in 2009 the turbines delivered almost 395,000 MWh in January and February. In 2017, it’s a different story: generation and curtailment combined jumped to about 2,926,000 MWh.
The contracted wind power prior the passage of the Green Energy Act is estimated to be at the rate of $90/MWh, whereas wind power contracted for after the Act was at $135/MWh (plus a cost-of-living annual increase) meaning they currently are estimated at $140/MWh. The math on the 2009 generation therefore shows a cost of $35.5 million and the 2017 generation/curtailment cost becomes $409.6 million. The increased cost of wind from 2009 is ($409.6 million less $35.5 million) $374 million. Deducting the $374 million from $727 million leaves $353 million to find to get to $901 million!
Since 2009, more than 3,300 MW of gas plant capacity has been added to the Ontario grid. Its addition was basically to back up the wind and solar capacity (which is unreliable and intermittent) to ensure sufficient generation is available during renewables’ failure and high demand periods. The private sector companies investing in those plants are paid for their capital investments amortized over their life span. When generating electricity they receive fuel costs plus a nominal markup. Payments details are not available in the public domain, but it is understood payments contracted are per MW of capacity, and estimates given are $8/15,000 per MW per month. Assuming the 3,300 MW of capacity secured since 2009 is at the mid-range ($12,000 per MW) the cost to ratepayers is $79 million (3,300 X $12,000 X 2 months).
That $79 million means we are still looking for $274 million.
► Consuming less but paying more
IESO shows ratepayers consumed 1.7 TWh less in the first two months of 2017 than in 2009, but paid more. That is evident in OPG reports. As OPG has not released its 2017 1st Quarter report estimates are based on the 2016, 1st Quarter report. First we estimate spilled (wasted) hydro was 1.2 TWh at a reported cost of $44 million/TWh so that cost ratepayers $53 million. The 21.0 TWh produced by OPG in the 2016, 1st Quarter generated average revenue per TWh of $70.4 million. Estimating the first two months of 2017 generation at 14 TWh results in a cost of $985.6 million. In 2009 OPG generated 25.6 TWh at an average of $57.8 million/TWh. Again estimating the total cost of the 17 TWh generated by OPG in the first two months produces a cost of $982.6 million so adding the $3 million to the spilled water cost shows an increase of $56 million. Subtracting $56 million from $274 million means we are looking for the last $218 of the increase.
► Solar, conservation, bio-mass and sundry
We assume the balance of the increased 2017 versus 2009 costs came from solar and bio-mass with a portion from the conservation program. Based on Figure 23 “Total Global Adjustment by Components” of the IESO Summary report we can estimate the costs of each of those for the two months. It appears conservation spending (absent in 2009) represented about $50/55 million for the first two months of 2017 and bio-mass (incented by the FIT and MicroFIT programs) generated costs of around $40 million. Solar (low during winter months) generated a minimum of $100/$120 million in costs for the two months based on the IESO Figure 23. While those are “best” estimates to get to the increase of $901 million for the two months, we have not included increased costs from the IESO and OEB budgets which have both increased.
“No checks” in the system
An article recently appeared in the Globe and Mail written by George Vegh, former general counsel to the OEB. This paragraph is perhaps why Premier Wynne admitted to her “mistake”
“Generation procurements are determined entirely by the government. The system operator – the Independent Electricity System Operator (IESO) – implements government directives. Neither the Ontario Energy Board nor any other independent regulator reviews these procurements. There are no independent criteria, no cost-benefit analysis, no consideration of the need for the procurements, and no review of alternatives. In short, there is virtually no check on the power to procure supply.”
What we have in Ontario is a “mistake” that will continue to cost Ontario ratepayers and taxpayers billions for years to come.
Admitting a mistake is one thing, doing something about it is another: Premier Wynne needs to recognize the Ontario Liberal government’s error, kill the Green Energy Act, and halt continued procurement of power from unreliable and intermittent wind and solar generators!
Almost a week after Premier Wynne announced her plan to reduce our electricity bills by 25%, the wind was blowing! On March 8, six days after the cost shifting announcement (from ratepayer to taxpayer), potential power generation from wind was forecast by IESO to produce at levels of 80/95% of their capacity, for many hours of the day. IESO was concerned about grid stability and as a consequence, curtailed much of the forecasted generation.
When the Premier made her announcement about reducing hydro bills, she also claimed “Decades of under-investment in the electricity system by governments of all stripes resulted in the need to invest more than $50 billion in generation, transmission and distribution assets to ensure the system is clean and reliable.”
It is worth noting that much of that $50 billion was spent acquiring wind and solar generation and its associated spending on transmission, plus gas plants (to back them up because the power is intermittent), and distribution assets to hook them into the grid or embed them with the local distribution companies. It would have been informative if Premier Wynne had had Energy Minister Glen Thibeault provide an accounting of exactly what the $50 billion was spent on.
As it turned out the amount of curtailed wind generated on March 8 was 37,044 megawatt hours (MWh) was just short of the record of 38,018 MWh set almost a year ago on March 16, 2016 (estimated by my friend Scott Luft). The curtailed wind on March 8, 2017 cost Ontario’s ratepayers $120/MWh or $4,445,280.
The cost on March 16, 2016 was $4,562,160.
What does it mean? Curtailing or restricting power output but paying for it anyway means a portion of the $50 billion spent was simply wasted money. It went to the corporate power developers that rushed to sign those above-market contracts for renewable power.
The other interesting aspect of the surplus power generation on March 16, 2016 and March 8, 2017 is revealed in IESO’s Daily Market Summaries: the hourly Ontario energy price (HOEP) March 16, 2016 was negative at -$1.25/MWh and on March 8th, 2017 was also negative at -.49 cents/MWh. This meant ratepayers paid for surplus exports sold to our neighbours in New York and Michigan, etc. Net exports (exports minus imports) on March 16, 2016 were 52,368 MWh, and on March 8, 2017 were 37,944 MWh. Total costs of their generation (HOEP + GA) fell to Ontario’s ratepayers along with the cost of any spilled hydro, steamed off nuclear and idling gas plants.
Millions here, millions there = a whole lot of wasted money
So, bear with me here, if we price the cost of the net exports at $110/MWh for those two days, ratepayer costs were approximately $9.8 million with $5.7 million for March 16, 2016 net exports and $4.1 million for March 8, 2017 net exports, not including the $84,000 we paid our neighbours to take our power.
How much did it cost you? Two days out of 729 (2016 was a leap year) cost Ontario ratepayers about $18.1 million for power not delivered (curtailed wind) or needed (net exports).
I hope this helps Minister Thibeault in his calculations for a long overdue accounting to Ontario citizens as to where the other $49.982 billion went.
The government has promised to get the electricity bills down…but at what cost? Where is the money coming from? The answer is simple: taxpayers and ratepayers are picking up the costs.
Last fall, Energy Minister Glenn Thibeault announced that the 8% provincial portion of the HST would be rebated to “residential, small business and farms as of January 1, 2017”.
The Energy Minister’s press release went further stating the government would be “Providing eligible rural ratepayers with additional relief, decreasing total electricity bills by an average of $540 a year or $45 each month”.
That was somewhat ambiguous in several areas so I looked for clarification from the Ministry.
After several phone calls and e-mails with messages left for the Ministry’s media spokespeople, and even a phone call to the Minister’s office, I received no response other than to confirm (via e-mail): I had “reached out to us [the ministry media contact] in regard to one of our September press releases”.
So, with no actual clarification, here’s what I get from the press releases, a mail insert from Hydro One, and a search on the Ontario Energy Board’s “bill calculator”.*
What is the real hydro bill relief?
Energy Minister Thibeault’s September 13th press release suggested an average savings of $130 per year for the rebate, and also announced “eligible” rural ratepayers would see “additional relief” amounting to $540 a year. My query to the Ministry asked, what were the requirements for “eligible” rural ratepayers, and how many were there? I also asked what the estimated overall cost of the 8% rebate would be for the province, and where the money was coming from to cover the lost revenue. Those questions remain unanswered by the government, so here are my estimates in respect to the anticipated costs of the 8% relief.
►Out of one pocket into the other
The Ontario Energy Board’s 2015 Yearbook of Electricity Distributors indicates Ontario had 4,564,835 Residential Customers and 434,999 General Service (50kW) Customers, 54,295 General Service (50-4999kW) Customer and 124 Large User (5000kW+). The “General Service” customers consist of farms and the small and medium sized businesses.
Gross revenue for the year including delivery costs was reported as $17,526 million, so rebating 8% would represent approximately $1.4 billion.
About $600 million would be earmarked for “Residential” Customers. Based on the specific information received from Hydro One, whose media team were responsive to my questions, the only group listed but not on the “rebate” list is the 124 Large Users who would consume (estimated) 5.2 terawatts (TWh) of the 124.6 TWh reported as “supplied” in the OEB report. Again, based on an estimate, the value of that 5.2 TWh would be approximately $735 million of gross revenues (including delivery) and reduce the rebate of the provincial portion of the HST by only $60 million to $1.340 billion. It is assumed the difference of $740 million would represent the rebate to the small businesses and farms.
The full $1.340 billion cost will be picked up by the Ontario taxpayers!
►Out of ratepayer’s pockets into ratepayer’s pockets
That same press release also said, “Providing eligible rural ratepayers with additional relief … by an average of $540 a year”. The Hydro One application filed with the OEB notes the total additional amount required under the RRRP (Rural or Remote Electricity Rate Protection Program) is $116.4 million (rounded) for 334,500 (rounded) Hydro One “low-density” customers. That works out to $29.19 per customer each month and annually to $350.28, not the additional $540.00 Minister Thibeault claimed in the press release. Even if you add the 8% PST rebate to the rural ratepayer relief it comes to $500.40 in total so is below the $540 claimed by Minister Thibeault.
The $116.4 million cost of the “additional relief” via the RRRP will be a part of the “regulatory” line on all ratepayers’ bills, increasing that cost. All ratepayers share in the payment of the RRRP which with this increase now totals approximately $280 million.
Thibeault’s quote at the end of the press release said “Many rural and northern customers would receive significant rate relief”. Yet there is nothing additional proposed in this press release for “northern customers.” The rate relief for them appears to be the same as the rest of the province, except for those who are “low-density” Hydro One customers.
The spin of the press release is captured in the first sentence: “Ontario is taking action to reduce electricity costs and intends to introduce legislation that, if passed, would rebate the provincial portion of the HST from the electricity bills”.
Very nice sentiment, except we know that funding to “reduce electricity costs” is from taxpayers who will pick up the costs of the 8% rebate and ratepayers who will pick up the costs of the “eligible rural ratepayers” reduction.
Almost $1.5 billion shifted to make government look good
The almost $1.5 billion was not obtained from a reduction in spending or by instructing the OEB to reduce the return on capital of the power generators or the local distribution companies—it’s coming from the pockets of taxpayers and ratepayers. The “action” being taken does nothing to defer future rate increases by canceling wind and solar contracts or by taxing them — it simply passes the costs to those who have been affected by the steady and unrelenting rise in the cost of electricity. To claim, as the press release does, that “consumers will be positively impacted” is pure spin!
Had the Wynne government been brave they would have reduced the TOU rates on the first 750 kWh of consumption by a significant amount. As it is those residential ratepayers who have been most impacted by the price climbs will not reap the monetary benefits of residential ratepayers who use more energy — 8% of a $150 monthly bill is $11 versus $24 for a $300 monthly bill.
This cost shift of almost $1.5 billion looks amazingly like another “mistake” by Premier Wynne.
* The OEB “Bill calculator” fails to note any reduction in the “delivery” line for Hydro One’s “low-density” ratepayers but does highlight the 8% reduction in the HST.
With Ontario’s lead in energy prices in Canada and the fastest rising consumer rates in North America, it is perhaps worth a review of a few of the ministerial comments that got us to this point.
Rates will rise 1% because of the GEA
George Smitherman, Minister of Energy and Infrastructure from June 2008 to November 2009 told the Standing Committee on General Government in April 2009: “We anticipate about 1% per year of additional rate increase associated with the bill’s implementation over the next 15 years.” In May 2009 the “average” rate was 6.07 cents per kilowatt hour (kWh) (not including delivery or HST). By May 2016, the “average” rate had increased to 11.1 cents/kWh, an increase of 82.9% in 7 years. The comparable costs of generation from IESO’s Monthly Summaries for the May 2009 to May 2016 comparisons grew by 84.9%. Looks like the forecast missed the mark by a bit.
Conservation will save you money
Back in July 2013 a press release from Minister Bob Chiarelli credits him with this quote: “By investing in conservation before new generation, where cost-effective, we can save ratepayers money”. At that point, average rates were 8.4 cents/kWh — in just three years they increased 32.1%. IESO’s monthly summaries indicate the cost of generation rose 26.4% in the same time-frame. Since 2012, consumption has fallen by 4.3 terawatts (TWh) on enough to provide 475,000 average Ontario households with power for a full year. Conservation hasn’t shown it will “save ratepayers money.”
Moving a gas plant is less than the price of a Tim Horton’s coffee
Another from former Energy Minister Bob Chiarelli who, when asked about the Oakville gas plant move was quick to suggest, “It’s less than a cup of Tim Horton’s coffee a year.” for the average ratepayer over 20 years. He made this dismissive comment to the Legislature Justice Committee investigating the move. What it meant was the waste of $1.1 billion dollars of taxpayer/ratepayer money; the Minister’s comment is a reflection of the regard the Ontario Liberal government has for the average hardworking Ontarian.
The Ontario Auditor General not informed?
Bob Chiarelli again: when the Auditor General’s report in late 2014 on smart meters was released suggesting the program was over-budget and under-effective Minister Chiarelli said, “Why are my numbers more credible than hers?” He went on to say: “Electricity is very complex, is very difficult to understand. Some of our senior managers, in discussing these issues with some of the representatives from the auditor general’s office, had the feeling they didn’t understand some of the elements of it.” As it turned out Auditor General, Bonnie Lysyk worked for Manitoba Hydro for 10 years so probably knew more about the electricity sector than the Minister.
Municipal authority is a non-starter Oh dear: Mr. Chiarelli, again. In May 2013 Bob Chiarelli said “Municipalities will be given a much bigger say in where or if renewable energy projects are located”. His remarks were well received by many municipalities and in the case of Dutton Dunwich council a survey they engaged in allowed them to declare 84% of their residents were against industrial wind developments. So what? The will of the people was ignored and a contract for a $250-million wind power project was granted anyway. The minister’s comments appear to have been a pretense that rural Ontario had been given authority to accept or reject contracts.
Industrial Wind Turbines granted special realty tax status
When Dwight Duncan was Minister of Finance it appears he bowed to lobbying efforts by trade association Canadian Wind Energy Association or CanWEA members who may have been concerned they would be required to pay significant municipal taxes should MPAC assess IWT at actual value! He accordingly issued a direction to MPAC (Municipal Property Assessment Corporation) to assess industrial wind turbines (IWT) at only $40,000 per megawatt (MW). That means, not only did municipal governments have no say in allowing IWT in their jurisdiction, but were also to receive nominal realty taxes from their presence.
Transparently opaque Premier Wynne in early March 2014 introduced the Accountability Act and had this to say to the Legislature: “I came into this office just over a year ago saying that I was going to do government differently, that we were going to open up and be more transparent.” Now should you have the urge to seek specific information from the Energy Ministry, which this writer frequently does, what you receive back is a homily that starts out with “you have reached out to us” followed by the promise they will get back to you. If and when the response comes, it generally dodges the question(s) and simply repeats the spin in the press release you are inquiring about.
Electricity exports are profitable We have consistently heard about how profitable our exports of electricity are from the various Energy Ministers in place over the past decade. Former Minister Chiarelli’s claim we made $6 billion was debunked, but the claims continue. The profits were claimed by former Premier Dalton McGuinty, Brad Duguid when Minister of Energy, and even a senior officer with IESO. The Auditor General noted the following in the 2015 report: “Since power is exported at prices below what generators are paid, and curtailed generators are still paid even when they are not producing energy, both of these options are costly. From 2009 to 2014, Ontario had to pay generators $339 million for curtailing 11.9 million MWh of surplus electricity.” This continues today, at a much higher rate!
High electricity prices a “mistake”
When Premier Wynne spoke to the 850 members who attended the Ontario Liberal Convention on November 19, 2016 she told the delegates her “government made a mistake” by allowing rates to soar. Apparently Premier Wynne doesn’t pay her electricity bills and didn’t notice since she was elected leader of the Ontario Liberal Party January 26, 2013 to the date of her recent speech, rates charged to residential ratepayers increased 38%. She also missed the fact that IESO in their monthly summary of December 2012 reported the cost of power generated was 8.89 cents/kWh and the October 31, 2016 summary reported it had climbed to 13.49 cents/kWh — an increase of almost 52%.
The last word is mine
I challenge anyone to make the claim that “planning” or a “cost/benefit” analysis ever played a role in Ontario reaching our current state of claiming the title of “highest cost” electricity in Canada or “fastest rising” in North America! The design pursued by the various energy ministers occupying the portfolio since the current government gained the reins of power in Ontario demonstrate clearly, they failed to consider the fate of Ontario households, along with the impact on jobs. Instead, they listened to the cadre of environmental NGOs and corporations that benefit from subsidies provided by the ratepayers.
The actual generation of solar power is much harder to pin down on an hourly, daily, weekly or monthly basis as most of it is LDC (local distribution company) connected (DX), and the IESO (Independent Electricity System Operator) doesn’t report it.
There appears to be only a single report, “Ontario’s System-Wide Electricity Supply Mix: 2015 Data” where one can find solar information. That report is from the Ontario Energy Board and only produced annually. The OEB report for 2015 (dated July 21, 2016) doesn’t provide actual generation; instead it gives a percentage of its contribution (grid-connected and LDC-embedded) to total generation which then can be utilized to determine solar contribution to the supply mix. First, one must determine, via IESO, what actual generation was from all sources in Ontario.
The OEB report for 2015 indicates solar (grid-connected plus embedded) contributed 1.9% to Ontario’s total generation of 153.7 terrawatts (TWh). The 1.9% noted by the OEB would suggest combined generation for grid and LDC connected solar was 2.92 TWh for 2015.
The average price paid for solar (roof-top and ground mounted) is approximately $448.00/MWh or $448 million per TWh — that means the 2.92 TWh generated in 2015 cost ratepayers about $1.3 billion.
Not environmentally perfect
Unlike wind power projects, solar installations don’t appear to suffer a requirement to ensure either their decommissioning or recycling; the cost of either (or both) will presumably be a burden that eventually falls to taxpayers. A National Geographic article from November 2014, “How green are those solar panels, really?” had this to say: “As the world seeks cleaner power, solar energy capacity has increased sixfold in the past five years. Yet manufacturing all those solar panels, a Tuesday report shows, can have environmental downsides.”
When Energy Minister Glenn Thibeault recently suspended LRP II (the second phase of Large Renewable Procurement), trade association CanSIA (Canadian Solar Industries Association) expressed their disappointment: “…it represents a significant back-step from previously committed renewables procurement in the Province that we believe will be required to deal with supply and GHG emission risks, such as delayed nuclear refurbishment schedules, un-met conservation targets, or increased demand as a result of electrification to meet the province’s climate change targets.”
Needless to say, Ontario’s ratepayers were not disappointed. We would like to see Minister Thibeault fully “cancel” both LRP II and contracts awarded under LRP I, and any other contracts that have missed their agreed start dates.
13% of the costs for 1.9% of the power
The $1.3 billion for 1.9% of solar generation represents approximately 13% of the 2015 total Global Adjustment pot of $9,962.6 million and drives electricity costs up by almost $1 billion annually.
Further installations of solar generation in the latter part of 2015 and throughout 2016 such as the 100-MW Kingston Solar on 1,000 acres of land will add to the generation costs, increase our surplus generation, and further drive up the cost of electricity for ratepayers.
The Wynne government is selling off surplus power at bargain rates … and yet, has contracted for more power produced out-of-phase with demand. Time to reverse engines.
November 14, 2016
Ontario’s Independent Electricity System Operator (IESO) has responsibility for running the “market” referred to as the HOEP (Hourly Ontario Electricity Price). That is defined as “the average of the twelve market clearing prices in each hour.” IESO also says the HOEP is “a real-time market, meaning purchases of electricity are made as they are needed. There are occasions, when the best-priced energy may not be available due to limitations on the transmission lines. In this case, that generator’s offer is still used to help set the price, but another generator may be asked to provide the electricity.”
Since the beginning of 2016, the “real-time market” has valued a traded megawatt (MWh) at an average of about $16.00 or 1.6 cents a kilowatt (kWh). Compare that to what households and small businesses pay, an average price of 11.1 cents a kWh or almost seven times the market rate.
What the HOEP market is telling Ontario’s Minister of Energy Glenn Thibeault: the value you get ratepayers to pay for unreliable and intermittent renewable energy in the form of wind and solar generation has absolutely no relationship to its actual worth!
The data my friend Scott Luft posts highlights just how much the feed-in-tariff (FIT) program, with their above market rate contracts for intermittent wind and solar have distorted the HOEP.
Scott’s data source is the IESO although for reasons best known to them they don’t post DX (local distributed FIT and MicroFIT contracted generation) connected wind or solar generation. Scott estimates these in his spreadsheet and his estimates have so far proven to be conservative when the DX results are posted many months later.
Let’s examine the data. The TX (transmission connected) wind generation for the first 10 months of the current year (January 1st to October 31st) was (rounded) 6,966,000 MWh, and the DX connected are estimated at 1,079,000 MWh. Curtailed wind generation is estimated at 1,804,000 MWh bringing total wind (generated and curtailed) to 9,849,000 MWh.. Those 9.8 TWh (terawatt hours) could have supplied approximately 1.3 million “average” households with electricity if it was delivered when needed.
So what that means is, 26% of the available energy from TX connected wind power developments was curtailed. Combining TX and DX curtailed wind MWh represents 18.3% of available energy from that source!
Power sold at a fraction of the contract price
At the same time as wind turbines were delivering or curtailing those megawatts of power, IESO was exporting surplus generation to our neighbours in New York, Michigan, Quebec, etc., selling it for a fraction of the FIT contracted price. Referring again to Scott Luft’s data it should be noted he actually includes the average HOEP price as of the hour(s) of generation or curtailment. That price averaged about $9.50 per MWh for the 10 months using his data! The sale price is a far cry from the FIT and MicroFIT contracted value for wind of $135.00/MWh plus as much as 20% for cost of living (COL) increases and an estimated $120.00/MWh for curtailed generation.
What we can calculate from the pricing information is that wind power generated and curtailed for the 10 months cost ratepayers almost $1.3 billion. If all the 9.8 TWh were included in the exported surpluses the net cost to ratepayers after recovering almost $100 million (9.8 TWh X $9.5 per TWh = $93.1 million) from its sale value is $1.2 billion. That’s about the same as moving two gas plants.
Cost: $300 a year for each electricity customer
The monthly cost of $120 million adds over $300 annually to the average ratepayer’s bill — and that doesn’t include the additional costs of the wasted power from other sources such as spilled hydro, steamed-off nuclear or the idling gas plants.
While we can’t say for sure the exported surplus generation sold to our neighbours came from industrial wind power developments, it is worth noting exports to the end of October were about 18.2 TWh or almost twice the amount of generated and curtailed wind produced in the same time-frame. Was wind-generated electricity a large part of those exports or did it cause other, cheaper, power to be exported? It is extremely likely.
Energy Minister Thibeault needs to recognize he needs to permanently cancel LRP I and LRP II along with any remaining unbuilt wind and solar projects in order to stop the upward pressure on electricity rates. As noted in the press release from the Ministry September 27, 2016, “Ontario will benefit from a robust supply of electricity over the coming decade to meet projected demand.”
It’s time for Energy Minister Thibeault to recognize the power to reduce upward pressure on electricity rates resides with him; he should use it to halt purchases of power we don’t need.