Wind: worst value for Ontario consumers

The wind power lobby continues to claim power from wind is great value and contributes to “affordable” electricity bills. But the facts of October tell a different story.

Ontario turbines near Comber: not helping

Right after Ontario Energy Minister Glenn Thibeault released his version of the LTEP (Long-Term Energy Plan), “Delivering Fairness and Choice,” CanWEA (the Canadian Wind Energy Association) issued a news release with the following statement:  “New wind energy provides the best value for consumers to meet growing demand for affordable non-emitting electricity.”

To back up that claim, CanWEA president Robert Hornung had this to say: Ontario’s harnessing of wind power can help fight climate change while keeping electricity costs low. Without new wind energy, costs to electricity customers and carbon emissions will both continue to rise.”

Brandy Giannetta, CanWEA’s Regional Director for Ontario also had a quote: “CanWEA supports competitive, market-based approaches to providing flexible, clean, and low-cost energy supply, to meet Ontarians’ changing needs.”

The expression “I wish I had a dollar for every time I heard that,” immediately comes to mind but here’s the truth: industrial-scale wind turbines have failed miserably in producing anything resembling “low-cost” energy and is instead one of the reasons consumers’ electricity bills “will continue to rise”!

If Hornung and Giannetta had waited just five days, they could have visited my friend Scott Luft’s spreadsheet and noticed how wind performed in October.   They would have discovered it was pretty dismal: 37.9% of possible grid-connected (Tx) wind power generation was curtailed (paid for but not used).  

The IESO (Independent Electricity System Operator) was concerned that too much wind power generation could cause repercussions such as a blackout or brownout, so 481,243 MWh (megawatt hours) were not accepted throughout the month. However, Ontario’s ratepayers will still pay for those undelivered MWh at a cost of $120 each, meaning the GA (global adjustment) increased by $57.7 million (481,243 MWh X $120. = $ $57,749,160).

Add that $57.7 million to the 787,627 MWh of the Tx  generation accepted into the grid, the total costs rise to $165 million or $208.32/MWh — the equivalent of 20.8 cents/kWh (kilowatt hour).   (That calculation is 787,627 X $135/MWh = $106,329,645 + $57,749,160 = $164,978,805.  Simply divide the latter amount by the Tx accepted generation and you get the $208.32 MWh or the 20.8 cents/kWh.)

It is important to note that the costs calculated and reported here do not include the transmission charge, delivery charge, regulatory charge or the HST.  Additionally, another 158,609 MWh of wind were delivered to local distribution companies (Dx) at a cost of $135/MWh, bringing IWT costs for the month to $185 million — for power we didn’t need.  No doubt during the month we were also steaming off clean nuclear power from Bruce Nuclear and spilling clean hydro power from OPG’s hydro generation units. In both cases the cost of the steamed off nuclear and the spilled hydro will be added to the Global Adjustment pot and find its way to our future bills.

I hope Mr. Hornung and Ms Giannetta will rethink their claims and simply admit wind power generation is high-cost, and frequently displaces low-cost non-emitting nuclear and hydro power.

You can’t hide October’s facts!

 

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Ontario’s fond hopes for wind power dashed by reality

Ontario’s energy minister will likely crow about the $146 million in revenue from selling surplus power recently … too bad it cost consumers $892 million

 If you visit the Canadian Wind Energy Association (CanWEA) website, the first page has the message:  “Wind is delivering clean, reliable and low-cost electricity”.  Anyone following my recent postings on how wind has either delivered almost no power or way too much, may have a different view.  You can also find this homily in the Energy Ministry’s just released 2017 Long-Term Electricity Plan, Delivering Fairness and Choice: “Wind power is also being produced more efficiently,” which distorts the truth!

Recent facts:

One day of wind power

Tuesday October 24, 2017 was a day when the wind was blowing strongly for 24 hours. IESO had forecast the approximately 4,220 MW of Tx (transmission-connected) capacity could have delivered 88,200 MWh of generation, meaning they would operate at over 86% of capacity.  Using that capacity value for the 580 MW of Dx (distributor-connected) turbines, another 12,080 MW were no doubt being generated at the same time — that meant almost 30% of Ontario’s total demand could have been supplied by wind.

As it stands, however, Ontario’s demand suggested we didn’t need all that power so IESO directed Tx connected turbine generators to curtail over 52,000 MWh. So, that same day, Ontario exported 40,300 MWh of free power to New York and Michigan, 11,700 MWh less than IESO curtailed.

The delivered and curtailed (paid for but not delivered) wind power on October 24th that wasn’t needed cost Ontario ratepayers $13.5 million or $280.60/MWh (28.1 cents/kWh).  If that happened every day the annual cost to Ontario’s ratepayers would be in excess of $5 billion.

Nine months of wind power

Let’s look at the nine months starting January 1, 2017 to the end of September and see what wind has contributed — and cost — Ontario ratepayers.  In the first nine months of 2017, industrial wind turbines could have produced about 9,820,000 megawatt hours (MWh) from Tx and Dx connected capacity — if curtailed generation was included! IESO however, forced curtailment of over 2,209,000* megawatt hours (MWh) or 22.5% of forecast generation to avoid compromising our grid and causing blackouts or brownouts.  Ontario ratepayers picked up the cost of curtailed power at $120 per/MWh costing them more than $265 million. The grid-accepted wind (7,620,395 MWh) cost; at $135/MWh added to the cost of curtailed wind brought the cost to ratepayers to almost $1.3 billion and more than $170/MWh (17cents/kWh). We would note when wind generation is high, IESO frequently instructs OPG to “spill water” and Bruce Nuclear to “steam off” power. Ratepayers also pick up those costs.

Nine months of (net) exports

From January 1, 2017 to September 30, 2017, Ontario’s net exports (exports minus imports) were 9,058,008 MWh. Those net exports were sold at somewhere close to the HOEP or hourly Ontario electricity price which to the end of September averaged $16.15MWh, so net exports sales generated about $146 million in revenue.  The sale price does not include the GA or Global Adjustment (the difference between contracted or regulated rates and the HOEP), meaning Ontario’s ratepayers picked up the average GA costs to the end of September.  The GA averaged $98.48/MWh for the first nine months of the current year, so the 9,058,008 MWh of net exports cost Ontario’s ratepayers just over $892 million dollars!   That is the equivalent of almost $200 per average residential ratepayer.

And the year isn’t over.

To put those net exports in context, Ontario’s net exports represented slightly over 92% of both the curtailed and delivered wind generation in the first nine months of the year, yet we were burdened with the cost of $892 million dollars for them, along with the costs of wind curtailment of $265 million.

The foregoing makes CanWEA’s claim of “low-cost electricity” and the Energy Ministry’s comments about wind power “being produced more efficiently” look to be simply fond hopes!

 

 

* My thanks to Scott Luft for his ability to generate reliable wind data using IESO’s files.

Weekends or weekdays: wind is a waste

October 20, 2017

Proof of the need to repeal the Unfair Green Energy Act

Tuesday October 17, 2017 was a typical Ontario fall weekday with electricity demand relatively low.

Total Ontario demand for power was slightly over 335,000* MWh for the whole day, peaking at hour 19 (7 PM) at 16,318 MW, according to the IESO’s Daily Market Summary.

That hour has significance as during weekdays, it signals the time when off-peak hours start. That Tuesday, it also was the hour when the Hourly Ontario Electricity Price (HOEP) reached its high for the day, getting all the way up to $5.01/MWh or ½ cent per kWh.

All through the day the wind was blowing. Based on the IESO’s Generator Report and Capability and their “wind generation forecast” it could have produced just over 57,000 MWh — that could have met 17% of Ontario’s demand.  IESO only accepted 20,900 MWh, however, and the other 36,100 MWh were curtailed or cut back.

The collective cost of the grid-delivered and curtailed wind generation over the 24 hours was almost $7.2 million, making the cost of the grid-accepted wind $344.50/MWh or 34 cents/kWh. Also because of a surplus of generated power, Ontario exported 38,200 MWh (almost double what IESO accepted from wind generators), principally to New York and Michigan — they had to pay them an average of $1.13 per MWh to take it.

All this makes it clear: Ontario’s electricity ratepayers don’t need any of wind’s intermittent and unreliable power, but are forced to pay for it anyway. To make matters worse, that power we subsidize gets delivered to our neighbours at negative prices. Those costs wind up on our electricity bills, too.

It’s time for Premier Wynne to stop the bleeding and kill the Unfair Green Energy Act.

 

* Numbers are rounded

And the winner (loser) is … Ontario!

Ontario ratepayers well ahead in international competition to see who pays more for nothing.

Ontario turbines near Comber: money for nothing

A recent article appearing in Energy Voice was all about the costs of “constraint” payments to onshore industrial wind developments in Scotland.  It started with the following bad news:

“According to figures received by Energy Voice, the cost of paying wind farm operators to power down in order to prevent the generation of excess energy is stacking up with more than £300million* paid out since 2010.”  (£300 million at the current exchange rate is equal to about CAD $500 million. ) 

What Scotland refers to as “constrained” Ontario calls “curtailed,” but they mean exactly the same thing. Ontario didn’t start constraining/curtailing generation until mid-September 2013, or almost three full years after the article’s reference date for Scotland. Curtailment prevents the grid from breaking down and causing blackout or brownouts.

The article from Energy Voice goes on: “In 2016 alone, Scottish onshore wind farms received £69million in constraint payments for limiting 1,048,890MWh worth of energy”.

Ontario in 2016, curtailed 2,327,228 MWh (megawatt hours). That figure comes from Scott Luft who uses data supplied by IESO (Independent Electricity System Operator) for grid-connected wind power projects and conservatively estimates curtailed wind for distributor-connected turbines to compile the information.

What that means: in 2016 it cost Ontario’s ratepayers CAD $$279.2 million** versus £69 million (CAD equivalent $115.2 million) for Scottish ratepayers. So, Ontario easily beat Scotland in both the amount of constrained wind generation as well as the subsidy cost for ratepayers who in both cases paid handsomely for the non-delivery of power!

The article went on to note: “By August 2017, the bill had already reached in excess of £55million in payments for 800,000MWh”!

Once again Ontario’s ratepayers easily took the subsidy title by curtailing 2.1 million MWh in the first eight months of the current year, coughing up over $252.5 million Canadian versus the equivalent of CAD $92 million by Scottish ratepayers.

In fact, since September 2013, Ontario has curtailed about 5.5 million MWh and ratepayers picked up subsidy costs of over $660 million.

Ratepayers in both Ontario and Scotland are victims of government mismanagement and wind power industry propaganda, and are paying to subsidize the intermittent and unreliable generation of electricity by industrial wind turbines.

(C) Parker Gallant

* One British Pound is currently equal to approximately CAD $1.67.

**Industrial wind generators are strongly rumored to be paid $120 per MWh for curtailed generation.

Day of Judgment on the gas plant scandal: Parker Gallant and Tom Adams

Posted on The Financial Post website today here

The trial of two aides of former Ontario premier Dalton McGuinty is likely to lay bare some inner workings behind the politicized management of Ontario’s power system over the past 10 years

On Monday, the criminal trial of David Livingston and Laura Miller, who served former Ontario premier Dalton McGuinty as chief of staff and deputy chief of staff respectively, convenes in Toronto. They face charges of breach of trust and mischief in relation to the alleged destruction of government files dealing with power plants originally contracted for the Greater Toronto Area. The trial is sure to attract media attention, particularly since another trial related to alleged Election Act violations by prominent Ontario Liberals — Pat Sorbara, Premier Kathleen Wynne’s former chief of staff, and Liberal fundraiser Gerry Lougheed — is going on at the same time.

Read the entire article here

Electricity in Ontario: save more, pay more

Consumption went down, costs went up!

The IESO (Independent Electricity System Operator) released their July 2017 Monthly Market Report several days ago, including Class B ratepayer consumption levels along with the cost of electricity by MWh (megawatt hour) and kWh (kilowatt hour).

Compared to the July 2016 report, it shows Ontario’s ratepayers used 910,000 MWh less (down 7.2%) in 2017 than 2016 (enough to power 100,000 average residential homes for one year) yet the cost* of the electricity generated jumped, from $106.47/MWh (10.6 cents/kWh) to $126.41/MWh (12.6 cents/kWh) or 18.7%!

To put this in context, Ontario’s Class B ratepayers reduced their consumption from 10.495 TWh (terawatt hours) in 2016 to 8.858 TWh (down 15.6%), while Class A ratepayers increased their consumption from 2.284 TWh to 3.062 TWh (up 34.1%). The cost of power consumed by both Class A and Class B ratepayers increased substantially year over year.

The impact on Class B ratepayers is being tempered by the debt being accumulated under the Fair Hydro Act that will eventually result in a new and higher debt retirement charge. Some of the additional costs can be attributed to losses on our export of surplus power increasing its cost from $88 million in 2016 to $105 million in 2017.   Wind curtailed (21.3% of potential generation in 2017) costs also increased from $13.2 million to $14.4 million in 2017.

What it means: despite a reduction in consumption of 15.6 %, total costs increased!

Looking at the IESO’s “Global Adjustment Components and Costs” for July 2017, you see that dividing the published Class B costs of the GA for July of $913.4 million by the consumption figure of 8.858 TWh results in a GA cost of $103.11/MWh (10.3 cents/kWh). That cost is $9.71/MWh less than the GA Monthly Market Report of $112.80.  The difference of $86 million** in additional costs was allocated to Class B ratepayers for the month of July.

When I saw that apparent difference, I inquired why.   What I got back was this:

“Regarding the discrepancy you’ve identified on the Global Adjustment Components and Costs web page, the reason for the difference is because of adjustments between Preliminary Settlement Statements and Final Settlement Statements for previous months. Page 28 of Market Manual 5.5 explains this. The rate as posted in the monthly market report, is not the Class B GA amount divided by TWh. Rather, it is set to cover all payments made through GA including those held in the variance account.”

The “variance account” referenced in the response from the IESO spokesperson is cleared every six months when the Ontario Energy Board (OEB) set future rates and would have been cleared when they reset the new rates under the Fair Hydro Act that applied to Class B ratepayers as of May 1, 2017. As a result of the reply, I undertook similar calculations for other months as a test and all of them wound up within pennies … not the almost $10/MWh difference for July 2017.

What I get from all this is, transparency may not be all it is claimed to be when a mistake is made, or alternately $86 million for one month being billed to ratepayers is considered a rounding error!  What is obvious is that “conservation” costs Class B ratepayers a lot of money.

Parker Gallant,

September 3, 2017

 

* GA (Global Adjustment) + HOEP (Hourly Ontario Energy Price).

** Calculation is 8.858 TWh X $9.71 million/TWh

Hydro One takeover of U.S. company a big negative for Ontarians

The Financial Post, August 10, 2017

Parker Gallant: Thibeault and Wynne believe it’s wrong for the province to borrow $4 billion to reacquire Hydro One shares, but OK for Hydro One to borrow $5.1 billion while diluting the province’s interest in it

PostMedia photo

By Parker Gallant
On March 28th, a few weeks after Ontario Premier Kathleen Wynne and Energy Minister Glenn Thibeault held their press conference about the “Fair Hydro Plan,” Andrea Horwath, leader of the NDP, delivered a motion to the Ontario legislature calling for a buy-back of Hydro One. The motion failed and later resulted in Thibeault calling the NDP motion “short on details and long on hollow promises.” He noted that many of the NDP’s proposals “rely on a vague and yet-to-be-determined ‘expert panel’ that will be convened in the future.” Buying back $4 billion in Hydro One shares is costly, the energy minister added, and “will not take one cent off electricity bills. What it will do is send billions to the stock market instead of making much needed infrastructure investments in communities across Ontario.”

Fast forward to July 19th, when Thibeault was beside himself with excitement because Hydro One will be paying US$5.3 billion ($6.7 billion) to purchase Avista, a much smaller electricity and natural gas utility headquartered in Spokane, Wash., 3,200 kilometres from Toronto. Hydro One offered a 24-per-cent premium on the traded value of the stock price over its July 18th closing and, based on Avista’s 2016 annual profit, it will take Hydro One 38 years to recoup the $6.7-billion price tag. Thibeault’s press release announcing the takeover carried this obtuse claim: “It is to the shared benefit of Hydro One’s customers, employees and shareholders to see the company strengthened and growing.” He also stated that, “In particular, we welcome the fact that this proposed acquisition will not impact the rates that Ontario customers pay. Neither will it have any impact on local jobs.”

The privatization of Hydro One and dilution of the province’s shareholding keep its debt off of the province’s balance sheet

 Based on that press release, and the requirement to get shareholder approval, we must assume Thibeault gave his blessings to the acquisition and dilution of the province’s holdings, which will decline from 49 per cent to 44 per cent. He presumably also blessed Hydro One’s borrowing program, which will add US$2.6 billion ($3.7 billion) in new debt, not including another $1.4 billion via a convertible debenture paying 12 per cent per annum in interest prior to its conversion to common shares.

Thibeault and Wynne believe it’s wrong for the province to borrow $4 billion, as the NDP suggested, to reacquire Hydro One shares, but OK for Hydro One to borrow $5.1 billion while diluting the province’s interest in it. The privatization of Hydro One and dilution of the province’s shareholding keep its debt off of the province’s balance sheet.

So, is the acquisition all that Thibeault and Hydro One’s CEO, Mayo Schmidt, claim it is or is the spin meant to distract ratepayers into believing the takeover will lessen pressure on future rate increases? Let’s examine a few facts:

— The acquisition of Avista will result in Hydro One’s debt (short and long term) increasing by 46 per cent, or $5.1 billion, to reach in excess of $16 billion. Should interest rates increase Hydro One will submit an application to the Ontario Energy Board (OEB) for a rate increase, an accepted OEB process.

— Hydro One’s 2017 first-quarter report notes it currently has five rate applications awaiting approval by the OEB and plans to file another nine rate applications over the next four years.

— Washington, where Avista’s electricity ratepayers are located, pays the second-lowest rates of any state on average, with all-in residential rates of 9.43 cents/kWh as of April 2017. Only Louisiana can claim lower rates at an average of 9.35 cents/kWh (U.S. rates expressed in U.S. currency).

— Based on the information in Avista’s 2016 annual report, it appears the all-in cost of a kilowatt-hour delivered to its ratepayers was 8.68 cents/kWh.

— Hydro One, on the other hand, has the highest rates in Canada and in most of North America. It is difficult to see how Washington ratepayers will see any benefit from this acquisition. Based on the data supplied by Hydro One to the OEB for 2015, its average cost of a kilowatt-hour was almost double Avista’s at 17 cents/kWh.

It is difficult to believe several of the claims in Hydro One’s news release

It is difficult to believe several of the claims in Hydro One’s July 19th news release. As an example, it states the acquisition of Avista “will be accretive to earnings per share in the mid-single digits in the first full year of operation.” Politicians and regulators in Washington may be tougher than those in Ontario when Hydro One seeks a rate increase! It gains increases in Ontario from the OEB and via political tampering, which recently resulted in a requirement that taxpayers pick up a part of Hydro One’s bad debt allocations via the Ontario Electricity Support Program.

Another quote is also a stretch: “Efficiencies through enhanced scale, innovation, shared IT systems and increased purchasing power provides cost savings for customers and better customer service, complementing both organization’s commitment to excellence.” This claim comes from the company that had the distinction of being singled out by Ontario’s ombudsman for issuing over 100,000 faulty hydro bills. Moreover, last October Global TV found Hydro One had almost 226,000 clients in arrears, which represented 20 per cent of all its residential clients and 40 per cent of all ratepayers in arrears in the province.

Ratepayers and taxpayers should view the Hydro One takeover of Avista as negative. To re-purpose Thibeault’s comment to the NDP leader, this action “will not take one cent off electricity bills.”

Financial Post

Parker Gallant is a retired bank executive who looked at his power bill and didn’t like what he saw.