Rants about Ontario’s electricity system

Canada Day came and went without parades or fireworks to celebrate the 153^rd year of Canada’s birth as the Covid-19 pandemic lock-down kept many of us confined to small social bubbles.  The exceptions were those who chose to defy regulations and participated in anti-racism protests, both indigenous and anti-black ones across the country.  To most it seemed a strange way to celebrate our country’s successes. At least the weather was sunny and very warm in Ontario on July 1st!

Industrial Wind Turbines on Canada Day In Ontario

As is often the custom in Ontario on hot humid summer days, most of the IWT (industrial wind turbines) took the day off so the 4,800 MW of capacity they have was virtually silent.  Had they operated at 100% of capacity they would have delivered 115,000 MWh but instead they only managed to puff out 7,440 MWh and had 400 MWh curtailed (at 11 PM) meaning they operated at a level of capacity of 6.8% including the curtailed MWh.  As the morning broke at hour 9 AM they generated 8 MWh or 0.017% of capacity.  Fortunately, we didn’t need their power as nuclear, hydro and gas easily supplied our needs throughout the day even though total market demand reached 22,641 MWh and Ontario demand peaked at 19,342 MWh or 402,000 MWh for the full day.  Our net exports were north of 45,000 MWh which earned us ratepayers only about $750,000 while costing us close to $7 million.

Hydro One’s 1^st Quarter Distribution Results raises unanswered questions

Hydro One announced their 1^st Quarter 2020 results on May 8, 2020 and they were pretty unexciting with adjusted earnings of .38 cents per share compared to .52 cents in the comparable 2019 quarter. Examining this further; revenue related to Hydro One’s distribution customers increased $118 million (+ 8.9%) but they reported a decline of $82 million (- 16%), net of purchased power.  The latter reputedly climbed from a cost of $807 million in 2019 to $1,007 million in 2020 or $200 million (+ 24.8%).  Now the odd thing one notes is consumption fell by 254,000 MWh* or 3.3% yet costs increased meaning the average cost per MWh shot up $29.31/MWh from $104.29/MWh to $134.60/MWh or 28.1% and well above the increase reported by IESO!  Interestingly if one looks at Note “23. Related Party Transactions” it states in one line; “Amounts related to electricity rebates” which for 2020 totaled $433 million and in 2019 was $138 million for an increase of $295 million. That suggests in just one quarter (compared to the 2019 quarter) the Ford led government raised the taxpayer support to reduce electricity prices year over year by 213.8% if Hydro One is atypical of all distribution companies.  The foregoing is scary for taxpayers and due to the inferred net revenue decline for Hydro One it possibly signals they will apply for a rate increase which will hit ratepayers.  Additionally, it also raises the question; where did the $295 million extra received for those “electricity rebates” go as it should have kept the cost of purchased power lower than Hydro One claim?

IESO’s limited transparency

On a monthly basis the IESO, responsible for managing the Ontario electricity grid, put out data disclosing Class A and Class B Global Adjustment (GA) rates along with consumption by each Class. IESO also provide what they label as a Monthly Market Summary (MMS) and in it you will find consumption, the HOEP (market price) rate for the month and the Class B, GA. They also provide other data covering exports and imports, market demand, lots of charts showing unavailable capacity, operating reserve prices, etc. etc. and even temperature data.  The big difference in the two reports is in respect to “consumption”, ie “market demand” as for some reason the MMS fails to include DX (distributor connected) generation which are the myriad of smaller solar capacity contracts (2,200 MW), wind generation contracts (600 MW), biofuel, etc. etc. IESO is responsible for settling with the LDC (local distribution companies) for the generation for each of the contracts. Those details are presumably provided by the LDC where those contracts reside.  What that tells us is; if IESO was truly transparent they would include the monthly generation created by those DX connected generators so those of us watching the system wouldn’t have to either make assumptions or wait until IESO publish their Year-End Data.

Wind is wimpy during peak demand hours

So far in 2020 five of the top ten peak hours have occurred in the first week of July and collectively IWT contributed 0.9% of their overall capacity during those five hours and only 1,9% of total demand.  What that implies is IWT without 99.9% back-up from reliable generation sources would leave us all sweating in the dark without air conditioning!

Hydro makes wind and solar look expensive and pretty useless

My friend Scott Luft recently posted an excellent chart on his Facebook page showing: generation by source, costs and curtailment for the first six months of each year starting with 2008.  Looking only at the 2020 data by itself is an interesting exercise in that hydro contributed 19,396 GWh (gigawatt hours), wind 7,140 GWh and solar 2,037 GWh.  It is worth noting hydro provided Ontario’s electricity system with 111.4% more power than both wind and solar combined and the average cost of hydro’s power was $59.24/MWh whereas the average cost of wind and solar was $213.69/MWh or 360% more costly. The total cost of the combined wind and solar generation was $1.961 billion versus $1.149 billion for hydro.  If one goes further Scott notes exports were 11,598 GWh so the combined generation of wind and solar represents 79.1% of those exports.  Those exports generated revenue of $17.87/MWh and if all the wind and solar (9,177 GWh) were a part of those exports the net costs to Ontario’s ratepayers and taxpayers would be approximately $1.8 billion (wind and solar related only) and that is just for the first six months of 2020.

With that cost of $1.8 billion highlighted in the foregoing paragraph I personally hope those of you who read this will forgive my rants and start ranting with me and the others who do the same!

Time for Premier Ford to fix this mess if he wants our economy to recover!

*What 102,000 average households would use over 3 months.

The Ongoing McGuinty GEA Ratepayer Financial Crisis Continues as the OEB releases the 2019 Electricity Supply-Mix

If one is inclined to have a concern about electricity costs and is intent on locating information it is truly disappointing that IESO, who control our grid, issue their annual report with limited information. Even though IESO are responsible for financially settling with all LDC (local distribution companies) for generation from DX (distribution connected) FIT contracted generators they appear unable to  include that generation in their “Year in Review” report.  Their report is released in mid-January.

The IESO report, as noted, doesn’t include DX generation and one must wait another five months or more until the OEB releases what they call; “Ontario’s System-Wide Electricity Supply Mix: 2019 Data”. The OEB released their 2019 review June 18, 2020 and it includes TX (transmission connected) and DX generation by source.  As a matter of interest my friend, Scott Luft does the same thing utilizing IESO Data and estimates, but his reports are issued mere days after the month or year-end.  The OEB report generally confirms his estimates.

So now that the “official” OEB Data is out let’s have a look at some of the information affecting our electricity bills.

Total generation in 2019 was 155.2 TWh (terawatt hours) with nuclear generating 90.4 TWh (58.2%) and hydro 37.2 TWh (24%).  In 2019 we exported 19.8 TWh of our generation to our neighbours in NY, Michigan, Quebec, etc. and they bought it for the average price of 1.83 cents/kWh meaning it generated approximately $360 million in revenue.  If one deducts the exported generation of 19.8 TWh from total generation of 155.2 TWh it indicates Ontario ratepayers consumed 135.4 TWh so nuclear and hydro alone could have supplied 94.2% of all our needs.  Interestingly enough, in 2019 OPG spilled 3.3 TWh of hydro and IESO’s year-end report indicated due to SBG (surplus baseload generation) there were 292 nuclear maneuvers and two (2) nuclear shutdowns. Natural gas plants provided 9.5 TWh so those three sources of generation could have easily supplied all of Ontario’s ratepayer needs.

As noted in the preceding paragraph we exported 19.8 TWh at a very low price but the information from both IESO and the OEB don’t specify the source of the generation exported. If one assumes what we didn’t need was wind and solar (generated and curtailed) the 12.7 TWh of wind plus it’s 2.6 TWh curtailed added to the 3.7 TWh of solar generation coincidentally totals 19 TWh or almost 100% of what we exported for pennies!

Wind and solar costs for 2019 came to about $3.6 billion for which we received only $360 million meaning our exports cost Ontario ratepayers in excess of $3.2 billion and that’s for only one year.  Combined the 16.4 TWh supplied intermittently by wind and solar cost 19.5 cents/kWh or 10.6 times what we sold it for!  Repeating that over the 20-year contract terms granted to renewable energy would remove $64 billion of after-tax dollars from the pockets of ratepayers.

Someone is benefiting from those GEA contracts but it sure isn’t Ontario’s ratepayers!

The Ford government should have utilized the “force majeure” clause in the contracts as soon as the Covid-19 pandemic lock-down was decreed by the Trudeau led Federal government as 2020’s costs will likely be even higher.  The pandemic has resulted in Ontario ratepayers consuming less.

How About Charitable Receipts for Ontario Ratepayers?

Another costly weekend for Ontario ratepayers/taxpayers came and went as we exported 163,566 MWh to our neighbours in NY, Michigan, Quebec, etc. Those MWh were sold at a probable cost to Ontarians of $137/MWh (minimum)* and we received an average of $0/MWh for the sale price meaning the cost to Ontario’s ratepayers and taxpayers was north of $22 million for nothing on June 13^th and June 14^th!

The above $22 million doesn’t include costs associated with spilled hydro, steamed off nuclear or idling gas plants which also occurred and paid for by us benevolent ratepayers/taxpayers.

Interestingly enough the almost 164 thousand MWh exported was equal to 28.9% of the 566 thousand MWh Ontario ratepayers actually consumed over those two days and equates to what 3.2 million average households in Ontario would consume over two days.  This smacks of bad planning by IESO or perhaps it’s the combined effects of the pandemic and the GEA instituted by the McGuinty/Wynne led governments. The bad planning was influenced by eco-warriors such as Bruce Lourie and Gerald Butts who pushed for intermittent and unreliable renewable energy in the form of wind and solar generation!

So, a high percentage of generation was exported over the two June days and much of the blame can be laid at the feet of wind and solar which often presents itself at times of the year when consumption falls.  Over the two days, wind was generating at around 27% of its capacity and solar at about 31%. Solar somehow even generated a few MWh in the middle of the night during those two days? In total wind generated around 38,500 MWh and additionally just under 20,000 MWh was curtailed, collectively costing $8.1 million. Solar’s (grid connected only) generation of almost 6,700 MWh cost another $3 million.  Together wind (including curtailed) and solar generation represented just over 39% of our net exports and close to 50% of their costs.

Without wind and solar generation, we would have saved just over $11 million and due to a smaller surplus may have actually generated some revenue based on the market driven HOEP (hourly Ontario electricity price) helping reduce costs for Ontario’s ratepayers and taxpayers.

Since implementation of the Green Energy Act and it’s poor planning (no cost benefit study) it has cost billions of dollars to supply our neighbours with cheap electricity.  Those billions of dollars paid by ratepayers and taxpayers over the past ten years have been paid with after-tax dollars by residential and sole ownership businesses so perhaps the Ford government should consider implementation of a charitable receipt for each of us to acknowledge our generosity over the years!

An alternative would be; amend the contracts, via legislation/regulations to eliminate wind and solar’s “first to the grid” rights! We should pay for power, as and when needed, not be forced to accept it when unneeded!

 

*The $137/MWh GA is an estimate as IESO now only uses the rate for the GA imposed by the Ford government set at $115/MWh or 11.5 cents/kWh with the difference accumulating in the Ontario Electricity Rebate program (previously called the Fair Hydro Plan) appearing on electricity bills.

Social Distancing for Covid-19 affects electricity costs

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

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

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

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

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

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

Time to use the “State of Emergency”

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

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

A new decade starts with climbing electricity prices in Ontario

IESO just released their January 2020 Monthly Market Report and it brought ratepayers and taxpayers more bad news.  Consumption in the first month of 2020 was down by around 599,000 MWh (what 855,000 average Ontario household’s consume monthly) or 4.7% compared to January 2019.

Consuming less however, cost us more, thanks to the way the McGuinty/Wynne led governments ruled the Province granting renewable energy; “must-take”, contracts at high prices!

Costs were up even though wind generation in January 2020 was down from 2019 by about 216,000 MWh (including curtailed).  Unfortunately consuming so much less had a negative effect on market prices as IESO sold off more generation to our neighbours.  Net exports increased from 1,106,328 MWh to 1,605,552 year over year, up 45.1% and the HOEP average price received for those exports for 2020 was only $14.82 MWh versus $27.82 the prior year.  Wind was not needed either year as in 2019 it was 93.7% of Ontario’s gross exports (1,637,496 MWh) and in 2020 it was 68.7% (1,364,869 MWh).

The drop in the market price (HOEP) of $13/MWh was more than offset by the climb in the Global Adjustment (GA) which increased from $80.85/MWh in 2019 to $102.31/MWh in 2020.  The increase in the GA had a much higher negative effect on Class B ratepayers driving up that portion of costs to 10.24 cents/kWh in 2020 versus 8.08 cents/kWh in 2019.  The foregoing represents a 26.7% increase whereas Class A ratepayers were not as affected seeing their share of the GA climb from 5.32 cents/kWh to 5.66 cents/kWh, an increase of 6.4%.

What the foregoing means is the GA portion of electricity costs to Class B ratepayer, year over year, increased $139.7 million to $911.4 million for just the first month of the new decade despite a reduction in consumption of almost 600,000 MWh. Class A ratepayers saw increased costs of $11.9 million to $196.4 million on a consumption increase of only 3,000 MWh.

Let’s try reverse

Maybe the time has come to drop rates for Class B ratepayers so they would consume more and ironically cause the GA rate to decrease and the all-in price to drop!  Failing that, drop the rate for those small and medium sized Class B businesses so they have competitive electricity prices that would allow them to increase their profits, hire additional staff and in the process consume more electricity!

Time to turn the McGuinty/Wynne Ontario axiom “consuming less, costs more” upside down!

PS: Thanks to Scott Luft of Cold Air for his wind data.

Ontario’s industrial wind turbines many costs

Wind’s visible costs

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

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

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

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

Winds hidden costs

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

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

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

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

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

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

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

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

Ontario electricity ratepayers paid up big-time to reduce emissions

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

Ontario’s three Classes of electricity ratepayers

The title above is intentionally misleading.

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

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

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

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

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

Second class, Class B ratepayers

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

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

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

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

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

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

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

IESO and their colourful 2019 Year-end Data

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

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

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

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

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

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

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

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

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

Knighthood within the Eco-royalty

The latest issue of the magazine, Corporate Knights is, as always, about clean capitalism and the latest issue does not deviate from that theme.  No matter which article you read it’s all about “climate change” and reducing emissions.  The magazine is published quarterly and distributed by the Globe and Mail and Washington Post.  Advertising dollars seem to come from those companies endorsed via their “rankings”. This issue contains a “Global 100 Progress Report” and many on that list have placed ads.

An article in this issue was written by Gideon Forman an analyst with the David Suzuki Foundation. For over 11 years Forman was Executive Director of CAPE (Canadian Association of Physicians for the Environment).  CAPE was and still is a relatively small charity with annual revenue of $386K (June 30, 2019 CRA filing) and received $107K of that from the Federal government. Nevertheless they claim many victories including phasing out coal plants, cosmetics pesticides, etc., etc. The David Suzuki Foundation on the other hand in their CRA filing for 2018 show revenue of $11.7 million and spent $1.8 million of those revenues on fundraising activities.

Forman’s article in Corporate Knights is titled “The man of wind, water and sun” and is a fawning article about Brian Iler, a lawyer who appears to reside on the Toronto Islands. Iler is an environmentalist and the article notes he “has been the creative legal mind behind a host of cutting-edge renewable energy projects, social ventures and co-ops that have challenged received wisdom.” The article goes on to note Iler was “the go-to counsel for Ontario’s cooperative sector,” and he “received a call from an engineer who wanted to erect wind turbines in Toronto. That was the start of the development of the iconic TREC wind turbine* at Exhibition Place now owned by Toronto Hydro. Finding a location for the wind turbine was difficult “until a naturalists’ group proposed Exhibition Place, but the zoning didn’t work.” A city official suggested; “Call it an amusement device” and “That’s what appeared on the building permit.”

Iler in April 2013 wrote an article about industrial wind turbines and in it he claimed “Scientists agree that the noise emitted by wind turbines ‑- the chief source of alleged health effects -‑ is basically indistinguishable from normal background sounds we experience in everyday life, whether we live in an urban or rural area.”

While Iler made the foregoing claim about wind turbines he was very upset about other noises and for several years fought against the Island Airport due to the “intolerable” noise.   An article in The Bulletin Iler penned June 6, 2018 stated: “That airport is a legacy heavy industrial use, completely out of step with the dominant recreational and residential character of our waterfront today.”  Iler was castigated in a letter from the CEO of Ports Toronto who, in his letter to Mr. Iler stated: “You are in fact the founding Chair of an organization dedicated to the airport’s closure, a position I might note that is clearly out of step with the sentiment of the vast majority of Toronto residents.”

The airport closes at 11 PM so one assumes the noise ceases at that time. Perhaps if Mr. Iler spent a few windy nights 500 metres from a 500 foot high wind turbine, he might not think of them as “an amusement device”!

Another part of the article commends Iler stating; “Iler is an expert on innovative funding models. Thanks in part to his efforts, Ontario has become a hotspot for renewable-energy-based community bonds, including SolarShare (a co-op that floats bonds to finance sun-powered arrays throughout Ontario) and ZooShare (a biogas co-operative).  Both of the foregoing have negatively impacted ratepayers and taxpayers in Ontario.

Ilier himself claims he played a major role in convincing the McGuinty led Ontario Liberal government to enact the GEA (Green Energy and Green Economy Act) in his biography (posted on his firms website).  He and other self-appointed luminaries such as Bruce Lourie, Marion Fraser, etc. were members of both OSEA and/or the GEAA (Green Energy Act Alliance) who convinced former Energy Minister and Deputy Premier, George Smitherman, to push the GEA through the provincial legislature.  Ratepayers of the Province have been paying the price of that “Act” since its enactment!

While Corporate Knights and environmentalists of the Gideon Forman ilk want to crown themselves and others such as Brian Iler; it is the ratepayers/taxpayers of Ontario who continue to suffer the consequences!

Perhaps it’s time for those who self-label themselves as knights to recognize they are charlatans.

NB: A contact of the writer disclosed the following suggesting another fact was untrue!

“The OPA called out Exhibition Place for claiming the wind turbine was the source of energy for charging their electric golf cart type vehicles. In fact, both turbine and charging stations were connected to the grid with separate accounts. As I recall, this was likely because the kWh payment for power delivered to the grid was higher than their kWh cost for the charging. Our point was that their claim about the wind turbine charging the golf carts was misleading to the public who might consider something similar.”

NBB: The Exhibition Place turbine was also created for the purpose on indoctrinating our children as this excerpt from a  August 28, 2012 indicates: “The Exhibition Place wind turbine doubles as the linchpin of a large-scale education program. In the 2008/2009 school year TREC reached more than 4,000 grade 5, 7 and 9 students.”

*The Trec Co-op Exhibition Place wind turbine is an abysmal economic failure as noted in an article penned in July 2014.