Ontario’s ECO says It’s the end of the world!

Cooked! says the enviro commissioner in her last, histrionic report

The Environmental Commissioner of Ontario (ECO), Dianne Saxe, released what appears to be her final “independent”* report on March 27, 2019 — it was full of hyperbole!  A CTV article issued after her news conference at Queens Park about the report carried this quote from her:  “If the world can’t hold together on the Paris Agreement we are toasted, roasted and grilled.”

The Saxe quote immediately reminded me of a very humourous Beyond the Fringe video from 1961 titled “The End of the World”. The cast: Peter Cook, Jonathan Miller, Dudley Moore and Alan Bennett are seated, huddled, on the top of a mountain waiting for The End of the World. Needless to say, the “End of the World” didn’t arrive so they agreed to meet “the same time tomorrow” in case it did.

End-of-the-world claims are common these days, it seems: in 2009, Al Gore claimed the Polar Ice Cap would be entirely melted in five to seven years. Turns out to be another wrong prediction, but the humour was missing, much as it is missing from the ECO’s remarks to the media and in her report.

Ms. Saxe’s lead in to the report is titled “FOSSIL FUEL CONSERVATION WOULD FIGHT CLIMATE CHANGE WHILE SAVING ONTARIANS BILLIONS” and the report itself is titled: “A Healthy, Happy, Prosperous Ontario 2019 Energy Conservation Progress Report, Why we need more energy conservation”.

We heard very many similar stories in the past about how Ontarians could “save billions!“

If one looks back to an article from October 29, 2004 Dwight Duncan, then Ontario Minister of Energy, was defending the $2.3 billion cost of smart meter installations. In a media report “Duncan wants the meters installed so residents and businesses can save money by using electricity in off-peak hours. He says Italy saved so much money that consumers there did not have to pay for the meters. But he doesn’t know if Ontario electricity users will be that lucky.”

Needless to say, we weren’t that lucky!

Several years later when George Smitherman held the post of Energy Minister he testified April 9, 2009 before the Standing Committee on General Government in respect to the Green Energy and Green Economy Act. One of his offerings to the Committee was the big promise: “We anticipate about 1% per year of additional rate increase associated with the bill’s implementation over the next 15 years. Our estimate of cost increases is based upon the way that we actually amortize costs in the energy sector. The research contracted by the official opposition does not. Their report apportions capital costs without consideration of the life of the asset, or, put another way, they didn’t amortize those costs. Their report counts the costs for conservation programs without providing any benefit for reduced consumption by the consumer.”

The new ECO report is 268 pages reiterating these same messages we ratepayers and taxpayers have been hearing, over and over again, for the past 15 years. Is Ms. Saxe unaware the Ontario voters reduced legislative seats held by Liberal MPPs to seven and the principal reason behind their fall from grace was the energy/electricity file? In searching the report, the words “electricity conservation” garners 175 hits and the word “electricity” generates 799 findings. The word “renewables” provides 66 hits and the word “billion” is used 53 times.

Ms. Saxe sincerely believes the world will come to an end unless Ontario’s ratepayers and taxpayers freeze in the dark or pay dearly for any energy consumed!

Ontario’s ECO wants Ontario’s ratepayers and taxpayers to reduce their fossil fuel consumption** while China’s power industry has called for hundreds of new coal power plants to be built by 2030. They have asked the government to allow for the development of between 300 and 500 new coal power plants by 2030 in a move that could single-handedly jeopardize global climate change targets.

That puts a damper on what Ontario might hope to achieve to prevent being “toasted, roasted and grilled”. Perhaps if each of the taxpayers of the province were paid the $207,676.40, the “Sunshine List” disclosed Ms. Saxe was paid in 2018 as the ECO, we would be happy to absorb higher prices for electricity or could buy an expensive EV to reduce our fossil fuel consumption. Until that happens, Ms. Saxe should tone down her expectations!

Ms. Saxe should realize if we are freezing in the dark it is difficult to be “happy, healthy and prosperous”!

Until then, let’s meet “same time tomorrow.”

PARKER GALLANT

*The Premier Ford led government has decreed the ECO should in the future report directly to the Auditor General.

**Fossil fuel consumption in Ontario in 2015 was (petroleum products and natural gas) 2,269 pj (petajoule) with a value of $16.8 billion according to the report and Ontario generated GDP (gross domestic product) of $618 billion meaning fossil fuels contributed only 2.7% of our GDP.

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Bugs, biomass and carbon tax: the confusing world of climate initiatives

Did this guy wreck our forest carbon sink? Tax it! [Photo: Purdue University]
Trying to understand the various issues surrounding “climate change” and the upcoming federal carbon/pollution tax or provincial cap and trade programs can be confusing when trying to research why they are being imposed.

It gets more confusing when you try to figure out, are Canada’s forests, a carbon sink or a carbon emitter?

A CBC article from a few years ago claimed forests absorb a third (2.4 billion tonnes a year) of the world’s C02 emissions. The CBC reported the study was “by an international team of government and university researchers published Wednesday in Science” and quoted a scientist “with  Natural Resources Canada’s Canadian Forest Service” who co-authored the paper. The article said “the study found that the amount of carbon absorbed annually by Canadian forests from 2000 to 2007 was about half the amount they absorbed annually from 1990 to 1999.” That was because trees killed by forest fires and by insects such as mountain pine beetle were no longer taking in carbon.

Fast forward to a recent CBC article which had this to say: “When you add up both the absorption and emissions, Canada’s forests haven’t been a net carbon sink since 2001.” The article goes on to claim our “managed forests” do absorb some emissions but: “our forestry practices would only negate roughly three to four per cent of our greenhouse-gas output each year.” And,  “In 2015, largely due to raging wildfires, these forests kicked a whopping 237 more megatonnes of carbon dioxide into the atmosphere than they absorbed. But when you exclude natural disturbances like fires and insect infestations and look only at the areas directly impacted by human forestry activity, the picture changes.”  The picture, as far as this article suggests, changes slightly suggesting we “have been a net sink of roughly 26 megatonnes annually since 2001.”

Pretty small potatoes considering Canada possesses about 12.5% of the world’s forests, second to Russia with 20%.  Russia claims its forests are a carbon sink, absorbing between 300 to 600 million tonnes of emissions annually. Russia has not signed on to the Paris Agreement so it’s not obligated to do what the UNFCCC tells them they should do, unlike Canada!

An interesting aspect of forests affected by the mountain pine beetle and other invasive species is related to those dead or dying trees. Those dead or dying trees are used to make wood pellets or biomass. Much of the manufactured biomass is exported to countries around the world and used for home heating and/or for generating electricity. Wood pellet exports from Canada and the U.S. for 2018 were projected to reach 2.4 million tonnes from Canada and 6.2 million tonnes from the U.S., as noted by Canadian Biomass, the media partner of the Wood Pellet Association of Canada.  The industrial pelletizing process uses energy to create the end product by using: a grinder, a rotary drum dryer, a magnetic separator, a ring die pellet maker and finally a counter flow cooler.  Needless to say, these actions create greenhouse gas emissions and are (or will become) subject to a “pollution tax.” The wood pellets are then transported by cargo ships burning diesel oil to destinations across the Pacific and Atlantic oceans.

For importers, the pellets reaching their destination oftentimes translate to ROCs (Renewable Obligation Certificates) or “carbon credits” as they do for the Drax Power Station in the U.K.  Reference to Drax and those ROCs can be found in an article by the writer where Drax is described as:  “It has a capacity of 3,906 megawatts (MW) and produces around 20 terawatt-hours (TWh) of power a year, 65% or more using compressed wood pellets, a form of sustainably sourced biomass.” Drax receives an ROC for each MWh (megawatt hour) it generates using those imported wood pellets which they can then sell to “carbon emitters.”

Needless to say, those ROCs generate considerable income for Drax while we here in Canada pay for the emissions created by those wood pellets manufactured in Canada.

Are you confused yet? There’s more.

The energy created using biomass emits 150% the CO2 of coal, and 300 to 400% the CO2 of natural gas, per unit of energy produced.  Apparently that concept is blessed by the UNIPCC: “The Intergovernmental Panel on Climate Change (IPCC) also says that biomass can only be considered carbon neutral if all land use impacts have been considered first.”  It is noteworthy that “Around half of the EU’s target for providing 20% of energy from renewable sources by 2020 will be made up by biomass energy from sources such as wood, waste and agricultural crops and residues, according to EU member states’ national action plans.” The article goes on to state: “Wood makes up the bulk of this target and is counted by the EU as ‘carbon neutral’, giving it access to subsidies, feed-in tariffs and electricity premiums at national level.”

An opinion by the European Environment Agency’s Scientific Committee  argued that “legislation that encourages substitution of fossil fuels by bioenergy, irrespective of the biomass source, may even result in increased carbon emissions – thereby accelerating global warming.”

So, bearing the above in mind, why do our politicians, ENGOs, and the UNIPCC want to tax us Canadians when others are receiving “emission credits” for using our deadwood?

Clean Energy BC in a posting on their website says: “Biomass generation, pursued on a sustainable basis, is endorsed by Greenpeace, the Sierra Club, and the David Suzuki Foundation.”  Hmm, one wonders if it occurred to these ENGO that supporting biomass might actually accelerate global warming? Would they also endorse the use of “dung” as an energy source?  An article on “energypedia” claimed “More than 2 billion people across the planet burn dried animal dung for energy.”  Is that where our politicians and those ENGOs such as Greenpeace, the Sierra Club and the David Suzuki Foundation want to take us?

Perhaps our politicians can examine how they could tax the “lighting storms” causing the forest fires, the wood boring pine beetle, the emerald ash borer and the fungus responsible for Dutch elm disease instead of us environmentally aware taxpayers!  That might (temporarily) get us off the path to energy regression they and their supporters seem determined to put us on.

PARKER GALLANT

A fallen (green) star in Texas

Texas small town Mayor Dale Ross meets up with reality

In early January I wrote about “virtue signaling” by the mayor of a small Texas city who was wooed by none other than Al Gore because he used “facts” to sign long-term contracts committing his city to purchase 100% renewable energy.

He has had a long hard fall from grace.

Dale Ross set himself up as a “green” hero, and claimed his social media news has been seen by 2.1 billion people around the world. He was even touted as a celebrity and interviewed by CanWEA at their convention last fall.

At the time, I said this about Mr. Ross and his claim to fame:

“This unexpected cost will presumably have a detrimental effect on the services that the city will be able to deliver OR service costs (electricity, water and waste removal) will spike much higher! These are just a couple of ‘facts’ that will make Georgetown’s utility consumers upset.”

Well, it now appears the bad news is out: the city’s ratepayers are facing increases in their electricity bills of more than $1,200 USD per year.

I surmise Mr. Ross will not be greeted warmly by his constituents.

To see why, watch this short video on Fox News!

https://video.foxnews.com/v/5996313943001/#sp=show-clips

Honesty, virtue and energy policy (3)

The previous two articles in this series pointed out how the mayor of the city of Georgetown, Texas and the former Ontario Liberal government endorsed the use of renewable energy to try to reduce emissions and save money for taxpayers. Led by environmental lobbyists (Pembina, Environmental Defence, David Suzuki, Al Gore and others) and proponents of wind and solar power generation, the politicians laid out the “facts” to persuade the public that doing so would both save money and create jobs.

The problem was, only some of the “facts” were presented and many of them were less than truthful!

Alberta-bound spin

What happened in Georgetown, Texas and Ontario has moved west to Alberta and the execution similarities are remarkable. In an article from the Calgary Herald November 24, 2016 the NDP Environment Minister announced, “We have chosen to incentivize new investment in clean energy and improve Albertans’ health by eliminating dangerous air pollution” and announced an agreement to pay $1.4 billion to shut three coal plants earlier than planned.

A government webpage titled: “Phasing out coal pollution” carries a message similar to what we were virtue signaled by Premier Wynne and her Environment Ministers noting: “Moving to more renewable energy and natural gas will protect the health of Albertans — especially vulnerable groups like children and seniors — and save money in health-care costs and lost productivity.”

Environmental push

Similar to what happened in Ontario in 2005 when a study was released about health costs (Liberal politicians claimed the cost was $4.4 billion annually) related to Ontario’s coal plants, Alberta politicians were handed a similar study. It was produced by Pembina Institute, the Asthma Society of Canada (ASC), Canadian Association of Physicians for the Environment and the Lung Association, and claimed the use of coal power cost $300 million annually in health costs. Using the 2017 Alberta census population figures for 2017 that works out to about $70 per resident. Using the 2005 census population figures for the Ontario study results in a cost of about $350 per resident. Something seems askew in the two claims, but in both cases, it provides the unverified “facts” politicians require to “virtue signal” and drive up electricity prices.

Political spin supported by wind power proponents                                                                                                                                     Alberta Premier Notley’s decision to phase out coal plants resulted in seeking out “more renewable energy” in the form of 600 MW of wind power generation. When the winning bids to the REP (renewable electricity program) were announced, the Premier was front and centre stating “It’s a new record for renewable energy pricing in Canada — the lowest price Canadians have ever seen, right here in Alberta.” The Premier went on to say in mid-December 2017: “Alberta isn’t only a leader in the [fossil fuel] energy that we are going to get to Tidewater. We are also a leader in renewable energy, and we are going to show our fellow Canadians, and the world, that economic growth and environmental responsibility can, and must, and will go hand-in-hand.”

Well, now it appears Premier Notley’s promise to get “fossil fuel” energy to Tidewater will not happen on her watch so that is just one “fact” she won’t be delivering on before the upcoming provincial election. Premier Notley went on to say: “In fact, our process was so competitive and so many companies wanted to invest, we got a 20-year price of 3.7 cents a kilowatt-hour.”

As one would expect, wind power trade association and lobbyist CanWEA (Canadian Wind Energy Association) was eager to get the word out, couched in language that made the announcement as wonderful as the Premier made it sound. Robert Hornung, CEO of CanWEA made it sound simply spectacular: “By attracting investment in the wind energy projects announced today, Alberta is diversifying its economy, driving economic growth and creating much-needed jobs in multiple sectors such as engineering, construction and local services.”

That sounds similar to what he said three years ago when he claimed: “Ontario’s choice to be the leading wind energy market in Canada has returned many economic benefits,” added Mr. Hornung, “As other jurisdictions consider a greater penetration of wind energy in their electricity systems, ‎this study clearly shows that the economic benefits associated with wind energy development are significant.” Pure fluff for the then Ontario Liberal government.

While the foregoing sounds impressive Premier Notley left out an important fact related to certain bonuses built into those contracts which include (RECs) “renewable energy certificates”.   Specifically, those RECs have a significant value which the recipients will be able to sell for revenue, boosting their income and the cost of electricity delivered to Alberta ratepayers. Those RECs will be tradeable in a market established in California in 2007.

From the Western Renewable Energy Generation Information System: (WREGIS) we would point out the following in a Q & A posting: “WREGIS issues one REC for each MWh of renewable generation. WREGIS accounts are similar to bank accounts; Certificates are deposited and managed within these accounts. Certificates can be transferred, retired, or exported to a Compatible Tracking System at the discretion of the certificate holder.” The value of a REC varies widely but as laws or regulations add such things as “carbon taxes”* to industries, (companies being charged a “carbon tax”) they can instead purchase an REC as an offset to the carbon tax and purchase it for less than the “tax”!

The monies will flow directly to those renewable energy companies.

What the foregoing suggests is the “20-year price of 3.7 cents a kilowatt-hour” may be a lot more as the future value of a “carbon tax” climbs over the $20/50 current cost, making the REC offset much more valuable than in today’s market. In summary, electricity prices will rise!

As politicians keep “virtue signaling” while only releasing selective “facts” we taxpayers/ratepayers must keep a vigilant watch.

PARKER GALLANT

*Current carbon tax in Alberta is $30/tonne and will increase further in 2021 to $40/tonne.

Honesty, virtue, and energy policy (2)

Yesterday’s post in respect to honesty and energy policy examined a small city in Texas and how its mayor has been courted around the world by proponents of renewable energy — because his actions sit into their narrative. However, I also showed how incomplete information given to the media can lead to bad results for those directly affected, the people who have to pay the bills for the “virtue signaling”.

What follows is how the two parties (politicians and energy proponents) collectively stomped on Ontario’s taxpayers/ratepayers!                                                                                                                

CanWEA spin

The Canadian Wind Energy Association (CanWEA) recently published an article that carried this claim:  “The Pan Canadian Wind Integration Study – the largest of its kind ever done in Canada – concluded that this country’s energy grid can be both highly reliable and one-third wind powered.”

The annoying part of the “study” is that it was completed by biased parties and used considerable taxpayer funds!

Perhaps Ontario’s grid operator, IESO, did make wind generation reliable but at what cost? As it turned out, in 2017, wind turbines delivered only 24.9% (9.2 TWh) of their capacity and curtailed* over 26% (3.3 TWh) of what they could have actually delivered.  That generation also caused hydro spillage of 5.9 TWh and nuclear steam-off of one (1) TWh!

IESO’s 18 Month Outlook Report also indicates they only rate the capability** of wind turbines to deliver generation 12.9% of the time it may be needed. Wind power generation also contributes to a reduction in the “real market” (HOEP) price, meaning we sell our surplus generation into the export market well below its cost.

Virtue signaling from former Ontario Premier Wynne                                    

Just over three years ago Ontario’s Auditor General released her report that noted the billions of dollars in extra costs Ontario ratepayers had to pay for the Liberal government’s green energy. The AG’s report said consumers would pay $9.2 billion more for 20-year wind and solar contracts signed by the Liberals than they would have under the former procurement system.

Premier Wynne’s response was: “There’s a cost associated with getting out of coal, of putting more renewables in place, and we’ve got other jurisdictions looking to Ontario as a model for how to do that,” said Wynne. “I’m happy to defend the changes that we’ve made.” She went on to say: “You only have to look at other jurisdictions that are struggling with air quality, with particulate matter in their air, with families that don’t feel they can let their kids play outside,” she said. “I know we weren’t in those serious straits, but the fact is we have reduced our pollution in this province.“

Apparently lost on her was the concept of the costs her government later imposed on those “kids” when in an attempt to win the last election she kicked in the neighbourhood of $50 billion down the road for them to pay via the Fair Hydro Act.

Premier Wynne earlier (about five years ago) got a pat on the head from Al Gore the climate crusader, when the last Ontario coal plant was about to be shut down.  In her speech she also referenced the children who will be paying back the above costs when she said: “And I would contend it’s our moral duty to take action to protect our children, our grandchildren, and our fellow citizens. We’re lucky today to be in the presence of a man who’s been fighting on these fronts for many years.”

In another announcement with Al Gore present she claimed: “Becoming a coal-free province is the equivalent of taking up to seven million cars off the road, which means we’ll have cleaner air to breathe, while saving Ontario $4.4 billion in health, financial and environmental costs”

It has now been four years since Premier Wynne said that so it would be nice to know, from a ratepayer and taxpayer perspective, what has happened to that $17.6 billion, we were supposed to have saved?

We should suspect Premier Wynne’s remarks was simply political spin meant to preserve her position as Premier while driving up our cost of living for a necessity of life. Our health care system has not improved in the last four years and the province’s financial situation has only become worse!

The self-evident virtue signaling has simply resulted in increasing a future cost for “our children, our grandchildren and our fellow citizens”.

PARKER GALLANT

*Those 3.3 TWh of curtailed wind cost Ontario ratepayers almost $400 million or more than all of the curtailed wind in the UK which was estimated as costing them more than £100 million in 2017 to switch off their turbines and NOT produce electricity. The equivalent of the UK’s cost was about $174 million Canadian!

**Forecast capability of capacity for other major generating sources are:  nuclear 81.9%, hydroelectric 68.4%, gas/oil 81.4% and solar 10%.

NB: If one wants to view what former Minister of the Environment and Climate Change, Glen Murray knew about the Ontario energy sector have a look at his interview at the COP 20 Conference in Lima, Peru here.  You will see that Minister Murray gave many incorrect answers and even wrongly cites the Atikokan (200 MW) coal station as the largest in North America.  It was Nanticoke (3,964 MW!

Honesty and energy policy

The new buzz is “virtue signaling” in which politicians espouse environmental solutions — but are they being honest? First in a three-part series

Texas small-town mayor Dale Ross: a star is born. But is he really a leader? [Photo: CBC]

An article penned just a couple of weeks ago focused on the spin emanating from industrial-scale wind power proponents and coupled their spin with less than honest political diatribe. Needless to say, the spin and diatribe continue.

Here is one example:

Mayor’s spin in Georgetown, Texas

Mayor Dale Ross* of Georgetown, Texas, population 70,000, has become an international celebrity. The reason: the city contracted for 100% renewable energy from a wind power development and a large solar farm, both hundreds of miles away. Because of this, Mayor Ross has been touted by Al Gore in his sequel to “An Inconvenient Truth,” interviewed by the UK’s BBC as well as many other national and international radio and TV stations. Mayor Ross, in this linked article estimated he has been seen by over 500 million people (now 2.1 billion-see below) around the world. What could go wrong? 

“To achieve 100% renewables, Georgetown negotiated two long-term (20+ year), fixed-price power contracts, one with EDF Renewables’ 194 MW Spinning Spur 3 wind plant beginning January 2016 and the second with NRG’s 154 MW Buckthorn solar site, effective July 2018. Details on pricing were withheld citing business confidential, but the contracts are for 144 MW of wind and 150 MW of solar for a combined annual quantity of nearly 900,000 MWh.”

Both of those generating sources were hundreds of miles away from Georgetown! 

Mayor Ross spins in Edmonton, Alberta

Mayor Ross was invited to speak at the 2018 Alberta Climate Summit organized by the Pembina institute. During that visit he was interviewed by the CBC where he claimed, in respect to a question about how he could support this as a Republican while the U.S. Republican president is pro-coal: “My daytime job is being a Certified Public Accountant and we make our decisions based on facts. In Georgetown, we put silly national partisan politics to the side and we just do what’s good for the voters and citizens that put us into office.”

Mayor Ross and CanWEA

Canada’s wind power trade association CanWEA naturally took an opportunity to interview Mayor Ross during his visit to Alberta and the Q & A session had the usual spin.  On closer examination however, some things Mayor Ross disclosed had a few bits of truth, but they were couched in such a way the reader would have to have knowledge of how electricity grids function to find them.

The Mayor said: “2.1 billion people have heard, read or saw my message”. When asked what advice he would give other communities, he had this to say: “In Georgetown’s case, it was mitigation and hedges to prevent negative pricing impacts of fuels components of energy production. Those take many forms and are often debated but certainly are a major component of electric generation pricing that use any form of fuel component in the process.”

If one reads about the subsequent events that have occurred to the public utility delivering electricity, water and waste collection in Georgetown, it is obvious Mayor Ross is really admitting that a few “facts” he and the City’s council based their decision on were missing.

What Mayor Ross didn’t say

A recent article notes Georgetown’s average annual consumption is about 575,000 MWh, which means they were forced to sell the surpluses into the real-time market usually at prices well below the contracted rate, including negative prices.

This small city is now facing a problem! “Actual power purchases for 2016 were 22% over budget coming in at $42.6 million against an expected cost of $35 million. In 2017, costs surged again to $52.5 million and all indications are Georgetown electricity customers will take another bath this year.”

This unexpected cost will presumably have a detrimental effect on the services that the city will be able to deliver OR service costs (electricity, water and waste removal) will spike much higher! These are just a couple of facts” that will make Georgetown’s utility consumers upset!

The message, even from a mayor who claims as a Certified Public Accountant, his decisions are fact-based, is that “virtue signaling” outweighs telling your constituents the real truth!

PARKER GALLANT

*Reading about Mayor Ross of Georgetown reminded me of Chatham Kent (population 102,000) where Mayor Randy Hope has a love affair with wind power, and CanWEA awarded him the “Friend of Wind Award” in 2017. Mr. Hope was defeated in the municipal elections of 2018.

 

 

 

 

 

Ontario Energy Board looked the other way on rising electricity bills

After seven years, the Ontario Energy Board has determined that a move by the McGuinty government to shift the burden of electricity costs to smaller ratepayers was “complicated and non-transparent.” What took them so long to find out that out, when it cost Ontario citizens billions?

Where your money went [Shutterstock photo]
Back in 2011, the Dalton McGuinty government introduced the Industrial Conservation Initiative (ICI) with the idea of changing the way Global Adjustment (GA) costs were allocated to different classes of consumers. “The stated purpose of the ICI is to provide large consumers with an incentive to reduce consumption at critical peak demand times. The resulting reductions in peak demand were expected to reduce the need to invest in new peaking generation and imports of electricity from coal-reliant jurisdictions.”

The government had been lobbied hard by the Association of Major Power Consumers of Ontario (AMPCO) who had been feeling the effects of climbing power rates brought on by the Green Energy Act (GEA) and the resulting FIT (feed-in-tariff) contracts for renewable energy (wind and solar).

Needless to say, the Liberal government caved, the ICI was born and officially started September 2011.

Just over a week ago the Ontario Energy Board released a report titled: The Industrial Conservation Initiative: Evaluating its Impact and Potential Alternative Approaches. What struck me immediately was this sentence in the Executive Summary: “In the Panel’s view, the ICI as presently structured is a complicated and non-transparent means of recovering costs, with limited efficiency benefits.”

It took the OEB seven years to come to this conclusion. And they are supposed to be the regulators for the energy sector. Their vision is: “The OEB supports and guides the continuing evolution of the Ontario energy sector by promoting outcomes and innovation that deliver value for all Ontario energy consumers.”

So, it took seven years to determine the ICI wasn’t delivering value?

The ICI was created via a change in the Regulations* and was posted August 27, 2010 on the Environmental Registry with this statement:  “As a result of the consultation, there was general agreement that the proposed changes would result in a net benefit to electricity consumers, the electricity system and the broader Ontario economy.”

The new OEB report noted the Class B to Class A shift commencing in 2011 “has shifted nearly $5 billion in electricity costs from larger consumers to smaller ones. In 2017, the ICI shifted $1.2 billion in electricity costs to households and small businesses—nearly four times greater than the amount in 2011.”

Wondering what 2018 would bring in respect to the B to A shift and, knowing IESO now posts both consumption and costs of the GA by customer class on their website, it was worth an exercise to determine if the $1.2 billion shift of 2017 would increase or decrease.  Using IESO’s data it appears the subsidy for the first 11 months was about $35.4 million per TWh (terawatt hour).  Based on 36.9 TWh consumed by Class A ratepayers the cost shift is $1.306 billion.  The 4,665,000 residential ratepayers who use 9 MW of electricity annually will absorb approximately 30% of those costs — in other words, it represents an annual subsidy to Class A customers of almost $100 from each ratepayer.

Small and medium sized businesses will pay a lot more absorbing the remaining 70%, or about $900 million!

Now you know why the price of that hamburger and everything else went up!

Electricity price increases have hit all classes of ratepayers in the province and now that we see the shift of costs, it is helpful to look at the cause!

Renewable energy in the form of wind and solar** power generation has played a big part in rising electricity bills, so it is an interesting exercise to do a simple calculation to determine what wind generation and curtailment have cost in the first 11 months of 2018.   My friend, Scott Luft posts actual wind generation and curtailment for grid-connected (TX) and distributor-connected (DX)*** wind.  Calculating the TX, wind generated (9.655 TWh) and curtailed (1.940 TWh) for the 11 months indicates costs were $1.305 billion for grid-accepted generation and $230 million for curtailed (paid for but not used) wind.

That brings total costs of intermittent and unreliable wind to more than $1.5 billion. ****

What this simple exercise really does of course is demonstrate how our costs would be much less without intermittent wind power generation, which is produced out-of-phase with demand in Ontario. Considering first-to-the-grid rights for wind power operators means it also results in spillage or waste of hydro (5.9 TWh in 2017) and nuclear steam-off (1 TWh in 2017) and must be backed up with gas generation — all of which we pay for — wind power simply increases our electricity bills without any significant benefit to the environment or power system.

If solar costs were also included in these calculations, we would be in the $3 to 4 billion range.

Short story: Without all that waste, all classes of Ontario ratepayers would have reasonable and cost-competitive electricity rates.

Conclusion                                                                                                                                       The OEB should have stood up for consumers a lot sooner and called out the government for NOT delivering the “outcomes and innovation that deliver[d] value for all Ontario energy consumers.”  Instead, the OEB simply watched while billions of dollars were removed from ratepayers’ pockets for foreign-owned wind power developments and stood by for seven years while residential, small and medium sized businesses provided increasing subsidies to large industrial companies for a program “with limited efficiency benefits.”

PARKER GALLANT

* Class A was limited to very large consumers with an average monthly peak demand of more than 5 MW (primarily large industrial consumers). Since then, the government has expanded eligibility such that Class A now includes all consumers with an average monthly peak demand of more than 1 MW, as well as consumers in certain manufacturing, industrial and agricultural sectors with an average monthly peak demand of more than 0.5 MW.

**IESO do not disclose solar generation until early the following year                                                                                                                                                      ***Estimated for grid connected but generally very close to actual generation.

****Generated wind at $135/MWH and curtailed at $120/MWh.