Challenging CanWEA’s claim about wind power and electricity bills

October 16, 2016

The Canadian Wind Energy Association (CanWEA), the wind power development lobbyist and trade association, posted a declaration last week defending wind power, saying it has no role in Ontario’s rising electricity bills. CanWEA’s Regional Director for Ontario Brandy Giannetta posted an article on their website claiming she has facts showing that wind power is a minor factor in the raft of electricity bill increases we have seen in Ontario.

Her chief source of information is a study conducted in 2014 by Power Advisory for “environmental action organization” Environmental Defence; this study has been very influential on the Wynne government’s energy policy.

The claim by CanWEA needs to be challenged.  Let’s look at real facts from the Independent Electricity System Operator (IESO).  Scott Luft collects wind data from IESO and posts it monthly on his energy analysis website.  His estimates of “curtailed” generation are indeed estimates; however, they have proven to be conservative over the past couple of years.

Luft posted data on wind power in Ontario in the first nine months of the current year; wind generated 7,035,901 megawatt hours (MWh) of electricity and curtailed* another 1,558,555 MWh.  The power restricted or curtailed actually represents slightly more than 18% of total power generation from wind.  

Together (assuming an average price of $123.50/MWh), the cost of the 8,594,456  MWh of generated and curtailed wind cost ratepayers about $1,061,415.000.   What Luft has also done is use IESO data to determine the HOEP (hourly Ontario energy price) during the generation and curtailment times and, based on that data, the market valuation of that almost 8.6 terawatt hours (TWh) was just shy of $87 million.  What that clearly indicates is the market value of 8.6 million of generated and curtailed wind contracted as a result of the GEA cost Ontario ratepayers $974 million for unneeded power that was principally exported or curtailed because it was surplus to our needs.

The data from the first nine months of the current year suggest approximately 90% of the costs associated with generating unneeded electricity from industrial wind turbines (curtailed and exported)  were costs adding no value to Ontario’s ratepayers (except for the 1 cent per kilowatt hour they would have received in a truly competitive market environment).

What this means is, the Auditor General’s observation that the government of Ontario needed to do a cost/benefit study for its non-hydro renewable energy program has become patently obvious. The wind power lobby can claim what it wants about wind power’s role in electricity bills, but the figures speak for themselves.

Parker Gallant

*IESO definition: curtailment means the involuntary curtailment of non-dispatchable load as a result of insufficient generation capacity, of a limitation in the capacity of a transmission system or of actions taken by the IESO pursuant to Chapter 5 to maintain the reliability of the IESO-controlled grid or of the electricity system

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Hydro One bills driving people into poverty

August 17, 2016

Thanks to the persistence of Global TV it appears the Ontario Energy Board (OEB) was obligated (transparency?) to release information on rising electricity bills and how people are being driven into energy poverty.

While the information contained in the PDF file shows a variety of arrears*-related information, and covers all of the local distribution companies (LDC) in the province, the Hydro One data is particularly striking. It is also in keeping with some of the 2015 Ombudsman’s report.

It is important to realize that Hydro One claimed 1,141,369 residential ratepaying customers as of December 31, 2015, representing exactly 25% of total Ontario residential ratepayers according to the Yearbook of Electricity Distributors on the OEB website.

So, focusing on Hydro One only, here are some of the interesting statistics gleaned from the OEB “arrears” report as of December 31, 2015:

  • Hydro One had 59,233 ratepayers in arrears which represented 7.1% of their residential customer base and 68.8% of all residential ratepayers in arrears (86,090) as of that date.
  • Hydro One claimed just over $97 million1. of billing arrears which represented 89% of the total billing arrears reported by all LDC (just over $109 million) as of December 31, 2015.
  • Hydro One’s arrears of $97 million represented 12.5% of their outstanding receivables as at the date of their year end.
  • Hydro One had 17,811 canceled “arrears payment agreements” due to non-payment out of 25,670 for all LDC and that represented 69.4% of all cancellations.
  • Hydro One wrote off $16,504,125.00 of receivables which represented 46.9% out of $35,172,817.00 in arrears written off by all LDC.
  • Hydro One had 7,570 eligible “low-income” households out of 19,914 households for all LDC which represented only 38% of those presumably eligible for the Ontario Electricity Support Program (OESP) which came into effect January 1, 2016

Why…?

Based on the above one would have to ask some pertinent questions such as:

Why did Hydro One have so many ratepayers in arrears when they identified only 7,570 customers as low-income and eligible for the OESP?

Why did Hydro One have such dominance of the number of ratepayers in arrears?

Why did Hydro One represent such a huge portion (89%) of the dollar value in arrears?

If you believe it is related to Hydro One’s excessive delivery rates you would be entirely correct. That was recently reported by writer Scott Luft.

A quick glance at the second Quarter results for Hydro One shows they distributed 6.2 terawatt hours (TWh) versus 6.7 TWh in the comparable 2015 Quarter — that’s a drop of 8% — yet their distribution revenue showed a slight increase of $2 million year over year. What we can determine from those results is in 2015 the “distribution” business of Hydro One generated $51.8 million per TWh and it increased to $56.3 million/TWh in 2016 for an increase of 8.7% per TWh.

The upside-down world of Ontario

In other words, for Hydro One declining demand results in increased revenue. Thanks to their monopoly and the unique cooperation of the OEB, Hydro One has turned the economic model of  “supply and demand” on its head.

One has to wonder now if the sale of shares in Hydro One was driven not only to help achieve a balanced budget in 2018, but also to rid the Ontario Liberal government of even more anticipated bad news about the electricity file and their ownership of Hydro One. Holding a minority interest at the date of the next election might have the Ontario Liberals pointing the finger at the OEB for constantly granting Hydro One’s distribution arm rate increases exceeding inflation by a wide margin.  With that in mind they might just pretend they would do something to right the wrong if re-elected.

Only time will tell if Hydro One is allowed to maintain their lofty position as the generator of the highest arrears levels amongst the ratepayers of the province and continue to be granted the rate increases applied for.

Parker Gallant

  • Average arrears level for Hydro One’s residential ratepayers as at December 31, 2015 was $1,638.59 and the OEB defines arrears as:  “ … an account that is 30 or more days past the 16-day minimum payment period .”