Ontario’s electricity export tariff

Special to The PostMedia Network, June 14, 2018

BY PARKER GALLANT, GUEST COLUMNIST

Former Energy Minister Chiarelli and his claim of a $6B profit on surplus electricity exports. “You can verify it.” No, you can’t.

Many will recall Bob Chiarelli, when in the position as Ontario’s Minister of Energy, was questioned on the costs of exporting our surplus electricity on TVO and stated: “since 2008, the province of Ontario – and you can verify it with the IESO – has made a $6 billion profit on the trading of electricity.”

Needless to say Minister Chiarelli was called out by the media and opposition parties for making such a spurious claim.

Let’s look at Ontario’s 2017 electricity exports and see what he would claim about them. The U.S. Energy Administration Information (EIA) in a recent release, had the following information posted from data supplied by Canada’s National Energy Board (NEB):

“Electricity accounts for a small, but locally important, share of bilateral trade. In 2017, the value of U.S. imports of electricity from Canada increased for the second straight year, reaching $2.3 billion*. The United States imported 72 million megawatt hours of electricity from Canada in 2017 and exported 9.9 million megawatt hours, based on data from Canada’s National Energy Board.”

As it turns out, Ontario’s exports of 19.1 million megawatt hours (MWh) in 2017 represents 26.5% of the 72 million MWh reported as exported by the NEB and those 19.1 million MWh generated “revenue” of $496.6 million (approximately) made up of the $15.80/MWh of the yearly average HOEP (hourly Ontario energy price) as reported by IESO and another $10.20/MWh for transmission** costs.

The implied revenue generated represented 16.6%* of total Canadian electricity revenue versus 26.5% of total Canadian electricity exports. The Ontario based generators of that 19.1 TWh of power were paid a yearly average of $115.5 million/TWh (yearly average includes HOEP plus global adjustment based on the IESO’s December 2017 monthly summary.

That means the cost to Ontario ratepayers for exported power was $1,709.5 billion and the credit (net of the monies to Hydro One of $194.8 million for transmission) resulted in Ontario’s ratepayers picking up the missing revenue of $1,507.7. Anyone with a small math knowledge would not refer to that as a profit as it would represent a cost of about $300 per Ontario household.

Export tariff?

The cost to ratepayers of electricity exports in 2017 at over $1.5 billion and prior years played a significant role in driving up electricity rates and represented almost 10% of total generation costs. To put that in current context, Ontario’s ratepayers were slapped with an “export tariff” by our Ontario government of 88% which greatly exceeds the US tariffs recently announced by the US government on Canadian manufactured steel and aluminum.

Getting slapped with only a 10% or 25% tariff would be a net benefit to Ontario’s ratepayers.

*Presumably US dollars so would represent approximately $3 billion CDN dollars at a $1.30/$1.00 exchange rate.

**A large part of these revenues ($194.8 million estimated) went to Hydro One who control about 99% of all transmission in the province.

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Energy Minister doles out lumps of coal to Ontario power customers Christmas Day

Ontario ratepayers, good and bad, had a disappointing Christmas Day

A quick review of IESO data for Christmas Day 2017 shows our Energy Ministry delivered lumps of coal to all Ontario’s electricity ratepayers, whether they were good or bad.  Those lumps of coal can be seen as a gift from all past and present Energy ministers who signed contracts for the industrial wind turbines liberally sprinkled throughout the province.

This year, the IESO data shows about 54,327 MWh* was curtailed (paid for but not delivered to the grid) and paid $120/MWH. That means wind power corporations were paid over $6.5 million  ($6,519,240 to be more precise) for NOT delivering that power.

The curtailed or wasted power was enough to supply almost 2.2 million average homes with power for the day, free.

Meanwhile, the IESO accepted about 25,680 MWh, so the curtailed/suspended generation was actually 2.1 times as much as grid-accepted wind power. Wind power corporations were paid $135 per MWh — that’s another $3,467,800 so the total bill for wind power for the day was $9,987,040.

What you paid them: 39 cents a kWh

Here’s what else it means: the 25,680 MWh of power actually accepted by IESO into the grid cost $388.77/MWh* or 39 cents a kWh!  And, that 39 cents a kWh doesn’t include the costs of gas plant backup, spilled hydro or steamed-off nuclear, all of which applied on Christmas Day.

What you got paid: 1.9 cents

That’s not all: at the same time, the IESO was busy exporting surplus power to our neighbours in New York and Michigan at an average of 1,993MW (net-total exports less imports) per hour. We practically gave away 48,000MWh (rounded) at a cost to Ontario ratepayers of over $4 million.  So, Christmas Day, the day of giving, ratepayers coughed up $14 million for unneeded power whether they could afford it or not! That $14 million raised the cost to electricity customers by about $40/MWh or 4 cents/kWh.

Christmas Day is supposed to be a day of joy and giving. In Ontario though, it was a day when the result of government energy policies and mismanagement furthered hardship for many.

(C) Parker Gallant,

December 27, 2017

 

* Calculation is simply $8,083,200 + $3,467,800 = $11,551,000/25689 MWh = $449.80/MWh

The secret is out: wind power costs plenty

This past weekend’s stats are not kind to the wind power cheerleaders

The wind power trade association, the Canadian Wind Energy Association or CanWEA, uses every opportunity to push for more wind power development, and often uses “selective facts” to promote their claims.   One of the latest relied on investment firm Lazard by stating:  “A December 2016 report from the U.S. investment firm Lazard found that wind energy is the lowest cost option for new supply in the United States without any subsidies. Wind energy costs continue to fall, offering an attractive electricity source to provinces seeking to clean and diversify their electricity systems.”

That statement is included in CanWEA’s recently released brochure “The Secret is Out, Wind is in”.

Had the unknown author(s) at CanWEA simply looked at the Ontario Energy Board’s (OEB) semi-annual Regulated Price Plan they would have noted Table 2 on page 21 of the April 20, 2017 report that the cost of a wind-generated kilowatt hour (kWh) in Ontario is shown as 17.3 cents ($178/MWh), as the cost of “curtailed” (not added to the grid) wind is also included as a cost input.

Had the author(s) also simply looked at IESO data they might also have noticed that maybe wind energy costs are not continuing to fall!   Saturday, November 25th was an example: it was a very windy day in Ontario with an especially windy night. Unfortunately for the wind power cheerleaders, our demand for power from 12 AM until 7 or 8 AM was relatively low, but the wind was really blowing. That meant the 4,200+ MW of wind capacity were running at 90% (approximately) of their capacity, at the same time as Ontario’s demand for power was hovering mid-way between 11,000 and 12,000 MW. That’s very close to what our nuclear plants can provide on their own without help from other generation sources.

As a result, IESO ordered wind’s curtailment, hydro’s spilling and nuclear steam-off. At the same time, they were exporting whatever the market would take.

So, all together on November 25, the IESO curtailed 35,600 MWh of grid-connected wind and accepted 30,600 MWh into the grid, while scrambling to prevent brownouts or blackouts by exporting about 50,000 MWh over the day.

Industrial-scale wind power developers get paid $120/MWh for curtailed wind and $135 MWh for grid-accepted wind.

Quick math on all that means:

Ontario’s ratepayers picked up the costs of almost $8.6 million for curtailed and grid-accepted wind power produced when it wasn’t needed.

The cost of the grid-accepted wind (30,600 MWh) was therefore just over $280/MWh or 28 cents per kWh or, 10.7 cents more than the OEB reported back in April. On top of that, we ratepayers also ate the costs of spilled hydro, steamed off nuclear and the losses on the 50,000 MWh exported at a price close to zero.

Now if that author or authors who cranked out the latest CanWEA “selective facts” brochure were brutally honest, they would immediately change the title to:

“The Secret is out: wind is horribly expensive, intermittent and unreliable!”

Wind power peaks match power use lows

Once again, the numbers show: wind power shows up when it’s not needed, adding to consumers’ electricity bills

The IESO/Independent Electricity System Operator just released their October 2017 Monthly Market Report.

As usual, it was full of bad news.

Ontario power consumption was down 2.6% from October 2016 and was the third lowest consumption month of the 10 so far in 2017.

October 2017 was also the fourth highest month for curtailed wind* in 2017 with 37.9% (481,243MWh [megawatt hours]) curtailed, compared to May’s record curtailment of 49.3%, April’s of 42.6% and June’s curtailment of 38.1%.  History has shown wind’s generation levels in Ontario tend to always be higher in the Spring and Fall months, so this was no surprise.  What it does underscore, again, is that the months of lowest power consumption line up with wind power’s best days on the job. Power when its not needed!  Curtailment of wind in October cost Ontario ratepayers about $58 million.

On top of the wind power curtailment, Ontario also was busy exporting surplus power to our neighbours in New York, Michigan, etc. providing them with cheap power subsidized by the ratepayers of Ontario.  Net exports (exports minus imports) averaged 1,438 MW per hour so 1,069,872 MWh were delivered elsewhere.  Based on the record Global Adjustment (GA) for the month of $125.63 and the very low HOEP (hourly Ontario electricity price) of $8.75 MWh (0.088 cents.kWh) the cost to Ontario ratepayers; after recovery of the HOEP, transmission and congestion charges was approximately $107 million.

In summary, Ontario ratepayers picked up costs of curtailed wind of $58 million plus lost revenue from exports of $107 million for 1,550,000 MWh (rounded) generation of no value to them.  Those 1,550,000 MWh were enough power to have supplied 172,000 average households with power for a full year or almost 2.1 million average households with power for the full month of October.

No doubt we also spilled cheap clean hydro and steamed off emissions free nuclear while paying for idling gas plants, at the ready; to ensure power when clouds passed over solar panels and the wind refused to blow.

This all adds up to very Un-Fair Hydro Plan!

Parker Gallant

November 23, 2017

Note: “constrained” means the power was not needed so not added to the grid … but paid for anyway.

* Thanks to Scott Luft for his invaluable data!

Wind power myths busted on one fall weekend

Beautiful … but costly. All that “free” wind power. [Photo: The Weather Network}
October 21 and 22 was a beautiful fall weekend in Southern Ontario with lots of sunshine, beautiful colours, mild temperatures and gentle breezes. That combination meant low electricity demand: power demand for the two days was slightly less than 603,000 MWh (megawatt hours) for all types and classes of Ontario ratepayers according to IESO’s (Independent Electricity System Operator) “Daily Summary Reports”.  As a result we exported surplus generation to New York, Michigan, etc. at an average two-day price of $2.65 per MWh, but at the same time, that cost Ontario’s ratepayers about $120/MWh*.

So, the “Net Exports” (exports less imports) of just under 98,000 MWh sold to our neighbours recovered about $260,000, but cost Ontario’s ratepayers almost $11.8 million … even more if we attribute it all to wind generation.

It turns out, the blame can easily be allocated to industrial wind turbines as they could have generated about 107,000 MWh, but were partially curtailed by IESO. As the weekend unfolded, 38,000 MWh were curtailed and 69,000 MWh were delivered to the grid.   Ontario’s ratepayers picked up the tab for the curtailed wind at $120/MWh and $135/MWh for the grid-delivered generation, bringing the weekend wind costs to almost $14 million ($13.875 million).  You should note curtailed and grid-accepted wind generation exceeded our net exports by 9,000 MWh — that’s enough to power 10,000 average households for a full year!

As it turned out, we didn’t need wind generation at all and we normally don’t. A look at our generation capabilities on the weekend via the IESO’s “Generators Output and Capability Reports” also shows IESO were busy controlling the grid to prevent blackouts or brownouts, and frequently did so by getting Bruce Nuclear to “steam off.” It must be assumed that OPG were also required to “spill hydro,” our cheapest form of generation!  Needless to say, we ratepayers were also paying for that!

Once again, the past weekend demonstrates power generation from industrial wind turbines wasn’t needed.

But the way the Ontario Liberal government has negotiated the contracts with wind power developers means Ontario’s ratepayers are required to pick up the bill for the unreliable and intermittent nature of power that often winds up creating a surplus of unneeded power that is exported at a substantial cost.

It is clearly time to end the charade — kill the GEA and cancel any outstanding unbuilt wind contracts.

 

* Due to the nature of grids, it is impossible to determine what source of generation was actually exported so the suggested cost reflects (approximately) the GA (Global Adjustment) plus the HOEP (hourly Ontario electricity price) of all types of generation either contracted or regulated.

Sickening: Wellington Times editorial on Ontario’s wasted power

Rick Conway of the Wellington Times in his editorial of August 16th has done a great job at highlighting the way the current government of the province have messed up the electricity sector and how they are trying to increase the mess.

He points out how we are exporting our surplus power, in part due to the unreliability of wind and solar generation.

He has kindly referenced yours truly in the article and it is much appreciated.

Find the “Dots” article here: http://wellingtontimes.ca/dots/

One (megawatt) is the loneliest number

On one day recently, for one hour, Ontario’s thousands of towering wind turbines delivered just one megawatt of power. And still, Ontario  had a surplus that was sold off cheap.

May 27 was a Saturday which is usually a “low demand” day for electricity in Ontario, compared to weekday power demand and assuming weather patterns are close to average. The temperature on the recent May 27 was slightly below historic averages in Toronto; as people woke up and set about their activities that day, the demand for electricity built slowly.

According to the IESO’s (Independent Electricity System Operator) Daily Market Summary, Ontario demand peaked at 14,069 MW and averaged 12,751 MW (total Ontario demand was 306,024 MWh for the whole day).  If anyone checked IESO’s “Power Data” page at, say, just after 11 AM, they would have noted demand was 13,208 MW at 10 AM and the HOEP (Hourly Ontario Energy Price) was indicating a negative price of -$4.00 /MWh.   If one had also looked at the “Generator Output and Capability” and scrolled down to “Wind Total” they would have seen that under the heading “Output” the number appearing on the screen was “1”!

As in, one single megawatt of power.

About half the capacity of one ordinary wind turbine.

So, at 10 AM on May 27, 2017 the approximately 4,500 MW capacity of the more than 2,000 wind turbines installed throughout the province by the McGuinty/Wynne governments with lucrative, 20-year contracts, were delivering one megawatt of power.

And yet, to the best of my knowledge, Ontario didn’t experience a blackout or brownout because intermittent wind power generation was almost completely absent, nor did our emissions increase, as we got all the power needed from nuclear and hydro resources.   In addition, the almost 9,000 MW of gas generation was idling, operating at an average of about 2% of capacity almost all day.

Despite wind only producing an average hourly output of 75 MW for the day and just the “1” for hour 10, Ontario still exported 43,584 MW of power at a cost to ratepayers of $5.6 million*.

Despite the lackluster performance of industrial wind turbines May 27 and on many other occasions, a visit to the home page of CanWEA still claims:  “Wind is delivering clean, reliable and low-cost electricity”!

Sure!

Perhaps with another 4,500 MW of capacity in Ontario, the industrial wind turbines may have delivered TWO MW of power at 10 AM on May 27?

 

*Cost estimate assumes the second IESO estimate of May’s Global Adjustment of $127.76 holds up.