Wind: worst value for Ontario consumers

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

Ontario turbines near Comber: not helping

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

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

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

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

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

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

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

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

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

You can’t hide October’s facts!

 

Advertisements

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.

Wynne government hydro discount means larger costs looming

IESO Connecting Today. Powering Tomorrow.

…and racking debt up for tomorrow, too

October 2, 2017

The Wynne government’s (apparent) 25% reduction in electricity rates for Class B ratepayers (ordinary folks, not huge corporations and businesses) under the Fair Hydro Act might have resulted in increased power consumption … but it doesn’t appear to have had that effect.  Should reduced demand for power continue in Ontario, the big discount will simply drive up the debt to be accumulated over the next ten years of the deferral (refinancing existing assets) under the act.

The Independent Electricity System Operator or IESO just released their Monthly Market Report for August 2017. Compared to the August 2016 report, overall consumption was down from 13,113,357 MWh to 11,350,008 MWh or 1,763,349 MWh (-13.4%). That’s enough to power about 200,000 average households for a year.

When one looks at the breakout between Class A and Class B ratepayers, however, IESO reports consumption by Class A ratepayers increased from 2.373 TWh (terawatt hours) in 2016 to 3.230 TWh in 2017 —  36.1% (.857 TWh).  Class B ratepayers consumed 22.9% less (2.515 TWh) reducing consumption from 10.962 TWh to 8.447 TWh.*

The lower consumption by Class B ratepayers was partially influenced by a slightly milder August in 2017; however, IESO notes in the recently released 18-Month Outlook “Weather-corrected demand was a similar 11.5 TWh and represents an all-time low for the month.”

Now looking at the Class A consumption, the combined rate (Global Adjustment + HOEP [hourly Ontario energy price]) dropped from $75.05/MWh to $70.53/MWh (-6%) from 2016 to 2017, and that ratepayer class appears to have taken advantage of the drop. Some of the increase was no doubt due to  an expansion of Class A ratepayers following a change in who qualifies under the Industrial Conservation Initiative program. That allowed companies with lower consumption to join the Class A group.  Energy Minister, Glenn Thibeault dropped the Class A attributes from peak consumption of 3 MWh to 1 MWh and then finally to 500 kWh* in an effort to mollify the numerous medium-sized companies and associations who lobbied hard to get a lower electricity price.

Costs are up for regular folks, down for business

The weighted average (GA+HOEP) cost for “B” class ratepayers is up $15.47/MWh year over year, but down for class A by $4.52/MWh. Costs (GA +HOEP) in August for B class ratepayers was $118.37/MWh and those costs for A class ratepayers were $70.53/MWh.  The additional costs of $47.84/MWh that B class ratepayers are responsible for was 67.8% higher than A class costs in August. Under the Fair Hydro Act, 17%** of the B class costs will be deferred and IESO tracks those under a “Variance Account”.  The latter increased in August by $210.8 million to reach $605.5 million for just the first two months.  The monthly variance is being refinanced cumulatively and will come back to haunt ratepayers and whoever is the government, in 10 years

According to my friend Scott Luft, wind power generation in August from grid- and distribution-connected industrial wind turbines (IWTs) produced 597,537 MWh. Another 78,265 MWh were curtailed, or paid for but not added to the grid.

All-in, the cost of IWTs in August was approximately $90 million and represented 79.7 % of our export of surplus power of 847,416 MWh to our neighbours in New York, Michigan and elsewhere.

While we don’t know specifically the source of the power included in the grid, if all the wind generation was exported, we were paid about $17/MWh or around $10 million, meaning a loss of $80 million. Without wind power generation, the August “Variance Account” addition could have been lower by that $80 million.

The future: more costs

So, despite “B” Class ratepayers experiencing the “benefits” of the Fair Hydro Plan, instead they reduced their consumption by 22.9%.

 

Maybe they are concerned about what will happen in 10 years’ time, when they will be billed for that Variance Account the Financial Accountability Office said would be a minimum of $45 billion and could balloon to as much as $93 billion.

 

* The difference of 165,000 MWh between the Market Report and the breakout is presumably due to line losses billed to each ratepayer class and the 22.9% drop is no doubt related to the expanded ICI

** 8% of the 25% reduction was due to the canceling of the 8% provincial portion of the HST.

 

Wind power: if this is “reliable,” get ready for lights out!

The wind power developers’ lobbyist/trade association is proposing a tripling of Ontario’s wind turbine capacity. What would that look like?

A June 5, 2017 article by Brandy Giannetta, the Ontario Regional Director at the Canadian Wind Energy Association (CanWEA), states that “Ontario could reliably integrate 16,000 megawatts of wind energy” . Later in the article, she says wind power would be “low-cost, emission-free and increasingly reliable”.

The 16,000 MW of wind capacity suggested in the article would more than triple the current 4,000 MW of grid-connected industrial wind turbines (IWT) and the 600 MW of embedded (approximately) capacity.   CanWEA just recently repeated this suggestion in a Tweet, so apparently the lobbyist/trade association thinks it’s a real idea.

Let’s see how “reliable” wind power is, right now.

It is important to look at the pattern of wind power generation.  In the four hours from 10 AM to 2 PM on September 12th , the grid-connected industrial wind turbine (IWT) capacity of 4,000 MW generated almost 340 MWh, according to the IESO’s Generator Output and Capability report of September 12, 2017.   During those four hours, Ontario demand totaled about 58,500 MW, so the 340 MWh delivered by wind turbines provided .58% of Ontario’s power demand — yet they represent 10.9% of Ontario’s grid-connected capacity of 36.563 MW!

It is hard to fathom how delivering just over ½ % of Ontario’s demand can be vaguely considered as reliable.   The full CanWEA article suggests tripling the current contracted industrial wind so that .58% delivered during those four hours would have generated 1.7% of demand over the same four hours.   Connecting the additional 10,400 MW to the grid would mean major expenditures (and by that I mean, billions of dollars) on the transmission system, while neglecting spending on truly reliable generation and the various parts of the transmission system that have been neglected.

It would also cost ratepayers for additional reliable back-up generation.

The CanWEA article also suggests wind at the 16,000 MW level would avoid “about $49 per megawatt-hour of production costs” if it supplied 35% of Ontario’s electricity demand.  If the four-hour experience of power generation on September 12 shows wind turbines would supply only 1.7% of our demand, it also demonstrates one thing clearly: the last thing we need in Ontario is more wind turbines, generating intermittent unreliable power!

Ontario’s ratepayers can’t afford any more wind.

Parker Gallant

September 12, 2017

Labour Day weekend stats show up Wynne government power folly

Mr Thibeault: If you sell the lemonade for 6.5 cents but it costs you 13 cents … oh, never mind

The Labour Day weekend was a disappointment for many as the last summer holiday featured below-normal temperatures in most of Ontario. The cool weather meant Ontario’s demand for electricity was only 904,000* megawatts (MWh) for the three days.

The “weighted” average of the hourly Ontario electricity price (HOEP) averaged a meagre $6.13/MWh (0.61 cents/kWh), meaning the market value for that consumption was only $5.542 million.

At the same time, however, Ontario was exporting 168,000 MWh (net exports i.e., exports minus imports) to New York, Michigan, etc. at about the same price. Ontario got $1.03 million from the sale of that power, which brought the total market value of Ontario’s consumption and exports to $6.572 million.

Apparently.

If the $6.57 million figure was the true cost of power generation, then Ontario’s ratepayers would have been delighted; however, we know the HOEP makes up only a small portion of the cost. The Global Adjustment (GA) represents the bulk of costs.

What the power REALLY cost

The GA includes the difference between the contracted rate and the market or HOEP value and many other costs.   As is the normal process of IESO (Independent Electricity System Operator) they provide a forecast of the GA at the start of each month. For September of this year, it was the highest ever at $127.39/MWh** or 12.7 cents/kWh.    Should IESO’s forecast prove correct, the total cost of those Labour Day megawatt hours for September will be $133.52 or 13.3 cents/kWh.

In other words, the 1,072,000 MWh consumed and exported over the three days of the Labour Day weekend had an all-in cost of over $143 million.

Ontario’s ratepayers in the interim were enjoying TOU (time of use) off-peak rates of 6.5cents/kWh meaning they will be billed $58,760,000 (904,000 X $65/MWh = $58,760,000).  That $58.760 million plus the $1.03 million from the export of the 168,000 MWh will produce revenue of only $59,793,000.

That leaves a shortfall in the costs of contracted generation of $83,340,440. ($143,133,440 – $59,793,000 = $83,340,440)

The $83 million shortfall for those three days winds up in what is referred to as a “variance” account and is normally reflected in the resetting of the rates semi-annually by the Ontario Energy Board on May 1st and November 1st. The Fair Hydro Act however kicked these costs down the road and will accumulate with all the other shortfalls and reflect themselves in future rate increases.

Still digging the hole

Despite these crazy financials, Energy Minister Glenn Thibeault has not cancelled the renewable energy contracts issued in 2016 that are now chasing their Renewable Energy Approvals from the Ministry of the Environment and Climate Change. The amount of exported power on the Labour Day weekend combined with the 36,000 MWh of curtailed wind power represented more than one-fifth (22.6%) of Ontario’s demand.

Ontario clearly does not need any more intermittent wind power generated out of phase with demand.

Time for the Minister of Energy to brush up on his Grade 6 Math and stop punishing Ontario’s ratepayers.

Parker Gallant

 

* Ontario’s demand for the 2016 Labour Day was 1,197,000 MWh

**Hopefully the IESO forecast includes an allowance for curtailed wind which was approximately 36,000 MWh over the three days of the weekend and which Ontario ratepayers pay $120/MWh.

 

Electricity in Ontario: save more, pay more

Consumption went down, costs went up!

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

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

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

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

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

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

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

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

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

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

Parker Gallant,

September 3, 2017

 

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

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

Ontario summer day means low power demand, high costs for consumers

A windy, sunny August day: sounds nice? In Ontario, that costs you. [Photo: Dorothea Larsen]
August 5 2017 was an interesting day: the wind was blowing and the sun was shining, in part of Ontario, anyway.

Unfortunately for Ontario ratepayers that weather will cost them a lot of money.

Why? The cost stems from the fact Ontario’s demand for electricity on that day was only 317,000 megawatts (MWh),* according to the IESO Daily Market Summary, probably due to conservation efforts and mild temperatures.  Low demand doesn’t save money: in fact, it will cost Ontario ratepayers millions of dollars due to bad management of the electricity sector by the current government.

I was curious about this windy, sunny day, which led me to contact Scott Luft, a master at using IESO data to give us a real picture of market demand and its costs.  Scott occasionally produces “Daily Ontario Supply Estimates” which provide a picture of both our demand and generated sources, what it cost, how much was exported, how much was curtailed/spilled (wasted), etc., and even how much of the costs were picked up by Class B ratepayers versus Class A.

Scott also estimates curtailed wind, spilled hydro, etc., using a conservative approach; they are generally confirmed months later by IESO.

Scott’s daily estimate for August 5, 2017 confirmed my suspicions!   Emissions-free nuclear and hydro generators alone supplied the 340,000 MWh of power Ontario needed easily, even exceeding Ontario demand by 23,000 MWh.  The cost of that generation was $21.1 million. After allowing for the value of the surplus 23,000 MWh as exports at the average hourly Ontario energy price (HOEP) of $4.94/MWh the cost per MWh comes to $66.34/MWh or 6.6 cents/kWh.**

Double the cost — and you’re paying it

Part of Scott’s daily estimate includes additional costs in the form of all the other generation sources, plus curtailed wind and solar, spilled hydro, biofuel and idling costs of gas plants. When those are added to the $21.1 million of nuclear and hydro, the price billed to ratepayers for the day jumps to $37.8 million — $119.24/MWh or 11.9 cents/kWh.  The Class A to Class B subsidy results in the cost per kWh for the “B” Class (that’s you and me) jumping to $131.10/MWh or 13.1 cents/kWh.

The other generation sources on Scott’s August 5 daily estimates include transmission (TX) and distributor (DX) connected generation, along with curtailed/idled, etc. costs with gas at 9,123 MWh (cost $4.1 million), wind at 49,088 MWh (cost $6.3 million), solar at 13,002 MWh (cost $6.1 million), biofuel at 701 MWh (cost $368,000) and imports of 8,563 MWh (cost $52,000).

The costs to you are mounting

Are you with me so far? What this means is, those other generation sources (including curtailed wind, etc.) of 85,000 MWh cost $16.7 million — $196.47/MWh or 19.5 cents/kWh) and are billed to … you, Ontario’s ratepayers.

Approximately $8.1 million of the day’s costs will be allocated to the Fair Hydro Plan and wind up on future electricity bills. If August 5 was a typical day, the amount kicked down the road for the next four years by the Premier Wynne-led government will amount to $3 billion annually (plus interest).  (The $8.1 million estimate for this day comes from the use of what is referred to as the “Global Adjustment Modifier” set by the OEB at $32.90/MWh from July 1, 2017 to April 30, 2018 and will be reset at the later date. The $8.1 million was obtained by simply multiplying Class B consumption — 246,000 MWh — by the $32.90 “Modifier”.)

Mismanagement of the energy portfolio by the Wynne-led government on August 5 generated a cost for Class B ratepayers that was excessive. It will continue, and lead to an explosion of households living in “energy poverty”*** when the Fair Hydro Plan comes to an end in four years.

The Minister of Energy needs to recognize the problems caused by intermittent and unreliable renewable energy!  Once he understands the latter he should immediately cancel any wind and solar contracted projects that have not commenced construction, along with any in the early planning stages.

Kicking the can down the road via the Fair Hydro Act is anything but fair. Paying twice for non-emitting clean energy simply amplifies the bad management this portfolio has received from our government.

Parker Gallant

August 11, 2017

*   Some of the above MWh references are rounded to the nearest thousand.

** The 6.6 cent rate, coincidentally, is close to our new off-peak rate of 6.5 cents/kWh (previously 8.7 cents/kWh) which came into effect July 1, 2017. The lower rate is a result of the “Fair Hydro Plan” instituted by the Premier Wynne that kicked 25% of the costs down the road for four years.  The Off-Peak rate back on May 1, 2007 was 3.2 cents/kWh so even after the recent reduction it is still up over 103% in the last 10 years.

*** Energy poverty is generally defined as utilizing 10% or more of a household’s disposal income to pay for their electricity and heating needs.