Ontario’s cyclonic wind costs keep heading higher

Compare power output from wind and the cost to consumers between 2010 and 2016 and we learn this: we’re paying more for intermittent wind power, produced out-of-phase with demand

More wind=more cost [Photo: Dorothea Larsen]

In 2010, industrial wind turbines (IWT) in Ontario represented total installed capacity of approximately 1,200 megawatts (MW); they generated 2.95 terawatt hours (TWh*) of transmission (TX) and distributed (DX) connected electricity.  The power from wind cost Ontario’s ratepayers about $413 million for those 2.95 TWh, about 2.1% of total 2010 consumption.  The cost of IWT generation in 2010 was 3.1% of total generation costs (Global Adjustment [GA] + Hourly Ontario Energy Price [HOEP]) and represented 33.5% of “net exports”** of electricity to our neighbours in Michigan, New York, and others.

Wind was over 90% of exported power

Jump to 2016: wind turbines represented installed capacity of almost 4,500 MW, and generated and curtailed*** TX and DX connected electricity totaling 13.15 TWh.  The cost to Ontario’s ratepayers jumped to $1,894.3 million — about 12.2 % of total generation costs.  The 13.15 TWh of generation was 7.9% of Ontario’s total consumption but 94.9% of net exports.

The cost per kilowatt hour of electricity generated by wind in 2010 was 14 cents and in 2016 it had increased to 17.5 cents, despite downward adjustments to the contracted values between 2010 and 2016.   That cost doesn’t include the back-up costs of gas generation when the wind doesn’t blow and we need the power, nor does it include costs associated with spilled hydro or steamed off nuclear, but it does include the cost of curtailed wind, which was 2.33 TWh in 2016 and just shy of total wind generated electricity in 2010.

In the seven years from 2010 to 2016, Ontario’s electricity ratepayers picked up total costs of $7.746 billion for 56.9 TWh of grid-accepted and curtailed (4.9 TWh) wind-generated electricity.   The actual value given to those 56.9 TWh by the HOEP market was just shy of $570 million meaning ratepayers were forced to pick up the difference of $7.166 billion for power that wasn’t needed.  The foregoing is based on the fact we have continually exported our surplus generation since the passing of the Green Energy Act and contracted for IWT generation at above market prices.

During those same seven years, Ontario had “net exports” of 85.95 TWh while curtailing wind, spilling hydro and steaming off nuclear. And, at the same time, we were contracting for gas plant generators that are now only occasionally called on to generate electricity yet are paid considerable dollars for simply idling!

Refinancing wind payments

As noted above the cost of wind generation in 2016 was almost $1.9 billion and represented 15.3% of the Global Adjustment pot. That cost was close to what was inferred in an Energy Ministry press release headlined: “Refinancing the Global Adjustment” but suggesting it was taxpayer owned “infrastructure”:  “To relieve the current burden on ratepayers and share costs more fairly, a portion of the GA is being refinanced. Refinancing the GA would provide significant and immediate rate relief by spreading the cost of electricity investments over the expected lifecycle of the infrastructure that has been built.”

What’s really being refinanced is a portion of the guaranteed payments to the wind and solar developers who were contracted at above market rates! So, what is being touted as a 25% reduction includes the 8% provincial portion of the HST and a portion of annual payments being made to wind and solar developers for their intermittent (and unreliable) power.

Premier Wynne’s shell game continues!

(C) Parker Gallant

May 22, 2017

Note: Special thanks to Scott Luft for his recent chart outlining the data enabling the writer to complete the math associated with this Liberal shell game!

*    One  TWh equals 1 million MWh and the average household in Ontario reputedly consumes 9 MWh annually, meaning 1 TWh could power 111,000 average household for one year.

**   Net exports are total exports less total imports.

*** Ontario commenced paying for “curtailed” wind generation in September 2013.

Wynne spin and the “Fair Hydro Plan”

Re-reading Premier Wynne’s statement of March 2, 2017 on her announcement of Ontario’s Fair Hydro Plan, one is struck by the avoidance of the truth, the sudden empathy displayed and her blatant claims.   As one example, she suddenly noticed “Electricity is not a frill — it’s an essential part of our daily lives.”

The Premier has obviously forgotten her party clearly treated it as a “frill” by taking advice from environmentalists who persuaded her (and predecessor Dalton McGuinty) that industrial wind turbines (IWT) and solar panels could easily replace the power generated by coal plants.  They were so taken by those claims the energy minister didn’t bother to do a cost-benefit analysis as noted by Ontario’s Auditor General (AG).  They also charged ahead installing “smart meters” at a cost of $2 billion (AG report) and instructed the OPA (Ontario Power Authority) to acquire 10,500 MW of renewable energy principally in the form of IWT and solar panels.

The year prior (2008) to the creation of the Green Energy Act, Ontario’s coal generation plants produced 23.2 TWh (terawatts) or enough electricity to supply 2.4 million (55%) average households .  In 2016 wind and solar* collectively and intermittently generated 14.2 TWh — 9 TWh less than coal plants generated in 2008.   The collective cost of wind and solar and their back-up (gas) in 2016 was approximately $3.8 billion or 27 cents per kilowatt (kWh,) whereas the cost per kWh of coal power generated in 2008 was 5.5 cents/kWh (OPG annual report).

Renewables: five times more costly

In short, the collective cost of electricity supplied by renewables and their back-up (gas) to replace coal generation turned out to be five times more which clearly raised the cost of the “frill,” but our Premier(s) and Energy Ministers were apparently unaware** costs were rising to that extent.

On the latter point the Premier in her statement claims: “But it’s not as if I’ve been unaware of the challenge. I have seen the rising rates. My family and I get a bill like anyone else.”  Premier Wynne’s salary in 2016 was $208,974.00 and in 2006 was $108,031.00 so she has seen a pay increase of 92% in 10 years.  It’s doubtful she was impacted by the $536,84 average annual increase she experienced in her cost of electricity as it represents less than one day’s pay at her current compensation level.

The Premier’s statement blames rate increases on past governments and claims since the Liberals regained power in 2003 they had to engage in “fixing a system that had been structured unwisely”.  Naturally, the 2003 blackout (caused by a fault in Northern Ohio) is blamed for the upgrade by the Premier to obscure their contracting of unreliable and intermittent wind and solar generation at above market prices.  The Premier now claims the “electricity grid” they created “is second to none.” And yet, the AG noted in  her December 2015 annual report that power outages increased 24% and lasted 30% longer!

Later in her statement the Premier notes “But the way we financed those investments was a mistake.”  The disturbing part of the statement about “those investments”, was Premier Wynne’s assertion “In the past few years we’ve invested more than $50 billion in electricity infrastructure — new dams in the south, new towers in the north, $13 billion to refurbish nuclear power plants alone and billions more to ensure new transmission and distribution lines everywhere.”

That part of the Premier’s spin will form the basis of Part 2, in this series, tomorrow.

 

* Wind and solar generation are classified as “base-load” generation whereas coal was strictly used for “peaking” (high demand periods) purposes.

** The writer has consistently sent Premier Wynne and her predecessor along with the various Energy Ministers a link to every article written no matter where it appeared.

April winds blow in high wind power costs

How badly were ratepayers hit? Millions upon millions for power produced out of phase with demand…

The Independent Electricity System Operator or IESO’s 18 month outlook report uses theirMethodology to Perform Long Term Assessments” to forecast what industrial wind turbines (IWT) are likely to generate as a percentage of their rated capacity.

The Methodology description follows.

“Monthly Wind Capacity Contribution (WCC) values are used to forecast the contribution from wind generators. WCC values in percentage of installed capacity are determined from actual historic median wind generator contribution over the last 10 years at the top 5 contiguous demand hours of the day for each winter and summer season, or shoulder period month. The top 5 contiguous demand hours are determined by the frequency of demand peak occurrences over the last 12 months.”

 The most recent 18-month outlook forecast wind production at an average (capacity 4,000 MW growing to 4,500 MW) over 12 months at 22.2%, which is well under the assumed 29-30 % capacity claimed by wind developers. For the month of April, IESO forecast wind generation at 33.2% of capacity.

April 2017 has now passed; my friend Scott Luft has posted the actual generation and estimated the curtailed generation produced by Ontario’s contracted IWT.   For April, IESO reported grid- and distribution-connected IWT generated almost 703,000 megawatt hours (MWh), or approximately 24% of their generation capacity. Scott also estimated they curtailed 521,000 MWh or 18 % of generation capacity.

So, actual generation could have been 42% of rated capacity as a result of Ontario’s very windy month of April 2017, but Ontario’s demand for power wasn’t sufficient to absorb it! April is typically a “shoulder” month with low demand, but at the same time it is a high generation month for wind turbines.

How badly did Ontario’s ratepayers get hit? In April, they paid the costs to pay wind developers – that doesn’t include the cost of back-up from gas plants or spilled or steamed off emissions-free hydro and nuclear or losses on exported surpluses.

Wind cost=22.9 cents per kWh

For the 703,000 MWh, the cost* of grid accepted generation at $140/MWh was $98.4 million and the cost of the “curtailed” generation at $120/MWh was $62.5 million making the total cost of wind for the month of April $160.9 million.   That translates to a cost per MWh of grid accepted wind of $229.50 or 22.9 cents per kWh.

Despite clear evidence that wind turbines fail to provide competitively priced electricity when it is actually needed, the Premier Wynne-led government continues to allow more capacity to be added instead of killing the Green Energy Act and cancelling contracts that have not commenced installation.

* Most wind contracts are priced at 13.5 cents/kilowatt (kWh) and the contracts include a cost of living (COL) annual increase to a maximum of 20% so the current cost is expected to be in the range of $140/MWh or 14cents/kWh.

Wind power lobby myth buster is busted

The opening sentence in a recent post on the Canadian Wind Energy Association’s (CanWEA) website states:  “Various pundits assert that the major reason for higher electricity bills in Ontario is the addition of renewable energy to the province’s electricity mix. This is a myth.”

The post was created by Brandy Giannetta, Ontario Regional Director of CanWEA. Ms. Giannetta holds a Master of Arts and Public Policy degree and was recently appointed to the Independent Electricity System Operator’s (IESO) Strategic Advisory Committee (SAC).  The Committee, says IESO, “gives senior stakeholder and community representatives the opportunity to provide policy-level advice and recommendations directly to the IESO Board of Directors and Executive on matters relating to the IESO’s mandate and other matters that may be of concern to stakeholders and the general public.”

I have trouble believing a representative of wind industry trade association CanWEA will represent the concerns of the general public.

Ms. Giannetta’s post on CanWEA’s website on April 24, 2017 underlines my worries.

Her article points to two articles that purportedly support the “myth” she is “busting,” but both require closer examination.   She cites Waterloo professor Natin Nathwani’s, (PhD in chemical engineering and a 2016 “Sunshine list” salary of $184,550) article of March 6, 2017, posted on the TVO website, which supports Premier Wynne’s dubious claims of “a massive investment, on the order of $50 billion, for the renewal of Ontario’s aging electricity infrastructure.”  Professor Nathwani offers no breakdown of the investment which suggests he simply took Premier Wynne’s assertion from her “Fair Hydro Plan” statement as a fact!  It would be easy to tear apart Professor Nathwani’s math calculations — for example, “The total electricity bill for Ontario consumers has increased at 3.2 per cent per year on average” — but anyone reading that blatant claim knows his math is flawed!

The second “study” cited is by Keith Brooks, Program Director at Environmental Defence (Masters degree in Environmental Studies from York) in which he claims “the average Ontario household pays about $11 per month for wind power, and $9 for solar power.”  Collectively it amounts to an annual cost of $240 for the “average Ontario household”.  Mr. Brooks and Ms. Giannetta apparently believe that, by providing a figure representing a small monthly amount, we will all buy into CanWEA’s spin that wind and solar are competitive with other generation sources.

In fact, Ms. Giannetta chose to ignore other more factual information that is readily available on other websites, including the Ontario Energy Board’s (OEB) semi-annual Regulated Price Plan, Price Report.  The following is a chart from the Price Report (May 1, 2017 to April 30, 2018) the OEB uses in setting TOU prices on a go-forward basis for the ensuing six months.  Note the chart provides a breakdown by percentage of generation supply and of the Global Adjustment (GA) and a per kWh cost of the specific generation:

Table 2: Total Electricity Supply Cost

  % of Total Supply % of Total GA Total unit cost (cents/kWh)
Nuclear 60% 40 6.9
Hydro 24% 12 5.8
Gas 6% 15 20.5
Wind 8% 18 17.3
Solar 2% 14 48.0
Bio Energy 0% 0 13.1

Source: Navigant NB: Hydro excludes NUGs and OPG non-prescribed generation. Gas includes Lennox, NUGs and OPG bioenergy facilities. Percentage (%) of Total GA excludes CDM costs.

Based on information in the OEB chart, it is relatively easy to calculate the individual generation supply costs* to the Global Adjustment or GA. The IESO provide the specific detail on the GA and for 2016 it totals $12.333 billion.  As noted, the chart indicates wind is forecast to represent 18% of the GA so the cost of wind should be around $2.220 billion, solar (14%) around $1.6 billion and gas (15%) $1.850 billion.

The OEB forecast is that wind and solar, (granted “base-load” status via their contacts) will cost ratepayers $3.820 billion over the next 12 months representing 32% of total GA costs, but will only deliver 10% of the power generation — often when it’s not needed!

To ensure wind and solar generation is backed up, gas plants (classified as “peaking plants”) stand at the ready and are estimated to impact the GA by $1.850 billion (15%) for a forecast 6 % of generation.

Collectively, wind solar and gas generation over the next 12 months are forecast to provide a meager 16% of total generation but will represent a cost of $5.670 billion of the Global Adjustment or 47% of total GA costs.

Most would agree $5.7 billion in annual costs is more than a “myth” and could have gone a long way in providing social, health, education and transit services for the people in Ontario, rather than creating wealth for wind and solar developers!

….

*In the prior year’s forecast wind was estimated to generate 8% of supply, solar 2% and gas 9% and represent 44% of the GA costs. Also note the IESO GA reports are on a calendar year (Jan. 1st to Dec. 31st) basis.

Premier Wynne’s Easter basket full of rotten eggs

Count the eggs! $50 million plus, lost in just 3 days!

The nice weather on Easter weekend in Ontario disguised the fact that April 14th, 15th and 16th were really bad days for electricity customers.

Scott Luft’s daily reports detailed the bad news, even before the Independent Electricity System Operator or IESO got out their daily summary for April 12th.   Some of the information in Scott’s reports are estimates, but they have always proven to be on the conservative side. These three reports paint a disturbing picture of what’s going on, and how badly the Ontario government is mismanaging the electricity file.

Here are a few of the events that our Energy Minister Glenn Thibeault and Premier Wynne should find embarrassing. They also confirm what many of us have been telling them for several years.

First, Thursday April 13th saw a disclosure from the Energy Ministry that Ontario paid out $28,095,332 including about $240,000 in interest to Windstream Energy to satisfy the award made to them under the NAFTA (North American Free Trade Agreement) tribunal, due to cancellation of  a 300-MW offshore industrial wind turbine project.

Second, the HOEP (hourly Ontario electricity price) market, traded all of Ontario’s generation over the three days at “0” (zero) or negative value. While total demand for electricity was 1,031,448 MWh over the three days the HOEP market valued it at -$869,220 or an average of -.84 cents/MWh.  The “0” and negative values for the HOEP lasted 77 continuous hours, breaking a prior record of 62 hours.

Wasted, unneeded wind power

Third, during the three days, ratepayers picked up the bill for 99,109 MWh of curtailed wind which exceeded the transmission (TX) and distribution (DX) connected wind by 60.2%. Curtailed wind at an estimated $120/MWh alone cost ratepayers $11.9 million, driving the price of delivered wind (61,882MWh) to a cost of $335.34/MWh or 33.5 cents a kWh.  Total wind costs were $20.8 million.

Fourth, solar power over the three days generated and curtailed (1,124 MWh) 35,539 MWh at a cost of   $16.8 million, which works out to $472.86/MWh or 47.3 cents/kWh.

Fifth was the cost of gas which in three days produced 18,433 MWh, but the cost was $12.5 million and $676.56/MWh or 67.7 cents/kWh.  The 9,943 MW of IESO grid-connected gas operated at 2.6% of actual capacity during the three days.

Sixth was the generosity shown to our neighbours in New York, Michigan and Quebec who took delivery of 157,768 MWh of free power along with a payment of $132,525.

The quick math on the above indicates a cost of wind, solar and gas generation plus the payment for exported power comes to $50.2 million.

Nuclear and hydro was all we needed

That’s bad enough, but if you look at nuclear and hydro generation during those three days, clearly the $50.2 million was “money for nothing” paid for by Ontario’s ratepayers.  Nuclear (including steamed-off of 49,118 MWh) was 688,981 MWh and combined with hydro generation of 324,001 MWh of could have provided 1,012,982 MWh versus Ontario’s demand over those three days of 869,232 MWh leaving 143,750 MWh of surplus.  Three days of nuclear and hydro cost $61.9 million or 6.1 cents/kWh.

Bottom line? Ontario ratepayers picked up the bill for not only the $28.1 million paid to Windstream for a canceled offshore wind project, but also another $50.2 million, making the past four days very expensive for everyone.

The $78.3 million could have been better spent on health care or so many other pressing needs!

It’s time to kill the Green Energy Act and cancel any uncompleted wind and solar contracts before all our weekends turn out like this one!

One spring day just cost you millions

A happy day for power importers south of the border. For you? Not so much…

April 9, 2017 was a perfect day to demonstrate the mess the current Ontario government could have expected if they had simply done a cost-benefit study of the electricity sector prior to imposing the GEA (Green Energy and Green Economy Act).

The April 9th IESO generator report and Daily Market Summary provide highlights of many of the mistakes the Liberal government has made, as does my friend Scott Luft’s “Daily Electricity Supply Estimates.”  IESO’s report fails to provide details of distributor connected (DX) generation (principally solar and wind) whereas Scott estimates those along with the curtailment of wind, solar, hydro and nuclear generation. His estimates have proven to be on the conservative side in the past.

IESO’s “Market Summary” shows Ontario Demand was only 294,600 MWh (megawatt hours) which Scott noted was the “3rd lowest Ontario Demand day in the history of the market” and that day, along with five other recent “lowest Ontario Demand” days have all occurred within the past 12 months.   How low is demand? Scott says the six low demand days were lower than any day during the massive blackout of 2003.

Seriously.

Demand in Ontario on April 9th of 294,600 MWh could have been easily supplied by nuclear generation (236,400 MWh including 14,800 MWh steamed-off) and hydro generation (101,900 MWh including 1,200 MWh spilled, and 2,600 MWh from DX).  Those two clean, emission-free power sources could have delivered 338,300 MWh, leaving 43,700 MWh available for sale to our neighbours.  The 338,300 MWh should have cost Ontario ratepayers $20,554,000 based on what we pay on average for nuclear and hydro generation.  That would equate to 6.1 cents per kilowatt hour (kWh) combined!

As it happened, Sunday April 9 saw 51,400 MWh of net exports (exports less imports) sent to our neighbours in Michigan, New York and elsewhere, along with an average payment of $3.08/MWh. They gladly took those free MWh along with our payment of $158,312.00.

Sunday April 9th also saw Ontario’s ratepayers pick up the bill for transmission (TX) and DX-connected wind of 25,700 MWh and another 46,300 MWh of curtailed (one of the highest curtailed days ever) wind at a total cost of $9.290 million.  If we calculate the cost for just the accepted wind generation (25,700 MWh,) the cost per MWh becomes $361/MWh or 36.1 cents/kWh.

Ontario ratepayers also picked up the bill for the 10,533 MWh of solar generation (DX and TX) and the 667 MWh of solar estimated as curtailed. Solar’s costs were $5.280 million, which means the delivered generation cost last Sunday was $501.28/MWh or 50.1 cents/kWh.

Meanwhile, those same ratepayers picked up a $4.143 million bill for gas generators who delivered 5,773 MWh (TX and DX) at a delivered cost of $717.12/MWh or 71.7 cents/kWh. Scott Luft noted the 5,773 MWh delivered to the system by the gas plants set a record low.*

The cost of unnecessary power for ONE DAY?

The total cost of the unneeded supply of power on April 9th coming from wind, solar, gas and biofuel ($368,000) plus the payment made to export ($158,312.) came to over $20 million.

What that means is, this one day of generation, Ontario’s ratepayers are obliged to pay for, was $40.8 million or 13.6 cents/kWh yet the 294,000 MWh they actually consumed was produced at a cost of $17.9 million (not including the $2.7 million loss on exporting).

Premier Wynne has admitted her government has made mistakes on the energy file. The “mistake” on that Spring day turned out to be a burden on all of Ontario’s ratepayers (rich and poor) with the extra cost of over $20 million in order for the Minister of the Environment and Climate Change and Premier Wynne to be able to claim the “cap and trade” tax is driving down emissions in the energy sector, by reducing generation from fossil fuels (gas).

They are not likely to mention that anyone using electricity from Ontario’s generators would have had to more than double — 13.8 cents/kWh instead of the 6.1 cents/kWh — so they could make that claim!

* Lower gas generation will allow Glen Murray, Minister of the Environment and Climate Change to claim the “cap and trade” tax is working.

How much did Premier Wynne’s hydro “mistake” actually cost?

Five months ago, Premier Kathleen Wynne admitted to the delegates at the annual Ontario Liberal Party convention her government “made a mistake” allowing electricity rates to rise so high.  Those rates have actually soared, increasing by 80.9% from 2009.

Comparing Ontario electricity rates to other indicators such as inflation, shows just how bad the situation is. Comparing the IESO (Independent Electricity System Operator) Monthly Summaries for January and February 2009 with the same two months in 2017, the combined costs of HOEP (hourly Ontario energy price) plus the Global Adjustment (GA) show costs per kilowatt hour (kWh) have increased from 5.85 cents/kWh to 10.58 cents/kWh. That is an 80.9% increase.  Average inflation over the same time-frame has increased about 14%.   (The reader should note the 2009 and 2017 costs are before HST so the 8% reduction commenced January 1st has had no effect on contracted or regulated electricity rates.)

So how bad? The cost of the basic commodity has increased by almost six times the inflation rate!

Commodity cost is way up

Reviewing the IESO Monthly Summaries for the two-month periods in 2009 versus 2017 also shows Ontario demand fell by 7% or 1,713,000 MWh (1.7 TWh). The Summary reports indicate the 24.43 TWh representing Ontario demand in 2009 cost $58.49 million/TWh or $1,429 million for January and February. The 22.7 TWh of Ontario demand in 2017 cost $105.78 million/ TWh or $2,330 million for the same two months.  That represents an increase in the commodity cost of electricity of $901 million for 7% less electricity — an average monthly increase of $450 million.

So, why?

Exports

One of the reasons was the drop in the market price as the HOEP fell from an average of $51.93/MWh in 2009 for the two months to $21.56/MWh in 2017 while the GA jumped from an average of $6.56/MWh in 2009 to $82.27/MWH in 2017. What that means is, the loss on exports from Ontario in 2009 cost Ontario ratepayers $13.1 million and in 2017 cost ratepayers $174.2 million as the GA costs are not included in the sale of exports via the HOEP.

OK, of that $900+ million increase, we have $174 million found … $727 million to go!

Wind power

Another obvious cause of the big jump was generation and payment for curtailment of power from industrial wind turbines (IWT). Back in the early part of 2009, Ontario had approximately 800 MW of IWT capacity; in the early 2017 we have about 4,550 MW of capacity.   According to my friend Scott Luft, who uses IESO data to estimate the generation and curtailment of IWTs,  in 2009 the turbines delivered almost 395,000 MWh in January and February. In 2017, it’s a different story: generation and curtailment combined jumped to about 2,926,000 MWh.

The contracted wind power prior the passage of the Green Energy Act is estimated to be at the rate of $90/MWh, whereas wind power contracted for after the Act was at $135/MWh (plus a cost-of-living annual increase) meaning they currently are estimated at $140/MWh. The math on the 2009 generation therefore shows a cost of $35.5 million and the 2017 generation/curtailment cost becomes $409.6 million.  The increased cost of wind from 2009 is ($409.6 million less $35.5 million) $374 million.   Deducting the $374 million from $727 million leaves $353 million to find to get to $901 million!

Gas

Since 2009, more than 3,300 MW of gas plant capacity has been added to the Ontario grid. Its addition was basically to back up the wind and solar capacity (which is unreliable and intermittent) to ensure sufficient generation is available during renewables’ failure and high demand periods.  The private sector companies investing in those plants are paid for their capital investments amortized over their life span. When generating electricity they receive fuel costs plus a nominal markup. Payments details are not available in the public domain, but it is understood payments contracted are per MW of capacity, and  estimates given are $8/15,000 per MW per month.  Assuming the 3,300 MW of capacity secured since 2009 is at the mid-range ($12,000 per MW) the cost to ratepayers is $79 million (3,300 X $12,000 X 2 months).

That $79 million means we are still looking for $274 million.

Consuming less but paying more

IESO shows ratepayers consumed 1.7 TWh less in the first two months of 2017 than in 2009, but paid more. That is evident in OPG reports.  As OPG has not released its 2017 1st Quarter report estimates are based on the 2016, 1st Quarter report.  First we estimate spilled (wasted) hydro was 1.2 TWh at a reported cost of $44 million/TWh so that cost ratepayers $53 million.   The 21.0 TWh produced by OPG in the 2016, 1st Quarter generated average revenue per TWh of $70.4 million.  Estimating the first two months of 2017 generation at 14 TWh results in a cost of $985.6 million.  In 2009 OPG generated 25.6 TWh at an average of $57.8 million/TWh. Again estimating the total cost of the 17 TWh generated by OPG in the first two months produces a cost of $982.6 million so adding the $3 million to the spilled water cost shows an increase of $56 million.  Subtracting $56 million from $274 million means we are looking for the last $218 of the increase.

Solar, conservation, bio-mass and sundry

We assume the balance of the increased 2017 versus 2009 costs came from solar and bio-mass with a portion from the conservation program. Based on Figure 23 “Total Global Adjustment by Components” of the IESO Summary report we can estimate the costs of each of those for the two months.  It appears conservation spending (absent in 2009) represented about $50/55 million for the first two months of 2017 and bio-mass (incented by the FIT and MicroFIT programs) generated costs of around $40 million.  Solar (low during winter months) generated a minimum of $100/$120 million in costs for the two months based on the IESO Figure 23.  While those are “best” estimates to get to the increase of $901 million for the two months, we have not included increased costs from the IESO and OEB budgets which have both increased.

“No checks” in the system

An article recently appeared in the Globe and Mail written by George Vegh, former general counsel to the OEB.  This paragraph is perhaps why Premier Wynne admitted to her “mistake”

“Generation procurements are determined entirely by the government. The system operator – the Independent Electricity System Operator (IESO) – implements government directives. Neither the Ontario Energy Board nor any other independent regulator reviews these procurements. There are no independent criteria, no cost-benefit analysis, no consideration of the need for the procurements, and no review of alternatives. In short, there is virtually no check on the power to procure supply.”

 

What we have in Ontario is a “mistake” that will continue to cost Ontario ratepayers and taxpayers billions for years to come.

Admitting a mistake is one thing, doing something about it is another: Premier Wynne needs to recognize the Ontario Liberal government’s error, kill the Green Energy Act, and halt continued procurement of power from unreliable and intermittent wind and solar generators!