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[Reposted from Wind Concerns Ontario]

Ontario’s electricity Powerball jackpot

Ontario’s electricity “Powerball” giveaway

It’s official! The cost of exporting Ontario’s surplus electricity paid for by electricity ratepayers actually exceeded the prize up for grabs in the U.S.-based “Powerball” lottery. In this case, prize winners were neighbouring states, New York and Michigan and a few other lucky Ontario neighbours.  The other big winners were the wind and solar developers in Ontario who were busy generating surplus unreliable and intermittent electricity.

The Independent Electricity System Operator (IESO) released the “2015 Ontario Electricity Data”, and buttered it up with verbiage that made it sound like everyone in the province won — but they didn’t.  Everyone who uses electricity for their daily needs actually lost a lot of money; the current year will simply make it worse.

Let’s have a look at some of the data. IESO told us Ontario demand fell by 2% to 137 terawatts (TWh)   The press release tells us the drop in demand “can be attributed to conservation initiatives, increases in embedded generation, mild weather and broader economic shifts”.  They don’t say what those “broader economic shifts” were, but they do sort of comment in respect to “embedded” generation.  They tell us that embedded generation grew by 20% last year to 3,000 megawatts (MW,) but they don’t tell us what they produced meaning we are not being told if demand actually fell by the 2% claimed.  If it didn’t fall the claim about those “conservation initiatives” would be false.   We will never know because IESO won’t disclose what embedded generation produced.   That doesn’t sound very “transparent” despite IESO first “Mission Statement” which is to operate the “electricity system and market in an effective and transparent manner.”

Other data released indicates Ontario exported 22.618 TWh (enough to power about 2.4 million1. average Ontario households for a full year) and those exported 22,618,000 MWh generated average revenue of $23.60/MWh each, meaning Minister Chiarelli would claim we made a profit of $534 million.  Well, we didn’t make a profit!  The data in the IESO release indicates the average hourly Ontario energy price (HOEP) for 2015 was $23.60/MWh (2.36 cents per kilowatt hour) and the GA or Global Adjustment added another $77.80/MWh to the costs of producing that exported surplus power bringing the all-in cost to $101.40/MWh.  Our U.S. neighbours don’t pay the GA!

The total cost of producing those 22,618,000 exported MWh was therefore $2,293 million. Now, if we deduct Minister Chiarelli’s “profit” of $534 million, the “Powerball” number picked up by Ontario’s benevolent ratepayers was $1.759 billion.

The press release also told us that power generation from wind reached a record 9.0 TWh in 2015 (without accounting for constrained generation).   The average cost of those 9 TWh was approximately $125/MWh or $125 million per TWh, so if we had had no wind turbines in the province producing electricity intermittently and out of phase with demand, we could have reduced the “Powerball” number by $1.1 billion. That would have saved the average ratepayer $223.

To many Ontario ratepayers, saving $223 in electricity costs would have been a “win” but instead, we all lose.

©Parker Gallant,

January 13, 2016

  1. Ontario has approximately 4.8 million households so our exports were sufficient to power 50% of them using 800 kWh per month or 9.6 MWh annually.
  2. Calculations are $125. X 9 million = $1.125 billion or about the cost of moving two gas plants.