Electricity in Ontario: higher cost, lower reliability

26 Monday May 2014

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Here from Ottawa-based energy economist Robert Lyman, a commentary on how Ontario’s electricity system has evolved. (You may also wish to read a letter in today’s Ottawa Citizen by wind industry lobby group the Canadian Wind Energy Association president Robert Hornung, who would have us believe wind power is the cheapest source of power available. )

For most of Ontario’s history, the official energy policy of successive provincial governments was generally the same. The Province sought to keep electricity prices as low as possible consistent with the goal of ensuring that Ontario consumers and industry had secure and reliable sources of supply. With the election of a Liberal government in 2003, the goal changed. Since then, the Government has raised electricity costs significantly, emphasizing reliance on expensive industrial wind turbines, solar plants and biomass for generation, and using higher rates to force consumers to cut back on their energy use.

The consequences of those policies have been a doubling of residential electricity rates and the ever-increasing share of renewable energy generation as part of the provincial electricity generation mix. According to data from the Ontario Power Authority, in 2014 biomass, industrial wind turbines and solar plants will provide about four per cent of Ontario electricity supply, but will cost consumers $1.933 billion dollars, or 17 per cent, of the total generation cost. The amount of renewable energy brought on line is expected to increase significantly by 2018, adding further to the costs.

The Ontario Long Term Energy Plan, published in December 2013, included a table projecting what this will mean for the average residential customer who consumes 800 KWh of electricity per month. Taking into account the costs of electricity generation, transmission, distribution, taxes and related regulatory charges, the average monthly bill will rise from $125 in 2013 to 181 in 2020, a 45 per cent increase. Large industrial users will see their rates rise from $79 per MWh in 2013 to $104 in 2020, a 32 per cent increase.

These increases do not take into the account the significant costs associated with having to provide significant back up capacity because the wind and solar plants are “intermittent” sources of supply. This means that they usually produce energy when it is not needed, and production from these plants cannot be varied to accommodate changes in demand.  Ontario generation capacity now exceeds demand, and the Green Energy and Economy Act requires that renewable energy sources be given preferential access to the provincial grid over lower cost conventional supplies. The increases in rates do not take account of the cost of curtailing operations at existing plants or of losses on export sales. In 2013 this was about $1 billion.

So, do Ontario residents at least get more secure electricity supplies as a result of all these increased costs? The answer lies in…

Please read the rest of Mr LYman’s article here: ONTARIO ELECTRICITY – High Prices, Low Reliability

Wind and solar power: the hidden costs

20 Tuesday May 2014

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Wind power: not free

Wind power: not free

Here, from Ottawa-based energy-specialist economist Robert Lyman, a quick look at what many people don’t know (and aren’t getting told by the government or the wind power lobby) about the costs of generating power from wind and solar.

A must-read.

THE HIDDEN COSTS OF ONTARIO RENEWABLE ELECTRICITY GENERATION 

Ontario residents can be forgiven if they fail to understand the public debate during the current (2014) provincial election about the costs of different types of electricity generation and why these have caused electricity rates for consumers to rise so much over the past ten years. The complexity of the system makes it difficult to explain the costs associated with one source of supply, namely the renewable energy generation  (industrial wind turbines and solar power generators). In this note, I will nonetheless try to explain in layperson’s terms why these costs are significant.

Electricity supply in Ontario takes place within the framework of the policy and legislative framework established by the Ontario government, an important part of which is the Green Energy and Economy Act of 2009 (GEA). Historically, the goal of Ontario electricity policy was to keep electricity rates for consumers as low as possible consistent with the goal of maintaining adequate and reliable supply. Within the current framework, however, that is no longer the goal. The GEA seeks to stimulate investment in renewable energy projects (such as wind, solar, hydro, biomass and biogas) and to increase energy conservation.  To do this, it:

  • Changed the review process for renewable energy projects to reduce environmental assessment and hasten approvals
  • Created a Feed-in-Tariff that the Independent Electricity Systems Operator (IESO) must pay, guaranteeing the specific rates for energy generated from renewable sources (typically, the rates are fixed for the full term of the twenty year contracts, with inflation escalators)
  • Established the right to connect to the electricity grid for renewable energy projects and gave renewable energy source preferential access over other sources of generation
  • Implemented a “smart” grid to support the development of renewable energy projects
  • Eliminated local approval requirements that local governments previously could impose on renewable energy projects

The guaranteed rates paid under the FIT system are not negotiated based upon the actual costs of production. In fact, the actual costs of production are largely unknown. …

Read the full analysis here: THE HIDDEN COSTS OF ONTARIO RENEWABLE ELECTRICITY GENERATION

Horwath in Sarnia: still believes in wind farms

16 Friday May 2014

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The NDP has not released its official platform yet for the election, and has been sparing with details, especially on the energy sector. Some clues may be had, however, in this report from Sarnia where the NDP leader appeared yesterday. She was greeted by sign-bearing members of WAIT-PW/We’re Against Wind Turbines-Plympton Wyoming, a community that is facing multiple turbines.

Here is the report from the Sarnia Observer:

Paul Morden, Sarnia Observer, May 16, 2014

Horwath talked about electricity when her campaign bus stopped next to the St. Clair River and the Blue Water Bridge Friday morning after a meet-and-greet the night before at the Ups ‘N’ Downs pub downtown where she was greeted by anti-wind turbine protestors.

A 92-turbine wind project is current under construction in Lambton County, and another 46-turbine project is awaiting provincial environmental approval.

Both have led to protests by opponents of wind energy and the province’s Green Energy Act.

“We believe that the Liberals have made a mess of the green energy sector, as well,” Horwath said.

“It’s a sad day in Ontario when we have families pitted against each other, when we have neighbours pitted against each other, when we have communities pitted against each other.”

Renewable energy is something most people believe is a good thing but the Liberals decided to shut down community participation, “ignore the voices of local residents and rammed through projects,” Horwath said.

“That’s a wrong-headed way of doing things.”

She said the NDP believes there’s no need to call in international companies to get green energy up and running in Ontario. Instead, Horwath said she would encourage municipalities, farm co-ops and First Nations to develop projects that are scaled to their communities and benefit local residents.

“Instead we have this situation that has pitted people against each other,” she said.

“Its very divisive and, frankly, is a failure of the Liberals.”

Read the full story here.

More turbines planned for south of Ottawa

14 Wednesday May 2014

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We’ve seen this before: wind power developments start off with a few turbines and then become dozens, or as in the case of Armow, 45 turbines became over 90.

In this month’s edition of the AgriBusiness News is a report on the wind power development at Brinston, which was started by Prowind, and is now owned by U.S.-based EDP Renewables.

Brinston turbines plug in for pay

Carolyn Thompson Goddard

The AgriNews May 2014, page 4

BRINSTON: It’s official–the South Branch wind farm in Brinston is on the grid.

Ken Little of EDP Renewables Canada Ltd. told The AgriNews that as of March 4, the Commercial Operating Date granted by the Ontario Power Authority, the project’s 10 wind turbines were producing a combined total of up to 30 megawatts. [sic. Editor’s note: we think the writer means producing power]

An on-site substation changes the power frim 34.5 to 44 kilovolts, which allows it to travel to a Morrisburg substation on Flegg Road, and onto the grid.

According to Little, at peak construction there were over 105 people on site, but presently on average there are 10 workers completing this phase. In April, a team will begin site acclamation [? Ed note: reclamation?] which should take about a month.

During a site tour March 14, Little provided information on the Siemens wind turbines deployed at the site. He explained there are a number of regulations governing the noise level (which can’t exceed 40 db) location of the tower (minimum of 550 meters from human habitation) and require a number of scientific studies that need to be completed prior to construction. A drive in the Brinston area allows one to see the standing towers producing electricity from their long rotating blades.

Little told The AgriBusiness News it had been a very windy week so there had been a lot of testing done at the site. While it didn’t appear too windy at ground level on Friday, March 14, the wind speed up above turned the blades at 10-12 revolutions per minute–just short of the 14 rpm maximum–the tips soaring more than 500 feet at their highest point.

Standing at the base of a tower, a slight whistling sound was heard but no other noise was detectable.

The towers are located on land leased for 20 years–the life of the EDP contract–from local landowners. EDP will receive 13.5 cents per kilowatt-hour produced.

If the contract is not renewed, the towers would be removed and the land returned to its original condition , with access roads left for the use of the owner if so desired.

The wind farm is located on land already under cultivation. Little explained .75 to 1.5 acres were used per turbine and that farmers could till up to the edge of the access road and boundary ring around the turbine itself.

Little confirmed there are negotiations set to begin with the Municipality of South Dundas and the Township of North Stormont for the construction of additional wind farms in those townships.

With talk of a provincial election in the air, the project’s Houston Texas-based developer appears undaunted by the stance of Ontario’s Progressive Conservatives. The official opposition party promises to review existing wind and solar operations and impose a moratorium on new ones if elected.

Editor’s notes:

First, these are power generation projects, not wind “farms.”

Other points:

-the quietest place to be is exactly below a wind turbine; the noise and infrasound can be experienced as far as 3 km

-the noise level in the regulations is 40 decibels or dB on AVERAGE: that means there are some very noisy days (and nights) allowed

-the significant problem with turbines is sound pressure; the province does not have any regulations pertaining to infrasound or sound pressure and will not even have a protocol for measurement until 2015

-at 13.6 cents a kilowatt, EDP is reaping the benefits of provincial subsidies, paid for by Ontario electricity customers–that is over $10 million a year, or $200 million over the life of the contract

-the amount of land used for the wind project is under-estimated

-the land can NEVER be returned to its original state: the concrete foundation remains

-the PCs are saying they will not fulfill wind power contracts which are not already constructed–no one said they will stop existing operating projects

Letters to the Editor of AgriBusiness News may be sent to rm@agrinewsinteractive.com

 

Public sector investment in ON up, actual business investment down

13 Tuesday May 2014

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Here, from today’s Financial Post, an opinion piece by Philip Cross, former Chief Economic Analyst at Statistics Canada.

Philip Cross: Public sector investment never ‘kick-starts’ more business investment

Philip Cross, Special to Financial Post | May 13, 2014 | Last Updated: May 13 10:12 AM ET

Ontario public sector investment has tripled, while business investment stagnates

Business investment is the most important dynamic in a growing economy. It commits a firm to a plan for its growth and creates jobs. Investments made today determine what our industrial structure will look like years from now, and how productive those industries will be. For Canada, watching business investment pour into our energy sector 10 times faster than the rest of the economy so far this century locks in that our future lies in producing oil and gas and transporting this to new markets inside and outside of Canada.

FE0513_investment_310_MF

So what does investment say about Ontario’s future? A look at the graph to the right tells an alarming story, with public sector investment tripling since 1998 while private sector investment has stagnated. Over the past 16 years, private sector investment in Ontario rose a total of only 17% from $39.8-billion to $46.4-billion, or 1% a year. Meanwhile, investment by the public sector soared 293% from $9.9-billion to $29.0-billion, or 18% a year (the public sector includes public administration, health, education and utilities, since Ontario’s electricity utilities clearly make decisions at the behest of their political masters, not on the basis of market principles). After a spike related to infrastructure spending during the 2009 recession, public sector investment has settled back into its long-term growth path. As a result, public sector investment has risen from one-quarter the size of private sector investment in 1998 to nearly two-thirds this year. Private and public sector investment are actually converging more than the graph shows, since the billions government is spending on urban transit cannot be separated out from the rest of transportation, which is allocated to the private sector.

One insight jumps out from comparing private versus public sector investment in Ontario. Public sector investment never “kick-starts” more business investment, creating the virtuous circle governments always hope for when launching the latest wave of government capital spending. Instead, more public sector spending creates a vicious circle, where a “failure” of business investment to respond to higher public sector spending justifies the perceived need to further boost public sector investment “to fill the gap.” Repeated enough times over more than a decade of parochial provincial budgets, and the result is a tripling of public service spending while business investment stagnates.

What businesses have been the most reluctant to invest in Ontario’s future, despite the much-vaunted benefits of an engorged public sector, including a highly-educated labour force? Pretty much all of them. Since the peak in 2008, business investment has fallen by $3-billion. The drop is widespread across all industries. Overall, 11 major industry groups have cut back, while only five have invested more. Manufacturing posted the largest drop, with 15 of its 22 member industries paring investment outlays. Before 2008, manufacturing consistently was the largest industry investing in Ontario. Now it has slipped to fourth place. But this is far more than a story of weak manufacturing investment, with important declines also occurring in finance, retail and wholesale trade, recreation, and information and culture among others.

It is not just that public sector investment crowds out business investment, although that clearly is a factor. The aggressive expansion of public sector investment is symptomatic of a wide range of public sector policies that discourage business spending in Ontario— uncompetitive electricity rates, higher minimum wages, more regulation, a new pension plan tax, and high budget deficits that promise future tax hikes….

Read the full story here.

Liberal ex-Finance Minister warned of debt crisis

11 Sunday May 2014

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This is a re-publish from The National Post.

Former Ontario Finance Minister Dwight Duncan went on an anti-debt crusade in his last months at the legislature.

by Scott Stinson, The National Post, May 10, 2014

ANALYSIS

The week before Charles Sousa tabled the Ontario budget that failed to pass, triggering a provincial election, the man who preceded him as Ontario Finance Minister came to Queen’s Park with a warning.

“Ontario is faced with a staggering debt,” Dwight Duncan said, and he called for public services to be contracted out. Government, he said, would have to “fundamentally re-evaluate its role.”

It didn’t escape notice that his warning was akin to a Kardashian tut-tutting someone about overexposure: Ontario’s debt rose from $154-billion to $281-billion during Mr. Duncan’s own time as Finance Minister. But he had warned about debt issues, he said, before he left office.

That much is true. Seemingly emboldened by the fact that it wasn’t his problem to solve anymore, Mr. Duncan went on an anti-debt crusade in his last months at the legislature. Given the province’s debt levels, he said in January, 2013, low interest rates were a “ticking time bomb.” He warned contenders for the Liberal leadership that spending cuts would have to be doubled if the government was still going to reach a balanced budget by 2017-18.

Kathleen Wynne won that race, of course. There is little indication she was listening.

The 2014 budget fattened the deficit, leaving Ontario with an annual hole of $12.5-billion this fiscal year. Total debt is now forecast to reach almost $338-billion by 2016-17.

It is a staggering number. But perhaps just as surprising has been the Liberals’ disinclination to do anything too rash in trying to reduce it.

Consider that the generally accepted blueprint for disastrous economic management was provided by the Bob Rae NDP government of the early 1990s. In 1993, a deficit that was anticipated to be around $10-billion came in closer to $12-billion.

…

 

Read the full story here.

Ashton farmer sells everything; electricity bills too high

11 Sunday May 2014

Posted by in Ottawa, Renewable energy, Wind power

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Ashton farm sold when local profits couldn’t keep up with hydro bills

By Brandy Harrison, farmersforum.com

May, 2014

ASHTON — It’s a done deal: the store is empty, the equipment auctioned off, and the farm signed away. Ashton beef farmer Rick Hobbs has quit full-time farming and is putting at least some of the blame on soaring electricity costs.

“Our hydro was more than what we were bringing in. It came down to a choice: do we pay the hydro or do we pay the mortgage?” says Hobbs, who ditched commercial beef sales for an on-farm store stocked with beef, a bakery, and restaurant south of Ottawa in 2010.

Local beef sales shot up quickly but began to tail off about a year ago when he said he lost customers to cheaper grocery store prices. At the same time, he worried his wife, Chris, the primary cook and baker for the restaurant, was burning out.

He closed the store for good at the end of March and sold the farm late last month to a buyer from Richmond, who will wait until September to move in his heavy horses and construction equipment. The store, house, barn, outbuildings, four Cover-Alls, and 92 acres were originally on the market for $950,000 but Hobbs dropped the price to $799,000.

Soaring hydro rates just cemented the decision to sell, says Hobbs.

The power was cut off for the better part of a day at -33 C in late January when he was a day late paying the bill because of a snowstorm. The next monthly bill shot up by an extra $1,400. Hobbs says he didn’t get a satisfactory answer as to why.

Since word got out that electricity costs played a part in the sale, Hobbs says he has fielded 15 to 20 calls from people, including some farmers, in similar situations.

 

Read the full story here.

See related story, on opening of the Hobbs’ on-farm store, in 2011.

Election goal: unseat Ontario’s Minister of Energy

06 Tuesday May 2014

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Ottawa West-Nepean candidates are familiar rivals

Bob Chiarelli faces off against Randall Denley and Alex Cullen

CBC News Posted: May 06, 2014 5:00 AM ET Last Updated: May 06, 2014 2:57 PM ET

NDP candidate Alex Cullen, left, and Progressive Conservative Randall Denley, right, are both familiar foes of current MPP and Liberal energy minister Bob Chiarelli, centre.

Residents in Ottawa West-Nepean could be forgiven for forgetting which election they were voting in when they cast their ballots on June 12, as three men equally known for their roles in municipal politics battle in the Ontario riding.

Related links:

Former mayor and current Liberal energy minister Bob Chiarelli again faces off against former Ottawa Citizen city hall columnist Randall Denley, the candidate for the Progressive Conservatives he beat in 2011. Joining them in the race this time is another familiar face from city hall: former Bay Ward councillor Alex Cullen, who is representing the New Democratic Party.

But all three candidates say their campaigns will be focused firmly on the issues today facing the province and the riding.

Chiarelli to campaign on budget

Chiarelli said he and his party will campaign on their recently released budget, which both the NDP and Progressive Conservatives said they would not support.

The budget called for the province to spend $130 billion over a 10-year period, another $11.4 billion on hospital expansion and laid out plans to establish an Ontario Retirement Pension Plan.

After NDP leader Andrea Horwath said she had lost confidence in the minority government of Kathleen Wynne and signalled she would not support the budget, Wynne went to Lt.-Gov. David Onley to dissolve the legislature, triggering the election.

Denley, who lost to Chiarelli by just over 1,000 votes in the 2011 election, said people he’s spoken with this weekend are most concerned about their high power bills.

“Of course I’m running against the energy minister, and people understand that and they’re not very happy with it,” said Denley.

…

Read the full story here.

Letter: ask questions about Gunn’s Hill (and Prowind)

06 Tuesday May 2014

Posted by in Ottawa, Wind power

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Here is a letter to the Editor from the current edition of the Norwich Gazette. This community is the location of Prowind’s ONLY active wind power development.

Letters to the Editor

Norwich Gazette

May 5, 2014

The public should be asking questions about the Gunn’s Hill wind project, and asking about the organization called The Oxford Community Energy Co-operative.

If the “community” in the project area wanted a co-operative why wouldn’t they create their own? Why are Prowind Canada, Ontario Sustainability Services (OSS), “Friends of Wind” (presumably funded by Canadian Wind Energy Association) and IPC Energy trying to push it into the community? Doesn’t this appear more like a mechanism for the developer to apply for the “co-operative” adder from the Ontario Power Authority (to make more money for the developer) rather than a true community initiative?

What is IPC Energy’s interest in this project? Will the project be changing ownership? Why would the Oxford Community Energy Co-operative’s (OCEC) corporate office address have been registered as the IPC Energy address in Mississauga, with IPC’s president being a director of the OCEC?

While Prowind stated in its Renewable Energy application documents its plans to be a “long-term presence and neighbour”, it already tried unsuccessfully to sell the Gunn’s Hill project to Boralex in 2013. Given that Prowind Canada has still not begun operating any projects in Canada, and their staff has been dwindling in number each year, why would there be any assurance that Prowind will be involved long-term? At what point will the project ownership change?

Ask about the provider, Prowind.

Why does Prowind claim employment opportunities will be offered to Six Nations workers in one section of their REA documents, while stating preference will be given to local community residents in another?

Why did Prowind claim the Talbot Wind Farm near Ridgetown was a “well planned project” without researching the impact on residents? Why have they not admitted that residents have had significant adverse impacts in this “well planned project”, including having to vacate their homes or sleep in their basements?

Take a look at a website we’ve been observing – http://www.windontario.ca. You already know the Norwich Township council has declared themselves to be an “unwilling host”.

Do you truly believe the Gunn’s Hill project will benefit the environment? Ontario’s coal-fired generating stations have already been shut down and we are exporting surplus electricity at a loss to other jurisdictions on a regular basis, with manufacturing industries closing down in Ontario.

The public should be asking the hard questions.

Gerald and Carol Engberts. RR4 Woodstock

Prowind's Head Office in Hamilton until 2013
Prowind’s Head Office in Hamilton until 2013

 

Editor note: Prowind is the Germany-based company that has proposed a wind power development for North Gower-Richmond until the Feed In Tariff subsidy process was put on hold in 2013; a new procurement process is slated to begin in the summer of 2014.

Global “warmists”: how far do they want us to go?

29 Tuesday Apr 2014

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In Canada we hear about global warming and climate change but the rhetoric seldom goes to the extremes seen in other areas. Economist Robert Lyman, who advised the federal government on issues pertaining to energy, transportation and the environment for 37 years, reviews the situation in this paper.

An excerpt:

In April 2014, the Intergovernmental Panel on Climate Change (IPCC), the U.N. body well known for its faulty projections of global temperatures rising, issued yet another report claiming that the science of climate change is “settled” and irrefutable. It also issued a report on the mitigation measures that countries should take. The IPCC’s goal, as approved by governments in 2010, is to avoid a rise in global temperature to no more than two degrees Celsius by the end of the century. To achieve this, they estimate that greenhouse gas (GHG) concentrations in the atmosphere must be kept below 450 parts per million (ppm) and the world must stay within a carbon “budget” of about 1000 billion tons of CO2 to 2010.

The IPCC report followed, but was closely related to, the 2013 report of Carbon Tracker, a U.K.-based organization allied with a number of “ethical” investment funds. Carbon Tracker’s report, entitled Unburnable Carbon 2013, compared the carbon budget to the amount of carbon present in the world already proven reserves of coal, oil and natural gas. Its conclusion was that those current reserves totaled almost 3000 billion tons, three times the allegedly available budget.

The recommendations coming out of these two organizations today don’t even make it to the back pages of the financial sections of the newspapers, but they are making their insidious ways through the governments of western countries as they prepare for the next Climate Change “Meeting of the Parties” in 2015. We ignore this at our risk.

Read the full paper here: WHERE THE CLIMATE WARMISTS WANT TO TAKE US NEXT