Nepean-Carleton MPP Lisa MacLeod addressed Energy Minister Glenn Thibeault in an evening session of the Ontario Legislature, to express concern about the plight of Ontario farmers and growers whose livelihoods are suffering due to high electricity bills.
She used the examples of the Manotick-based greenhouse operation SunTech, Osgoode Mushroom, and North Gower Grains to show how different growers are being affected by unrelenting increases in electricity bills, much of which is due to the government’s push for wind and solar power.
See MPP MacLeod’s speech and the Energy Minister’s response here.
Even though her riding will soon split, MacLeod said, she will “always” stand up for Ontario farmers.
Former bank vice-president and vice-president of Wind Concerns Ontario was in Ottawa this past weekend, speaking at a Town Hall in Kanata on the details of Ontario’s electricity bills.
Today, he published an analysis of how much wind power is really costing us, on his Energy Perspectivesblog. When the well-financed wind power lobby claims wind power prices are low, they don’t factor in other costs such as wasted hydro, gas, and nuclear, he says.
This is really shocking, given the rise in energy poverty in Ontario.
For the cost to provide a small portion of Ontario’s power, wind is no bargain
Most electricity ratepayers in Ontario are aware that contracts awarded to wind power developers following the Green Energy Act gave them 13.5 cents per kilowatt (kWh) for power generation, no matter when that power was delivered. Last year, the Ontario Auditor General’s report noted that renewable contracts (wind and solar) were handed out at above market prices; as a result, Ontario ratepayers overpaid by billions.
The Auditor General’s findings were vigorously disputed by the wind power lobbyist the Canadian Wind Energy Association or CanWEA, and the Energy Minister of the day, Bob Chiarelli.
Here are some cogent facts about wind power. The U.K. president for German energy giant E.ON stated wind power requires 90% backup from gas or coal plants due to its unreliable and intermittent nature. The average efficiency of onshore wind power generation, accepted by Ontario’s Independent Electricity System Operator (IESO) and other grid operators, is 30% of their rated capacity; the Ontario Society of Professional Engineers (OSPE) supports that claim. OSPE also note the actual value of a kWh of wind is 3 cents a kWh (fuel costs) as all it does is displace gas generators when it is generating during high demand periods. On occasion, wind turbines will generate power at levels over 90% and other times at 0% of capacity. When wind power is generated during low demand hours, the IESO is forced to spill hydro, steam off nuclear or curtail power from the wind turbines, in order to manage the grid. When wind turbines operate at lower capacity levels during peak demand times, other suppliers such as gas plants are called on for what is needed to meet demand.
Bearing all that in mind, it is worth looking at wind generation’s effect on costs in the first six months of 2016 and ask, are the costs are reflective of the $135/MWh (+ up to 20% COL [cost of living] increases) 20 year contracts IESO, and the Ontario Power Authority awarded?
As of June 30, 2016, Ontario had 3,823 MW grid-connected wind turbines and 515 MW distributor-connected. The Ontario Energy Reports for the 1st two quarters of 2016 indicate that wind turbines contributed 4.6 terawatts (TWh) of power, which represented 5.9% of Ontario’s consumption of 69.3 TWh.
Missing something important
Not mentioned in those reports is the “curtailed” wind. The cost of curtailed wind (estimated at $120 per/MWh) is part of the electricity line on our bills via the Global Adjustment, or GA. Estimates by energy analyst Scott Luft have curtailed wind in the first six months of 2016 at 1.228 TWh.
So, based on the foregoing, the GA cost of grid-accepted and curtailed IWT generation in the first six months of 2016 was $759.2 million, made up of a cost of $611.8 million for grid-delivered generation (estimated at $133 million per TWh) and $147.4 million for curtailed generation. Those two costs on their own mean the per kWh cost of wind was 16.5 cents/kWh (3.2 cents about the average of 13.3 cents/kWh). The $759.2 million was 12% of the GA costs ($6.3 billion) for the six months for 5.9% of the power contributed.
But hold on, that’s not all. We know that wind turbines need gas plant backup, so those costs should be included, too. Those costs (due to the peaking abilities of gas plants) currently are approximately $160/MWh (at 20% of capacity utilization) meaning payments to idling plants for the 4.6 TWh backup was about $662 million. That brings the overall cost of the wind power contribution to the GA to about $1.421 billion, for a per kWh rate of 30.9 cents. If you add in costs of spilled or wasted hydro power to make way for wind (3.4 TWh in the first six months) and steamed off nuclear generation at Bruce Power (unknown and unreported) the cost per/kWh would be higher still.
So when the moneyed corporate wind power lobbyist CanWEA claims that the latest procurement of IWT is priced at 8.59 cents per kWh, they are purposely ignoring the costs of curtailed wind and the costs of gas plant backup.
22% of the costs for 5.9% of the power
Effectively, for the first six months of 2016 the $1.421 billion in costs to deliver 4.6 TWh of wind-generated power represented 22.5% of the total GA of $6.3 billion but delivered only 5.9% of the power. Each of the kWh delivered by IWT, at a cost of 30.9 cents/kWh was 2.8 times the average cost set by the OEB and billed to the ratepayer. As more wind turbines are added to the grid (Ontario signed contracts for more in April 2016), the costs described here will grow and be billed to Ontario’s consumers.
CanWEA recently claimed “Ontario’s decision to nurture a clean energy economy was a smart investment and additional investments in wind energy will provide an increasingly good news story for the province’s electricity customers.”
There is plenty of evidence to counter the claim that wind power is “a smart investment.” But it is true that this is a “good news story” — for the wind power developers, that is. They rushed to Ontario to obtain the generous above-market rates handed out at the expense of Ontario’s residents and businesses. And we’re all paying for it.
No community support for greed in Nation Twp [Photo: Ontario Farmer]
December 6, 2016
Residents of Nation Township and North Stormont recently gathered signatures on a petition and letters demanding the Ontario government halt the Large Renewable Procurement (LRP) process permanently (it is currently “suspended”), cancel the LRP I contracts awarded for five wind power projects earlier this year, and cancel contracts for wind power projects that have not yet been built.
The Premier of Ontario recently admitted that her government’s energy policies were a “mistake” that resulted in higher costs for Ontario citizens.
The Ontario Association of Food Banks recently released its Hunger report, placing the blame for Ontario’s “shockingly high levels of food bank use” on the electricity bills, and other factors. Hydro rates have increased 3.5 times and “off-peak” rates are now eight times what they were. Remedies proposed by the Wynne government, the association says, are a “drop in the bucket.”
The petitions filed at Queen’s Park yesterday refer to the high electricity rates and growing poverty and also to the fact that the Wynne government, specifically Energy Minister Glenn Thibeault, says it now has a “robust supply of power” for the years ahead.
So why pay out the millions for these new contracts, for power we don’t need, say the residents.
MPPs Jim McDonell and Grant Crack (the LIBERAL MPP for Glengarry-Prescott-Russell) read the petitions in the Legislature yesterday, while representatives of Save The Nation/Sauvons La Nation and Concerned Citizens of North Stormont watched from the Gallery.
The Windlectric wind power project on tiny Amherst Island has no hope of meeting its “drop-dead” Commercial Operation date, so Ontario’s Independent Electricity System Operator (IESO) can cancel the Feed In Tariff (FIT) contract right now, with no penalty, says the Association to Protect Amherst Island.
See the letter to IESO Chair Tim O’Neill here and below.
Dear Dr. O’Neill,
In August 2015 The Association to Protect Amherst Island requested that the IESO exercise its ability to cancel the Fit Contract dated February 25, 2011 with Windlectric Inc. (Algonquin Power) without penalty because of the inability of the company to achieve its commercial operation date.
In its 2016 Q2 Quarterly Report, extract attached, Algonquin now advises that construction is expected to take 12 to 18 months and that the Commercial Operation Date will be in 2018. This timeline is contrary to what was submitted to the Environmental Review Tribunal and to the Ontario Energy Board. A COD of 2018 is seven years from the date of award of the contract.
Cancellation of the contract at this time would enable the IESO to achieve cost avoidance exceeding $500 million over the next 20 years based on the high cost of power generation at 13.5 cents per kilowatt-hour set out in the contract with Windlectric and based on the IESO’s commitment to pay Windlectric to not produce power when capacity exceeds demand. Cancellation of the Windlectric contract could be achieved without penalty due to noncompliance and would address in part the IESO’s budget challenges and energy poverty in Ontario.
Accordingly, the Association reiterates its request that IESO cancel the FIT Contract with Windlectric Inc.
Rick Conroy, in the attached article from the Wellington Times, explains the Kafkaesque and cruel nature of allowing the Amherst island project to continue especially in light of the unused power capacity of the nearby Lennox Generating Station and the Napanee Gas Plant under construction.
• Windlectric cannot comply with the Commercial Operation Date in its FIT Contract.
• At a time of skyrocketing hydro rates and financial challenges the IESO could save $500 million over the next 20 years by cancelling the Windlectric Contract without penalty.
• Existing nearby generating capacity is almost never used and will increase when the Napanee Gas Plant comes online. Intermittent and expensive power from wind turbines on Amherst Island is not necessary
Finally, please provide the IESO’s understanding of the Commercial Operation Date for Windlectric, any extensions awarded by the IESO, and the number of days granted due to Force Majeure and judicial matters.
To get an idea of what Ontario could look like a couple of decades out under Liberal energy minister Glen Murray’s “climate action plan” — which was revealed in detail in Monday’s Globe and Mail — who better to rely on than the man himself, Glen Murray?
Back in 2008, when he chaired the National Roundtable on the Environment and the Economy, Murray — along with his acting CEO, Alex Wood, now executive director of the Ontario Climate Change Directorate — offered up a plan that looked remarkably similar to the new Liberal cabinet document. In fairness, the NRTEE document hardly offered the perniciously micro-managed prescriptions for people and businesses that Murray has graduated to now. And this new plan, billed by the Liberals as a “once-in-a-lifetime transformation” for Ontario’s economy, may also prove the end of Ontario’s lifetime of economic progress. In an era where assisted dying is the big thing with Liberals, this could be the first case where it’s tried on a province.
The leaked cabinet document, reportedly signed-off on by Premier Kathleen Wynne, lists a jaw-dropping 80 or so policies including: The eventual ban on heating new homes and buildings with natural gas, with only electric or geothermal being legal; $4 billion to be doled out by a “green bank,” funded by carbon taxes, to subsidize retrofits of buildings to get them off natural gas; the requirement that homes undergo an “energy-efficiency audit” before they can be sold; and a stack of rules, regulations and handouts to get an electric car into every two-car household within eight years, including rebates, free electric charging, and plug-in stations at every liquor store. Naturally, there will be billions more in traditional government-spending programs on public transit, bike paths, upgrades for schools and hospitals, and “research” funds and centres of climate excellence, not to mention new ethanol fuel standards that will gratify the Liberals’ top corporate donors in the biofuel lobby.
We present a collection of stories that review the manner in which strategies that are supposedly positive for the environment have been enacted (usually without any sort of cost-benefit or full impact analysis), and what the results are to date.
From Terence Corcoran’s review in The Financial Post, to a review of German energy policy (this is a sad, sad story worthy of Dickens), an article in Prince Edward County’s Wellington Times (one of the last independent newspapers in Canada) on a wind power developer’s arrogance, and last, an opinion on what the real effect on the local environment green energy policies are in reality, the collection deserves a read … and consideration by the Ontario government.
Will they? In the words of the team of academics lead by the University of Ottawa’s Stewart Fast, writing recently about the disastrous implementation of the Green Energy Act on Ontario communities, “Our recommendations will unfortunately remain unaddressed, without further consideration or assessment of the lessons that could be learned.” [Fast et al. Lessons learned from Ontario wind energy disputes, January, 2016]
Terence Corcoran, The Financial Post, “Clean, green, and catastrophic.” (Note: our Parker Gallant provided some figures for this article.)
Handelsblatt (Global edition) “How to kill an industry”. (Thanks to energy economist Robert Lyman in Ottawa for sending this in.)
Rick Conroy, The Wellington Times, “There’s always a catch.” (“The wolf has been sent to find out what’s killing all the lambs …” Conroy writes.)
Last, this letter to the editor of Ontario Farmer, excerpted here.
“Off-grid will make a bad situation worse for reluctant grid payees”
A farming friend recently took me on a “crop tour” of rural businesses that are partially or fully off-grid. We saw a sawmill, a pressed-steel manufacturer, a maker of wood-burning stoves, a cabinet-maker and an ethanol plant. Finding it progressively more difficult to remain profitable in the agricultural business with skyrocketing electrical costs, my friend is seriously looking at more cost-effective alternatives. If going off-grid works for others, perhaps it will work for him.
“Off-grid” means that these business owners are no longer victims of usurious hydro rates the Ontario Green Energy Act (GEA) has imposed on the vast majority who obtain electricity from Hydro One and other such utility companies. Are these enterprises trailblazers illuminating a path to greater energy independence for other beleaguered hydro ratepayers?
Or are they creating an even greater financial burden for those who remain on the grid?
And what may be the environmental impact if a great many businesses follow suit?
Operating the Ontario power grid has become exorbitantly expensive under the GEA. It is becoming ever more expensive as greater numbers of windmills spring up to further sully our rural landscapes. … Operating costs of a centralized generation and distribution system are borne by all users. The more users there are, the less share of fixed costs each user pays. Businesses fleeing to off-grid energy alternatives leave fewer users on-grid bearing fixed costs; thus, each user pays more. While going off-grid may financially benefit those who do it, greater economic burden falls on those remaining on-grid, and most have no choice.
Fossil fuels are the primary energy source for off-grid users. Electricity to run their businesses must be generated by some sort of power plant, typically an internal combustion engine driving and electrical generator. It’s far removed from the most cost-effective or environmentally friendly way to generate and distribute electricity —the way we used to do it — but the GEA has made grid power so prohibitively expensive off-grid generation has become economically viable for major energy users.
George Darouze, councilor ofr Osgoode in the City of Ottawa, thinks its outrageous that some residents in Ottawa have to buy their electricity from Hydro One … and pay 30 percent more than their neighbor on Ottawa Hydro.
He has launched a petition which can be found here.
Like all real petitions, in order to be a legal document, it must be signed by a resident of the City of Ottawa, hard copy only, and mailed.
Meeting open to the public on options to meet electricity demand
INDEPENDENT ELECTRICITY SYSTEM OPERATOR (IESO)
You are invited to attend the third meeting of the Greater Ottawa Area Local Advisory Committee (LAC) being held on January 12. The LAC will help shape a plan to meet Ottawa’s longer-term electricity needs, including options to meet electricity demand growth in the broader West Ottawa area. The Greater Ottawa LAC will provide advice and recommendations on local priorities, and will help to identify ways to engage the broader community in the long-term discussion.
LAC meetings are open to the public, and the details of the Ottawa meeting are as follows:
Date: Tuesday, January 12, 2016 Time: 5:30 p.m. – 8:30 p.m. Location: Hotel Indigo – Indigo Room, 123 Metcalfe Street, Ottawa, ON
On April 28, a 20-year Integrated Regional Resource Plan (IRRP) was released for the Central Ottawa Area. Developed by Hydro Ottawa, Hydro One Networks and the Independent Electricity System Operator (IESO), the plan identifies the electricity needs of the Ottawa area, and is designed to support community growth through a range of solutions and ensure that electricity is available when needed. The planning process puts Conservation First, and seeks the most cost-effective and sustainable options for the community.
As part of the overall regional planning process, a Regional Infrastructure Plan (RIP), focusing on the transmission and distribution components of the plan, was developed for the Greater Ottawa Region. This effort was led by Hydro One and the RIP Report was posted to the Hydro One website on December 3, 2015. The RIP phase involves confirmation of previously identified needs and a more detailed development of the “wires” plan to address the needs where a wires solution would be the best overall approach. View the RIP report online.
For information about the LAC meeting, the plan, materials from previous LAC meetings or to view an archive of the informational webinar about the plan, visit www.ieso.ca/GreaterOttawa.
We look forward to working together to plan for your future electricity needs, and hope to see you at the LAC meeting.
CanWEA’s Hornung: his definition of ‘reliable’ is a bit off
Wind power: unreliable, and costly
Re-posted from Wind Concerns Ontario, with permission
Robert Hornung, president of the Canadian Wind Energy Association (CanWEA), frequently uses the word “reliable” when expounding on the purported benefits of generating power from wind. Here are a couple of them: “Wind energy is meeting Canada’s demand for new electricity in a clean,reliable and cost-competitive way,” says Hornung. And this one: “Wind energy provides reliable power”.
Hornung’s use of the word “reliable” is not the same as Webster’s defines it: “to be relied on” and “giving the same result on repeated trials”. His use of the term “cost-competitive” fails the same test!
Some recent events offer contradicting evidence on the issue of wind’s “reliability” as a power source.
On October 5, 2015 wind production for the full 24 hours was 2,636 megawatts (MW) averaging 110 MW per hour—that represented just 0.5% of Ontario’s average demand of 16,394 MW per hour. Now measured against Ontario’s average hourly demand of October 19, 2015 at 14,997 MW is an interesting contrast. Ontario’s industrial wind turbines (IWTs), with an IESO1. reported capacity of 3,427 MW, were producing an average of 2,474 MW per hour, and in 24 hours cranked out 59,389 MWh, representing 16.5% of the average hourly demand. The lower demand day of October 19th (9.4% less than October 5th) saw those IWTs producing power at very high levels, which coincidentally resulted in average hourly exports 760 MW higher per hour.
The connection to high wind power generation and higher exports is obvious, as is the lower average of the hourly Ontario energy price (HOEP). October 5th that was $30.99 per MWh, but only $21.62 (30% lower) on October 19th.
What does it mean? Ontario’s ratepayers subsidized wind on the higher demand day by picking up the cost of $252K (2,626 X $127/MWh2. = $333K – $81K [2,626 X $30.99/MWh] = $252K). Compared to the subsidy picked up by Ontario’s ratepayers on October 19th , however, that was a bargain. On the latter day the cost was considerably more at $6.2 million (59,389 MWh X $127= $7.5 million – $1.3 million [59,389 MWh X $21.62/MWh] = $6.2 million).
Mr. Hornung and CanWEA may consider “reliable” to mean Ontario’s ability to supply our neighbours in New York, Michigan and elsewhere with power that is “cost-competitive.” It’s just not in his best interest to express it that way.
CanWEA needs to find new talking points that deal with the facts: power generation from wind is totally unreliable and anything but cost-competitive!
IESO do not report the full capacity until the IWT are commissioned by them, whereas the full capacity may be considerably higher.
The OEB estimates the average cost of wind generation at $127/MWh.
P.S.: Hour 18 on October 24, 2015 saw a new record for wind generation in Ontario with 3,123 MWh meaning IWT were operating at over 91% of capacity, and the HOEP (hourly Ontario energy price) was $13.36— subsidies were $350K for just that hour.
Peter J. Thompson/National Post Electricity bills for all segments of businesses and households are now a drain on the economy versus an attraction for new business and the jobs they might create.
Over the past several months there has been a constant din of noise from all business segments in Ontario about the high price of electricity and its effects. Electricity prices have risen as they have absorbed the high costs of 20-year contracts for renewable energy in the form of wind and solar as additions to Ontario’s electricity grid. Ontario currently has a huge surplus which results in as much as 20 per cent of our generation exported at fire sale prices. Couple that with a drop in demand, annual spending of $400 million on conservation messages, smart meters that allow time of use (TOU) pricing and the Hydro One, OPG and other Ministry of Energy employees enjoying wages and benefits that outstrip the private sector means electricity bills for all segments of businesses and households are now a drain on the economy versus an attraction for new business and the jobs they might create.
The situation for many small business owners is dire
The foregoing recently manifested itself in a report from the Ontario Chamber of Commerce entitled: “Empowering Ontario: Constraining Costs and Staying Competitive in the Electricity Market.” The report stated soaring electricity prices would cause one (1) in 20 Ontario businesses to shut their doors within the next 5 years. The report didn’t suggest how much electricity those 5 per cent of businesses consume or how many jobs would be lost but it should represent a concern to the ruling Liberal Party of Ontario. Should the scenario play out it would also result in a revenue drop for generators, transmitters and local distribution companies. Due to how the electricity sector operates in Ontario a revenue drop results in rate increases to all remaining Ontario businesses and residential households.
The Chamber was not the first to note the problems with high electricity costs, as the Association of Major Power Consumers of Ontario (AMPCO) raised its concerns in a May 2015 release of its “Power Market Outlook” and the president was quoted in the media referencing large Ontario industrial concerns: “Not only are they paying very high costs for the commodity but they’re paying some of the highest delivery rates … so it’s not just a commodity cost problem, it’s not just a renewable energy or coal phase-out problem.”
The above concerns were expressed despite the fact AMPCO members qualify as “Class A” ratepayers, meaning they get a break on their rates as part of the Global Adjustment which finds its way to residential and small businesses (Class B ratepayers) who subsidize the reduction of Class A rates.
A mid June 2015 C. D. Howe study, noted: “Class B consumers are paying more in GA charges so that Class A consumers can pay less. The panel estimates that the new GA formula resulted in Class A consumers paying $422 million less in 2012 than they would have paid under the former formula. From a policy perspective, the relevant question is – is society better off?”
The Canadian Federation of Independent Business (CFIB) also expressed its concern in relation to electricity prices on “small businesses” in April, noting: “The situation for many small business owners is dire, said CFIB’s Ontario vice president Plamen Petkov. The advocacy group, which represents 42,000 small and medium-sized business, has been asking the provincial government to provide relief for businesses for years.”
The Canadian Manufacturers and Exporters in their January 29, 2015 “pre-budget” report submitted to the ruling Wynne-led Ontario government also expressed concern about electricity rates:
“Competitive electricity rates are fundamental to the success of Ontario’s manufacturing sector and our economy. Despite progressive reforms including the demand based allocation of the global adjustment for large volume users, Ontario has among the highest electricity rates in North America.”
The CME further stated: “The only path forward for Ontario is to adopt a manufacturing action plan with an industrial/electricity rate as a core component.”
Another association referencing the cost of electricity to their activities is the Ontario Mining Association which on May 11, 2015 reported: “Jurisdictions with higher mining tax rates have lower electricity prices and government cost-sharing on infrastructure. A recent report indicates that exploration and mining costs are particularly inflated in the North, where companies need to invest in lacking, but essential infrastructure such as ports, power plants, winter and permanent roads, and accommodation facilities.” And the Ontario Forest Industries Association in its January 9 pre-budget submission to the Ontario government noted: “As a primary resource industry, forestry is an energy-intensive and trade exposed sector. The government has introduced a number of programs that have provided some relief from the steady rise in electricity pricing. However, given the government’s own projections in the recent Long Term Energy Plan these benefits are quickly being erased, along with the small competitive advantage they bring.”
Parker Gallant is a former banker who didn’t like what he was seeing in his Ontario electricity bills.