Ontario gives away $4.5B in ratepayer dollars; Energy Minister Chiarelli persists in directive to add more intermittent, expensive wind power
Electricity costs up 97 percent in Ontario: power surplus exports rising
February 8, 2016. Reposted from Wind Concerns Ontario
The GA or Global Adjustment first made its appearance on IESO’s Monthly Market Report in January 2007. As noted in the chart below, that year, the GA finished 2007 at $3.95 per megawatt hour (MWh) which means it cost Ontario’s electricity ratepayers about $600 million for the full year. In, 2015 the GA was just shy of $10 billion.
To be fair, the GA includes the price of “contracted” power, less the value given to it on the hourly Ontario electricity price (HOEP) market. As a result of Ontario’s high surplus of generating capacity and the intermittent presentation of wind and solar in periods of low demand, has resulted in the HOEP showing declining values. Despite declining values the cost of a kilowatt hour (kWh) of electricity increased from an average of 5.43 cents/kWh to 10.7 cents/kWh from November 1, 2007 to November 1, 2015 — up 97%. The upsetting part, and a driving force behind the 97% increase is surplus generation sold to our neighbours. We sell excess output to New York and Michigan, etc. without inclusion of the GA. The GA lost on those sales is charged to Ontario ratepayers and has become increasingly large. The chart indicates the “intertie flows” (exports/imports netted) initially cost Ontario ratepayers $20 million for 2007, but that has increased, and representing more $1.3 billion for 2015.
It is anticipated the annual cost of subsidizing surplus exports will continue to climb.
Scott Luft notes results for January 2016 are 20% higher than January 2015 for the cost of electricity as the HOEP was lower despite what Ontario’s Liberal government says about pricing stabilizing. With plans to add 500 MW of capacity for wind and solar, the climb will continue for at least another two years. Energy Minister Bob Chiarelli recently stated: “Our government’s focus is now on preparations for the next long term energy plan and the ways in which we can continue to drive down costs for Ontarians”. (Note to the Minister: a 97% increase does not “drive down costs”!)
Further reference to the chart points out addition of more wind and solar over the past nine years has driven up the percentage of renewables exported. The “Net Intertie” (net exports) increased from 19.6% in 2007 to over 57% in 2015.
What the Energy Minister needs to accept is this: we don’t need more intermittent and unreliable power.
That message is not getting through, despite evidence presented by the Auditor General of Ontario on several occasions and by numerous critics in the media.
Costing ratepayers $4.5 billion in after-tax dollars to help our neighbours is what’s happened. Perhaps Minister Chiarelli could suggest to Finance Minister Charles Sousa, that the money extracted from ratepayers provides no benefits to Ontarians. Perhaps a tax receipt is in order — that would help cash-strapped citizens, but there is a better idea.
The Energy Minister needs to immediately recall his directive to the IESO to acquire another 500 MW of contracts for intermittent wind and solar power.
Ontario electricity customers: in pain with more to come
Anybody watching as Ontario circles the drain?
Ratepayers to Queen’s Park: we have a problem
Wind power costs plenty for only 4% of generation
In the past six months, reports from the Canadian Manufacturers and Exporters, the C.D. Howe Institute, the Association of Major Power Consumers of Ontario, the Canadian Federation of Independent Business and the Ontario Chamber of Commerce have all called for “competitive” electricity prices.
A few of the members of some of those associations already benefit from absorption of some costs by residential and small business ratepayers, but still complain their electricity bills are too high and not competitive with competing jurisdictions in Canada and the U.S.!
Ontario is cursed with probably the most complex electricity system in the world even though 80% of our electricity is generated by nuclear and hydro. Both of those generation sources produce power at an average of about 6-7 cents per kilowatt hour (kWh), yet Ontario’s delivered electricity prices are among the highest in North America. Why? Most of the reasons relate to the Global Adjustment Mechanism (GA)NB 1: which has increased every year since its creation in 2005. The GA absorbs a plethora of ratepayer costs that are billed out via the “electricity” line on our bill. In the first six months of the current year, the GA accumulation is $4.6 billion versus only $2.2 billion in the comparable six month-period of 2014.
Here are some of the reasons for the increasing cost of electricity to Ontario’s ratepayers. Note that many have nothing to do with generating electricity.
Some current ratepayer costs:
Moving two gas plants (Oakville and Mississauga) at a cost of $1.1 billion
Smart meters costing $2 billion to enable time of use (TOU) billing with no benefit
The shift in costs (estimated at $422 million for 2012 by the C.D. Howe Institute) from Class A ratepayers to residential and small commercial enterprises
Cost overruns on the Niagara tunnel (“Big Becky”) of $500 million
Supporting the employee pensions of Hydro One and OPG pensions by contributing $4. for every $1 contributed by the employeesNB 2:
The $200 million cost of Hydro One’s messed up billing system
The costs for the 1.2 million letters and postage ($600K) for the CEO of Hydro One to apologize to their ratepaying customers for messing up their billing system
The $120 million annual cost of the Northern Industrial Electricity Rate Program to reduce electricity rates by 2 cents/kWh for industry in Northern Ontario
The $35-40 million annual cost of the Northern Ontario Energy Credit to assist single and family households with their electricity bills
The $2.6 billion it cost for the Lower Mattagami run of river project to principally produce expensive hydro electric power in the Spring when Ontario’s demand is at its lowest level
The Low-income Energy Assistance Program with an annual cost of $4 million to assist households living in Energy PovertyNB: 2
The annual costs (currently estimated at $40 million annually) associated with the development of a “smart grid” (smart grid entity charge) estimated in 2010 to cost $1.5 billion
The costs of the Net Revenue Requirement (NRR) for gas plants estimated to be a minimum of $650 million annually for them to sit idling so they can back up wind and solar generation
The annual costs of $30 million for the recovery of OPG’s expenses related to the conversion of one unit of Thunder Bay to biomass from coal
The $170 million costs of converting Atitokan from a coal generation unit to biomass together with the annual operating costs (operation, maintenance and administration) to sit idle for most of the time
Annual Conservation spending of $400 million that provides grants for people to purchase high efficiency air conditioners, LED bulbs, etc., and for businesses to retrofit their lighting system, purchase high efficiency refrigeration units, etc. and for municipalities to switch their street lighting systems and municipally owned arenas to LED, etc. etc.
The costs (unknown) of the “Lost Revenue Adjustment Charge” to allow your LDC to recover revenues (via the “delivery” charges) lost because your community has used less electricity
The costs of spilling clean hydro (3.7 terawatts in 2014 for OPG), constraining wind and solar generation, steaming off Bruce Nuclear, all at an estimated annual cost of $400-500 million.
The costs of subsidizing utility-scale wind power generation, which represented about 9% ($700 million + unknown amount for constrained wind generation) of the GA costs but only 4% (6.8 TWh) of total electricity generated
The costs of erecting and maintaining meteorological station for IESO to measure constrained wind at every wind development with a capacity rating of 10 Megawatts or more
The actual generation and costs of (an average of $500. per MWh) of solar panels NB: 3 to generate electricity usually when not needed. With 2,000 MW of capacity IESO doesn’t disclose what they produce yet claim they are transparent. An estimate of costs to ratepayers at 15% of rated capacity suggests ratepayers absorb in excess of $1 billion annually or 15% of the total GA costs but they produce less than 2% of total generated electricity
The costs associated with exporting Ontario’s surplus electricity production which was about $1.2 billion in 2014 and appears headed to $2 billion in 2015
Some future ratepayer costs:
The Ontario Energy Support Program, estimated to cost $200 million annually commences January 1, 2016 and will support 570,000 household’s currently living in “energy poverty”
Also effective January 1, 2016 the Ontario Clean Energy Benefit will no longer exist raising electricity bills 10%
Another 500 MW of capacity from wind (300 MW) and solar (200 MW) is to be added to the grid raising annual costs by about $200 million
The further shift of smaller industrials from Class B to Class A ratepayers will effectively transfer costs (estimated) of $300/400 million from clients with peak energy needs of 3MW under the “High 5” system
Lump sum payments and free Hydro One shares (after privatization) to Hydro One and OPG employees. Cost to ratepayers is an unknown at this time
The costs to convert the Toronto Zoo’s “zoo poo” to electricity
The costs of research and grants related to “energy storage.” The Energy Storage Association‘s members appear to be the beneficiaries of the grants but haven’t registered as lobbyists with the Ontario Registry. Costs are unknown! Members of the Association include: NextEra, Northland Power, MaRS Discovery District and even Ontario Sustainable Energy Association.
Another 1,500 MW of wind capacity scheduled to be in place by December 31, 2016 that will add a further $500 million annual cost to the system.
Future Ratepayer Savings:
As of January 1, 2016 the Debt Retirement Charge will no longer be levied saving an average ratepayer (residential) about $70 annually. The DRC will continue to be charged to businesses!
Net Ratepayer Increase:
The additional future costs coupled with the demise of the Ontario Clean Energy Benefit will see residential rates increase by a minimum of $400 annually, based on a quick estimate, and raise overall rates to rival those of Alaska and Hawaii.
Taxpayer-related costs:
The Ministry of the Environment and Climate Change will continue to incur costs associated with the legal fees to defend the issuance of their approvals of industrial wind developments via the Environmental Review Tribunal! Costs are unknown.
The Ontario Ministry of Transportation (MTO) will continue to experience costs associated with grants of $8,500 to individuals, etc. purchasing electric vehicles for those who can afford luxury Tesla automobiles, etc! Overall costs are unknown.
The MTO will continue to incur costs associated with the installation of charging station for electric vehicles! Costs are unknown.
Various municipalities will eventually experience declining property value assessments from their residential taxpayers associated with industrial wind turbines driving down property values and municipal tax revenue and require additional funding from the Ministry of Municipal Affairs and Housing or higher municipal taxes. Costs are presently unknown!
Taxpayer related benefit:
The one and only taxpayer benefit relates to the end of the Ontario Clean Energy Benefit on January 1, 2016, saving taxpayers about $1 billion annually. The taxpayer savings will however increase ratepayer bills by a like amount and will also generate about $130 million via the cost of the HST for the additional cost of electricity.
Premier Wynne and her Minister of Energy, Bob Chiarelli seem to believe we can continue on this path of destruction of the province in an effort to have Ontario save the world from “climate change” as she noted when her Environment Minister Glen Murray announced their “cap and trade” plans back on April 13, 2015 by stating: “The action we are taking today will help secure a healthier environment, a more competitive economy and a better future for our children and grandchildren.”
The Liberal government may feel it has created a “healthier environment” but that has come at the expense of what was once a thriving economy and the envy of the developed world. The debt they have created coupled with the highest electricity rates of competing economies will continue to undermine the future for our children and grandchildren. There goes “the better future for our children and grandchildren” that Premier Wynne claims.
NB 1: The GA was originally established to capture the difference between the contracted rates for power and the actual market value given via the hourly Ontario electricity price (HOEP) but has become the dumping ground for anything that doesn’t fit elsewhere.
NB 2: Energy poverty reflects itself when energy costs are 10%, or more of a household’s total income.
NB 3: Solar panels on your neighbour’s roof, the farmer’s barn, your municipally owned arena, IKEA, Loblaws, Toronto District Public Schools, etc., etc.
The opinions expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy.
October 2014 Breaks Record for Ontario Electricity Costs and Losses
Cost to consumers of government energy policies for one month reaches $1 billion
TORONTO, Nov. 5, 2014 /CNW/ – The Ontario government’s policy of pursuing “renewable” sources of power at a premium and selling off surplus at a loss has resulted in a record-breaking month of expenses and losses for Ontario’spower consumers.
In a document prepared by former bank vice-president and Wind Concerns Ontario executive Parker Gallant and energy analyst Scott Luft, figures from the Independent Electricity System Operator (IESO) show that the Global Adjustment for Ontario power customers hit $1 billion.
The Global Adjustment is the difference between market rates for electricity, and what the government pays power generators. In the case of wind power, which has first right to the grid in Ontario, Ontario is buying high and selling low, says Gallant. “In the spring and fall every year, demand for power is low, but wind production is at a high—that is the problem with wind power: it is produced out-of-phase with demand. Because of the contracts the government has with the developers, we pay top dollar for the power and when we don’t need it, sell for bargain-basement prices. We pay about 13.5 cents per kilowatt hour for wind, and sell it off far below that; in October it was below 0.7 cents.
“This is economic disaster for Ontario,” Gallant adds.
Consumer power bills rose again on November 1st, and the government will also launch its new procurement process for wind and solar this month.
Wind Concerns Ontario has been opposed to the development of large-scale wind power in Ontario’s communities in part because it is an expensive yet unreliable source of power. The record-breaking October figures should spur the government to halt its wind power program, says president Jane Wilson. “Any decision to approve one more wind farm, or to launch the new procurement process for more contracts this month as planned, is completely unsupportable,” she says. “Wind power doesn’t work, and Ontario can’t afford this experiment any longer.”
Ontario has contracts for 43 wind power projects not currently operational, which will cost consumers $16 billion over the next 20 years.
