Tag Archives: Ontario electricity bills

Big Becky cost overruns: how come nobody got fired?

28 Tuesday Jan 2014

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Parker gallant on Big Becky: what is THAT going to cost you?

BigBecky

The big hole where your money goes

 

In February 2010 an article penned for the Financial Post I disclosed that the Ontario Power Generation’s OPG) new Niagara tunnel (“Big Becky”) was not only running late but had incurred substantial cost overruns—in excess of $600 million, in fact.
The effects of that overrun have not affected our electricity prices yet, but the writing is now on the wall based on the OPG application of September 27, 2013.  The increases requested in that rate application by OPG, if approved, will increase electricity rates by at least $6-7.00 per month ($72-84.00 annually) for the average 800-kilowatt (per month) consumer.   According to the submissions to the Ontario Energy Board (OEB), all of OPG’s “regulated” hydro rates will increase from 3.9 cents per kilowatt hour (kWh) to 4.4 cents per kWh due to the costs of the tunnel.  One-half a cent doesn’t sound like much, but when you consider that in 2012, OPG produced 18.5 billion kWh of unregulated hydro, it is time to bring out the calculators.
That overrun effectively means OPG is seeking to recover about $96 million annually for the cost of “Big Becky” for the next 50 years (amortization period), which equates to $4.6 billion for a tunnel originally estimated by OPG in the business case presented to their Board of Directors in 2005, to cost $873 million. It has cost 70% over that amount.
OPG is seeking approval for the foregoing as a rate increase for their “regulated” hydro as Big Becky is classified; that means it is considered “baseload” generation and its cost of production will be close to 10 cents a kWh.  At the same time they are also seeking approval for an even larger increase in their “unregulated” hydro which could generate as much as $300 million and was the cause of the media focus when they discovered the application.  The “anti-nuclear” lobby painted it as a rate increase related to OPG’s nuclear refurbishment plans, which was a false premise.
What the cost overrun on “Big Becky” demonstrates is that oversight at Queens Park is sadly lacking in the energy portfolio.   It is disconcerting to realize that this project was $600 million over budget, yet to the best of the writer’s knowledge no OPG employee or Board member was castigated or lost their job. A private sector firm would investigate and allocate “cause” to one or several individuals in the event a project of this size exceeded budget by a factor of 70%.
Perhaps it is time to privatize the electricity sector as the private, but regulated, natural gas sector has demonstrated they can do a much better job.
©Parker Gallant                                                                                                                                           January 25, 2014
The views expressed here are those of the author.
Reposted from Wind Concerns Ontario windconcernsontario.ca

Ontario’s electricity bills: rising costs for everyone

13 Monday Jan 2014

Posted by in Ottawa, Renewable energy, Wind power

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Ottawa Morning

Here from today’s CBC show Ottawa Morning, is a panel discussion on the impact of Ontario’s rising electricity bills. The panelists include a representative from the Preston Street BIA, a representative of an agency trying to help people in need, and an Ottawa area dairy farmer.

The message is a powerful one: rising electricity bills will result in increased costs for everyone including for food, as well as job losses as business try to cope.

Dairy farmer Peter Ruiter of Black Rapids Farm says the province ought to have figured out how it was going to pay for its renewables progarm. He invited Energy Minister Bob Chiarelli to come to his farm.

Listen to the program here.

 

 

Tom van Dusen on Ontario’s power situation: “powerless”

10 Tuesday Dec 2013

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From the December 3rd edition of Ontario Farmer, an excerpt from the Stories from Eastern Ontario feature by Ottawa area writer Tom Van Dusen. Powerless

I recently listened to one of the most horrifying hours of radio programming I have ever heard.

I was driving the truck at the time and almost leapt out of the seat I became so incensed. I was receiving information I already knew in general terms but that didn’t make it any less tormenting.

The show wasn’t about disaster or disease. It wasn’t about the Senate. It wasn’t even about Rob Ford.

It was a discussion about that outrageous cash guzzler Hydro One, its stunning rates and the crippling effect they are having on all aspects of Ontario commercial and residential life.

It was a tale of gross mismanagement, incompetence, political interference and total indifference for consumers–you and me–in Hydro One’s grossly inflated charges…charges poised to make Ontario the most expensive place to buy electricity in North America.’

Listeners were calling in to tell horror stories about dealing with Hydro One, of having their service cut off because they could no longer pay, of planning to move because their electricity bills had become too exorbitant to manage.

There was an overall feeling of helplessness, of being able to do nothing but stand by as the bandits running Hydro One and related government agencies continue to jack prices without explanation. …

The radio show* featured guest energy analyst Tom Adams, who was a pleasure to listen to, a man who seemed to know his stuff and who pulled no punches in describing how Ontario’s electricity future is being burdened with “stupidly expensive junk generation.”

Adams and callers raised several of the issues particularly frustrating to the people who have to pay for all the blunders–that would be you and me–including compensating electricity producers to remain idle and selling off surplus power at cut rate prices to other jurisdictions.

Let’s take wind power. I’m a great fan but enough is enough…taxpayers can’t justify any more subsidized turbine erection under the Green Energy Act when a surplus is being produced for the grid.

Ottawa city council has passed a motion asking the province to give communities more say in where wind power projects are installed.

A little way south in Brinston, 10 turbines are in the works with little backing from neighbours or local government, South Dundas Township. Council passed a motion that additional turbines won’t be supported until a need is proven. With no legal clout behind the move, more than 70 Ontario municipalities have officially become “unwilling hosts” for turbines. Yet this provincial government continues to push its alternative energy agenda while failing to curb Hydro One’s scandalous misuse of our money.

The waste can only be shut off with an election and a complete makeover of the shirt circuiting Ontario Hydro bureaucracy.

tomvandusen@sympatico.ca

*Editor’s note: this sounds like Ontario Today hosted by Rita Celli with guest Tom Adams. A podcast of the show is available at cbc.ca

Parker Gallant on energy ministry: aiding the fortunes of … Quebec!

21 Monday Oct 2013

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Parker Gallant on Ontario’s Energy Ministry: aiding the fortunes of…Quebec

 chiarelli1.jpg.size.xxlarge.promo

No, no, don’t confuse me with the facts!
Endorsing fallacies, avoiding realities—Ontario’s Ministry of Energy
Global Adjustment charge jumps from $800 million to $6.5 billion in four years
Watch out Ontario, Quebec is targeting our industry!  That’s the message one gets from the announcement by Premier Pauline Marois that Quebec will use Hydro Quebec’s surplus power to attract job-creating industries to Quebec.  An article in the October 8, 2013 edition of the Financial Post states Hydro Quebec will set aside 50 terawatt (TWh) hours for that purpose.  To put that in perspective, 50 TWh represents 35% of Ontario’s total power demand (141.3 TWh) in 2012, or enough to power five million average Ontario households.
So what is Ontario doing to stave off this aggressive push from Quebec?  Well, since being named Premier, Kathleen Wynne has overseen the Ministry of Natural Resources issue renewable energy approvals for about 811 megawatts (MW) of industrial-scale wind power.  Three of those, including a Samsung contract (Armow Wind for 180 MW), occurred in just the last two weeks!  Her government also announced October 10, 2013 that they will scrap the plan to build 2,000 MW of new nuclear.  That 2,000 MW was part of the Long-Term Energy Plan issued by Brad Duguid in late 2010 when he was Energy Minister.
Here is what Energy Minister Bob Chiarelli had to say about abandoning the new nuclear build:  “We’re in a comfortable (electricity generation) surplus position at this time and it’s not advisable to make the major investments in new nuclear. Some time in the future we might be looking at it.”
To put that into perspective, it would take approximately 7,000 MW of industrial wind turbines to produce the equivalent power of the proposed 2,000 MW of nuclear.  That 7,000 MW would entail the erection of almost 3,500 turbines spread throughout the province, producing power at 29% of their rated capacity.   That same 7,000 MW of wind would produce power 80% of the time when we don’t need it—the middle of the night, during the spring freshet, and in the fall when our demand for power is the lowest.  And, when we don’t need the power we will often pay the wind companies to not produce power. We will also require other power sources to back up those turbines (now expensive gas plants, two of which were moved at a cost of over $1 billion ) so Ontario ratepayers will pay twice for any power we may need.
So what will this cost us?
A report from the Ontario Power Authority (that no longer appears on their website) pegged the Global Adjustment Mechanism (GAM) for the 12 months ended January 31, 2009 at $800 million.  Fast forward just four years to January 31, 2013 and the total GAM had jumped to $6.5 billion for the comparable 12 months.  The GAM looks sure to hit the $8 billion mark by the end of January 2014. That GAM pot principally reflects renewable energy costs along with money spent on getting Ontarians to conserve.
Looking at what the cost of 2,000 MW of new nuclear might be to the Ontario ratepayers and  using the original estimate of $26 billion, you get a capital cost of $43.4 million per TWh (assuming a 40-year lifespan).  That includes a fuel cost of 6.3 million per TWh.  For those who like to equate that to a kilowatt hour (kWh) the cost (without Operations, Maintenance and Administration [OMA]) would be 4.43 cents per kWh and 8.3 cents per kWh when OMA is included both less than recently announced average (8.88 cents) time-of-use (TOU) prices set for the next six months.
Now compare that to the cost of a TWh from wind turbines and assume they will produce at 29% of their rated capacity.   At 11.5 cents per kWh the cost to produce the same power jumps to $115 million per TWh (plus another 20% cost of living increases) without adding in the costs of back-up power from gas turbines, the spilling of clean hydro or “steaming off” nuclear power from Bruce.  The back-up alone adds over $80 million per TWh bringing the cost per kWh to 20 cents.
So how do Ontario’s electricity rates for large industrial customers compare with Quebec?  According to Hydro Quebec energy costs in Montreal at $100 would cost $223 in Toronto and $90 in Winnipeg.
It may be time for Premier Wynne and Minister Chiarelli to do a reality check.  Why didn’t they simply announce that Ontario doesn’t need more electricity production from wind, solar and nuclear “due to our comfortable surplus position” instead of the fallacy that we need more wind?
We certainly don’t need electricity generation that will complete the process of making Ontario the most expensive place to operate energy intensive industry in all of North America.  Stop the spin, stop the fallacy that wind can replace nuclear!
Parker Gallant,
October 21, 2013

Parker Gallant: are Ontario’s electricity bills a regressive tax?

07 Monday Oct 2013

Posted by in Ottawa, Renewable energy, Wind power

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On September 10, 2013, when the temperature hit 34 degrees in Toronto, demand for electricity in Ontario peaked at 8 PM when we were consuming 22,417 megawatts (MW) of power.  At that point according to the Adequacy Report from the IESO, we still had excess capacity−8,437 MW in fact, or enough to power over seven million average Ontario homes.

So the question becomes, if we have power to spare, why do we continue to add expensive sources of power generation like wind and solar to the electricity grid?   Surely the addition of that expensive generation that must be backed up will do nothing more than drive electricity prices up.
Has our electricity system turned into nothing more than a form of wealth transfer or, perhaps, a regressive tax?   The latter is defined as: “A tax that takes a larger percentage from low-income people than from high-income people. A regressive tax is generally a tax that is applied uniformly. This means that it hits lower-income individuals harder.”
As it turns out, the management of our electricity system by the Liberal government during the past 10 years has been both.   Consider the following points and see if any of them were meant to keep our electricity prices competitive with other markets, and that might have helped to create jobs in Ontario. Job creation may have resulted in tax revenue that could have been use to reduce our deficit, improve health care, built better transit, or provide better government services.
Reality in Ontario today
Here is what ratepayers must accept:
§     Paying for smart meters and resulting time-of-use pricing–we eat supper after 7 PM and do our laundry in the middle of the night
§     Paying to replace smart meters because they “don’t communicate”
§     Paying for the development of the “smart grid” which turns out to be not so smart.
§     Subsidizing very large energy consumers by picking up a chunk ($200/400 million) of what they would have to pay if they were a household, just to keep remaining manufacturing jobs
§     Paying huge Net Revenue payments to gas plant electricity generators for sitting idle
§     Paying wind generators to not produce electricity
§     Paying solar generators to not produce electricity
§     Paying to erect meteorological stations to measure how much wind generators might have produced so that we can pay them for not producing
§     Paying for “steaming off” perfectly clean nuclear power from Bruce Power
§     Paying for the Ontario Power Authority to run ads on TV, radio and the newspapers to tell us to conserve electricity, racking up average annual spending of $300 million
§     Paying for costs of operating the Ontario Power Authority, which we were told was a temporary long-term planning agency
§     Paying to get the local distribution company to pick up old refrigerators and being told it’s free
§     Paying to move two gas generation plants at a cost of about $1 billion
§     Paying to have the school boards in Toronto and elsewhere put solar panels on their roofs so they could generate money to fix some of the roofs
§     Paying for grants to people that can afford to purchase new expensive electric vehicles (EVs)
§     Paying to put in charging stations for those EVs that use the streets but don’t pay gas taxes
§     Paying for someone else to use coupons to purchase CFL or LED light bulbs
§     Paying for grants to small and medium sized companies to retrofit their lighting systems
§     Paying for expensive electricity generated by solar panels placed on your local municipally owned arena
§     Paying for grants so your municipality can exchange incandescent and halogen street lights to LED lights
§     Paying your local distribution company extra money each year because their revenue deteriorated because you conserved electricity, so they asked for and got a rate increase blessed by the Ontario Energy Board
§     Paying to connect wind and solar generators to the transmission system run by Hydro One, a wholly owned provincial monopoly
§     Paying the cost of electricity produced by your neighbour for those solar panels on his roof for which he gets 80 cents a kilowatt hour
§     Paying for the costs of solar power produced by corporations like Loblaws, Canadian Tire,  IKEA, etc., which they sell into the electricity grid at 70 cents a kilowatt hour, but buy the power they need at the same (or lower) price that you pay
§     Paying forever for “residual stranded debt” that should have been paid off 5 years ago.
§     Paying for the sale of surplus electricity to New York, Michigan, etc. at a price 75/85% below its cost
§     Paying HST on our electricity bills which automatically added 7% to its cost and generates well in excess of $1 billion for the province’s coffers
Now look over these 28 points and think about which represent “wealth transfers” and which represent a “regressive tax.”   Review them again and pick out any that added cost-effective new generation.  Hint: you will probably have trouble finding the latter!
Ontario’s legacy
Energy Minister Chiarelli recently bragged about the reputed $35 billion in new investment attracted to the province by the Green Energy and Green Economy Act and the 31,000 jobs that it supposedly created. Those 31,000 jobs (most are relatively short term construction jobs) will cost the ratepayers of the province over $3 million each.
What Minister Chiarelli didn’t say was that the $35-billion investment will cost ratepayers well over $100/120 billion by the time those 20-year contracts have ended, and most of that will be extracted from the pockets of many Ontarians who cannot afford the “regressive tax” it has become. Many are discovering they can’t afford to turn their lights on for fear of being unable to buy groceries.
What a legacy for the McGuinty/Wynne team.
Parker Gallant,
October 3, 2013
The opinions expressed here are those of the author and not necessarily Wind Concerns Ontario.