Buffalo’s Pal: Ontario’s ratepayers

(Re-posted from Wind Concerns Ontario http://www.windconcernsontario.ca )

The September 2015 summary report from IESO demonstrates that once again, Ontario ratepayers picked up additional costs for exporting surplus power. The September results, gleaned from examination of the “monthly summary” indicates it cost $100 million to subsidize Ontario-generated electricity exports to New York, Michigan, etc., in September.

That totals $1.5 billion for the first nine months of 2015. The 16.2 terawatts exported in those nine months could have supplied power to 1.7 million average Ontario households for the full year.

What’s really annoying is finding out that our neighbours in Buffalo are engaged in an industry attraction effort that is meeting with some success. A recent article about the NY government subsidized building ($750 million) of SolarCity’s “gigafactory” in Buffalo to manufacture solar panels indicates they are on the comeback trail and attracting investments.  One of the reasons is because they are able to offer a “huge benefit: the electricity rate for manufacturers averages just 4.79 cents per kilowatt-hour, which is possible because of cheap hydroelectric power generated from Niagara Falls.”

Because some of our power generated from Niagara Falls^1. and other sources in September was sold as surplus power for just 3.19 cents per kilowatt-hour (kWh), we’re actually helping Buffalo offer those attractive electricity rates.

This fact should remind all Ontarians of the promises made to us by the Ontario Liberal government when it enacted Bill 150, the Green Energy and Green Economy Act (GEA).  The April 8, 2009 Standing Committee on General Government transcript on Bill 150, with the then Ontario Energy Minister George Smitherman on the stand, elicited this response to a question posed about the effects of the GEA on electricity prices:

“We anticipate about 1% per year of additional rate increase associated with the bill’s implementation over the next 15 years. Our estimate of cost increases is based upon the way that we actually amortize costs in the energy sector.”

Let’s look back to September 2009, the year the Legislature passed the GEA, when Ontario demand for electricity was 10,932,000 megawatt hours (MWh) and compare to September 2015 when Ontario demand was slightly higher (+3.8%), reaching 11,362,000 MWh. IESO’s monthly summary for September 2009 indicates the “average weighted cost” (all-in) to consumers was $82.73/MWh whereas the “average weighted cost” for September 2015 was $125.35/MWh.

That translates to an increase of $42.62/MWh or 4.26 cents per kilowatt-hour (kWh), and cost ratepayers $453 million extra for just one month.  Looking at this in a slightly different way, the extra MWh we consumed for September 2015 versus 2009 came at a cost of $1,196 each or $11.96 per kWh, had generation and delivery costs remained the same through those six years.

It is clear costs to ratepayers have already become a multiple of the Smitherman promise … and we still have nine years left in his forecast.

The Auditor General pointed out the Energy Ministry failed to complete a cost/benefit study before implementing the GEA. There was never any acknowledgement or accounting for the intermittent nature of renewable energy, the fact power is produced when it’s not needed, and the need for renewables to be backed up with other generation (along with transmission line costs to bring it to where it’s needed) was apparently never considered.

And now, in spite of the evidence of the past six years, the march continues to add more wind and solar to the Ontario grid, which means Buffalo and other jurisdictions will reap the rewards.

As Buffalo adds manufacturing jobs, Ontario is shedding them. Ontario’s electricity ratepayers are wondering, what will the next nine years bring?

© Parker Gallant, November 10, 2015

1.  Thanks to Scott Luft for his analysis on the Niagara Falls waste.