Tag Archives: Robert Lyman

Ottawa’s Energy Evolution plan will hit you hard—here’s how

26 Tuesday Jul 2022

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The city’s climate change action plan has no cost-benefit analysis, but plenty of costs (and prohibitions) for citizens

If Ottawa goes for variable renewable energy such as wind turbines, electricity bills may double [Shutterstock photo]

July 26, 2022


You can be forgiven if you never heard of Ottawa’s Energy Evolution climate change action plan. It got passed by the city’s environmental protection committee after a few presentations to select groups* and a couple of questions on “Engage Ottawa”.

That happened in August 2020 and approval by council in October.

You probably had other things on your mind.

Like the pandemic. And whether kids were going back to school, or you were going back to work. Whether there would be a Thanksgiving, or Christmas.

That’s when Ottawa City staff decided to put this in motion, a $57-billion plan to make a “better future” for the City, after declaring a climate emergency.

The goals are to achieve a 100-percent reduction in emissions by 2050, and 43 percent by 2025. Here’s how:

All fossil fuels have to be phased out

Heating and transportation systems have to be fully electrified

Waste heat utilization and renewable natural gas

Sufficient renewable electricity (mostly wind** and solar) to meet demand and offset emissions on the provincial grid***

Price tag? Billions. Who pays? YOU

At the time this was presented to council, two Councillors had comments. Carol Anne Meehan said the $57B budget was equal to the budget for 14 cities. “How are we going to pay for this?” she asked.

Councillor Allan Hubley said, “We’re spending $57 billion? This is news.”

“This is NEWS”????

With all the “engagement” staff is supposed to have done, some councillors were not fully aware of the price tag.

People are also unaware of the prescriptions in Energy Evolution, some of which are pretty drastic.

Bye-bye gas stove. And fireplace. Hello higher bills

Ottawa energy economist Robert Lyman has put together a list of some of the actions that lie ahead in the name of climate change.

Did you know that Ottawa plans to spend $57 billion by 2050, or $57,000 per person now residing in the city, on its climate plan?

Electricity

Did you know that Ottawa wants to install 36 square kilometres of photovoltaic panels on roofs?

Did you know that Ottawa plans to spend $4 billion on industrial-scale wind turbines within the city limits by 2050? And that they hope to “profit” by $4B (not Ontario’s experience, and probably via your electricity bill)?

Did you know that Ottawa plans to eliminate the secure backup electricity generating plants that now use natural gas and replace them with untested storage systems that could cost $383 million?

Did you know that Ottawa plans to ban sales of natural gas furnaces, fireplaces and appliances (even stoves that restaurants use)?

Did you know that Ottawa’s plans will double or triple the cost of electricity over the few years?

Transportation

Did you know that Ottawa plans to eliminate parking in the downtown core and in the Byward Market within eight years?

Did you know Ottawa wants to charge you $20 just to drive downtown? For a doctor’s appointment or to dine out?

Did you know that Ottawa plans to restrict new car purchases so that 90% are electric vehicles by 2030, regardless of cost?

Did you know that Ottawa plans to regulate all commercial vehicles (heavy trucks, delivery vans, taxis, car and truck rental, etc.) so that at least 40% of them are all-electric within eight years?

Did you know that Ottawa will spend almost $1 billion on all-electric buses over the next five years, even though no studies have been done of how well they operate in winter conditions?

Did you know that Ottawa expects the percentage of residents here commuting by walking or cycling in 2030 to be higher than in Victoria, British Columbia, even in winter?

Housing/building

Did you know that Ottawa intends to reduce requirements of residential developers to provide parking spaces for the houses and apartments they build?

Did you know that Ottawa is considering introducing an Ottawa vehicle registration fee of $118 per vehicle per year, on top of what the province charges?

Did you know that Ottawa is considering increasing the tax on all private parking lots by 24%?

Did you know that Ottawa plans to require most houses to be retrofitted, even though the cost could be $150,000 per unit?

Did you know that Ottawa is considering increasing development charges by $234 million per year to pay for its climate measures?

Did you know that Ottawa is considering introducing a new Land Transfer Tax raising $130 million per year to pay for its climate measures?


After all this is done, Mr Lyman says, actions by the City of Ottawa would only reduce annual global emissions by 0.014%, an amount too small to be measured, and have zero impact on global temperatures or weather patterns.

Former head of the Canadian Federation of Independent Business Catherine Swift recently described Energy Evolution as a “fantasy strategy.” That may be but the fact is work is being done on it NOW, and money—your money—is being spent.

The municipal election is coming. Ask candidates now if they know about Energy Evolution and whether they support it. As a tax-paying citizen, you deserve an answer.

ottawawindconcerns@gmail.com

Ottawa Wind Concerns is an incorporated, not-for-profit group, with a membership list of several hundred residents of rural Ottawa communities and other stakeholders. We are a community group member of the Wind Concerns Ontario coalition.Our goal: a safe environment…for everyone

NOTES

*Check the list of “partners” on pages ix-x. Many are organizations that stand to profit from Energy Evolution demands. The list includes the Canadian Renewable Energy Association or CanREA, formerly the Canadian Wind Energy Association or CanWEA—their goal is to advance the interests of wind and solar power developers, not fix the environment.

**Several councillors denied this, despite staff being very clear.

***This is a peevish political statement as well as being inaccurate. Ontario’s power grid is more than 90-percent emissions-free. Also, more intermittent wind power means MORE natural gas as backup. If you actually want electricity, that is.

Read the Energy Evolution document here.

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The truth about ‘saving’ electricity

12 Sunday Jul 2015

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Ottawa-based energy economist Robert Lyman has taken a critical eye to advertisements on energy conservation

This week, people living in Ottawa are being bombarded with radio and newspaper advertisements proclaiming that the electrical energy they “saved” over the past six years was enough to “power our arenas”.

How about some “truth in advertising”?

There is a big difference between reducing your energy use and “saving” money. When a residential householder in Ontario reduces electricity use, that may temporarily reduce his or her electricity bill, but it does not reduce the costs that are incurred by the various companies that are involved in generating, transmitting and distributing electricity. All of those companies are government-owned and regulated utilities. Unlike private companies that, faced with reduced demand for their services, have to cut back production and costs, the electrical utilities are completely protected by their regulated rate structures. When sales go down, they simply apply to the regulator (the Ontario Energy Board) to raise their rates per unit of sale, denominated in kilowatts per hour (kWh). So, the price for the consumer just goes up after the next rate hearing.

But it gets worse, far worse.

When the Ontario government advertises about “saving energy,” it is not talking about saving consumers money. It is talking about— in theory— reducing the costs associated with generating and transporting electrical energy to consumers. Reducing demand usually refers to two things: reducing the overall average use of electricity and switching the use of electricity from the peak periods of day and season to other times. Reducing the average use over time reduces the amount of generating capacity of all kinds that the electrical utilities need to build. Reducing the peak uses can, in theory, cut the amount of peaking capacity (electrical energy generation capacity that stands idle to be used when needed) that has to be built.

So, in theory, Ontario wants us all to use less electricity so that its utilities won’t have to build more expensive generating plants and transmissions lines. This is where things start to get bizarre. You see, back in 2002, people were justifiably worried that Ontario would not have enough generating capacity. So the province started to add more, and more, and more. In fact, Ontario has added more than 12,400 megawatts (MW) of generating capacity since 2002. As of March 2015, the Independent Electricity Systems Operator (IESO) had 18,458 MW of in-service generating capacity, not counting the significant amount of solar powered capacity that is contracted by the several distribution utilities in the province. The Ontario Auditor General, in his December, 2014 report, found that, while IESO is required to maintain an operating reserve of between 1,300 and 1,600 MW for contingencies, since 2009 the available surplus has been between 4,000 and 5,900 MW.

Meanwhile, IESO is busily contracting for immense amounts of additional capacity, mostly to meet the dictates of the 2009 Green Energy and Green Economy Act. In 2015 alone, newly contracted supply of renewable energy sources (wind, solar and biomass) totaled 1,700 MW, raising the amount of IESO contracted (but not necessarily built) supply to 21,000 MW. This contracted supply is on a path to reach 23,000 MW by the 2018–2022 period. Demand continues to fall every year.

With massive and costly oversupply and a legislated mandate to continue contracting for more, what does IESO do? Does it cut back on its “conserve, conserve, conserve” campaign? Why no, it ramps it up. The present focus is on two strategies — programs and pricing. The programs include plenty of advertising and financial inducements to get people to use less electricity, programs that cost hundreds of millions of dollars and are charged to — you guessed it — Ontario electricity ratepayers.

The pricing strategy is delivered though the use of “smart meters” and time-of-use pricing is to gouge ratepayers until they yell “uncle.” The rate for on-peak service went up on May 1, 2015 to 16.1 cents per kWh.

Despite all this activity, the surplus continues to grow. So the power is exported. In 2014, Ontario’s exports totaled 19.1 terawatt hours (TWh), sold at a loss of $1.4 billion. If current trends this year continue, export sales will reach an all-time high and an all-time maximum loss of about $2 billion. You already know who will pay for that.

In effect, every kWh saved is another kWh exported and more money lost. Keep that in mind when you hear the ads.

Robert Lyman

Ottawa

Economist: top 10 reasons why Ontario carbon tax is a bad idea

16 Thursday Apr 2015

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Here, from energy economist Robert Lyman, a discussion of the recent announcement of a “cap and trade” arrangement for Ontario.

Various politicians and academics in Canada have recently called for the introduction of a carbon tax as a means of stimulating a reduction in greenhouses gas emissions. This is welcome news to provincial governments like that of Kathleen Wynne in Ontario that are desperate for new sources of funds. The central arguments for a carbon tax, in terms of economic theory, are that such a tax would create a price disincentive affecting the use of all fossil fuels sources of energy (i.e., oil products, coal, and natural gas) and that it would be more even-handed and economically efficient than the current complex system of subsidies, incentives, and regulatory mandates that are now used in almost every sector of the economy to discourage fossil fuel consumption and emissions. 

British Columbia, it is claimed, has already found success with a carbon tax of about seven cents per liter on gasoline. Allegedly, this caused gasoline consumption in the province to drop from 2008 to 2012, even as British Columbia economic performance overall was one of the best in Canada. 

Such arguments, in my view, are based on wishful thinking and poor understanding of the institutional context within which carbon taxes have been implemented. Here are ten reasons why imposition of a carbon tax in Ontario would be a very bad idea.

 

Read the full article here: THE TOP TEN REASONS WHY A CARBON TAX IS A BAD IDEA (long version)

 

 

Does conserving power in Ontario save us money? (No.)

16 Friday Jan 2015

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Here is a precis of an analysis of the Ontario government’s conservation efforts prepared by local economist Robert Lyman, based on research by Parker Gallant.

Here are the numbers.

In 2009, local electricity distribution companies in Ontario provided 124,206,032 megawatt-hours (MWh) for 4,748,577 households, a monthly average of 2,180 kilowatt hours (kWh).

In 2013, they provided 125,306,563 MWh for 4,944,488 households, a monthly average of 2,112 kWh. Average consumption fell by 3.3%, or 875 kilowatts annually between 2009 and 2013. For the average home, that is a monthly reduction from 800 kWh to 774 kWh (317 kWh per year).

In 2009, the cost of a kWh of electricity delivered averaged 6.15 cents and the “commodity” cost (just the electricity portion) for the full year was $590. By reducing annual consumption by 317 kWh, the savings should have been $19.50.

In 2013, the commodity cost had risen to 9.2 cents per kWh, or $854 per year. Not only did the $19.50 savings disappear, but also, the average household paid an additional $264 annually. That represents an additional cost to all ratepayers in the province of $1.2 billion annually. That does not include the $2 billion cost of installing smart meters.

The average household would have had to reduce its annual consumption by 33%, or 3,200 kWh, in order to have simply matched its cost for electricity consumption in 2009.

The Independent Electricity Systems Operator (IESO) is required to maintain an operating reserve of generating capacity of between 1,300 and 1,600 MW for contingencies. Since 2009 the available surplus has been between 4,000 MW and 5,900 MW. The IESO expects these surpluses will continue until at least the later part of this decade. Thus, while the official rationale for smart meters, time-of-use pricing and “conservation” programs is to avoid the addition of expensive new generation capacity, the province has continued to add that capacity even in the face of a substantial surplus.

What’s next? Current Energy Minister Bob Chiarelli has set new targets for both reductions in peak demand and “conservation” in his long-term energy plan. The target set for reducing peak demand is 10% (2,400 MW by 2025) and for “conservation” is 16% (30 TWh) by 2032. These will be combined with continuing large additions in industrial wind turbine and solar power generators at substantial premiums above most current generation. As a result, despite the lower consumption, ratepayers will be expected to dig deeper into their pockets.

Economist summary of the A G report on “smart meters”: astounding incompetence

31 Wednesday Dec 2014

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Ottawa-based economist Robert Lyman, who specializes in energy issues, has provided us with a summary of the highlights of the recently released Auditor General report, on the energy sector in Ontario. The government’s handling of this portfolio is astounding for its mismanagement, and wasted taxpayer and ratepayer dollars.

Read the summary from Mr Lyman Here: Ontario Auditor General Report on the Smart Metering Initiative

Ontario electricity policies hamper economic growth: Fraser Institute

06 Monday Oct 2014

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Here a commentary from Ottawa-based energy economist, Robert Lyman:

In May 2014, the Fraser Institute, based in British Columbia, published a report authored by Professor Ross McKitrick and PhD candidate Elmira Aliakbari of the University of Guelph. The report, Energy Abundance and Economic Growth, endeavoured to answer an important question in economic research: does economic growth cause an increase in energy consumption or does an increase in energy availability cause an increase in economic activity, or both?

The question has important implications for government policy. Suppose GDP (i.e., national income) growth causes increased energy consumption, but is not dependent on it. In this view, energy consumption is like a luxury good (like jewelry), the consumption of which arises from increased wealth. If policy makers wanted to, they could restrict energy consumption without impinging on future economic and employment growth. The alternative view is that energy is a limiting factor (or essential input) to growth. In that framework, if energy consumption is constrained by policy, future growth will also be constrained, raising the economic costs of such policies. If both directions of causality exist (i.e., if economic growth causes increases in energy consumption and increases in the availability, and use of energy causes economic growth), it still implies that restrictions on energy availability or increases in energy prices will have negative effects on future growth.

The main contribution of the report, in terms of economic theory, is that it shows how new statistical methods have been developed that allow for investigation of whether the relationships between economic growth and growth in energy use are simply correlated or are causal in nature. The theoretical and methodological discussion in the report is quite complex, even for a trained economist, which is probably why the report received very little public attention. The clear conclusion of the analysis, however, is that growth and energy either jointly influence each other, or that the influence is one-way from energy to GDP. Further, of all the OECD countries studied, Canada shows the most consistent evidence on this, in that studies under a variety of methods and time periods have regularly found evidence that energy is a limiting factor in Canadian economic growth.

In other words, real per-capita income in Canada is definitely constrained by policies that restrict energy availability and/or increase energy costs, and growth in energy abundance leads to growth in Canadian GDP per capita.

The report concludes with a reference to Ontario’s electricity policies.

“These considerations are important to keep in mind as policymakers consider initiatives (especially related to renewable energy mandates, biofuels requirements, and so forth) that explicitly limit energy availability. Jurisdictions such as Ontario have argued that such policies are consistent with their overall strategy to promote economic growth. In other words, they assert that forcing investment in wind and solar generation systems – while making electricity more expensive overall – will contribute to macro-economic growth. The evidence points in the opposite direction. Policies that engineer energy scarcity are likely to lead to negative effects on future GDP growth.”

One can read the entire Fraser Institute report at:

http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/energy-abundance-and-economic-growth.pdf

Robert Lyman

Ottawa

Citizen opposition to wind farms results in ratepayer savings

25 Monday Aug 2014

Posted by in Ottawa, Renewable energy, Wind power

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Here is a comment from Ottawa economist Robert Lyman, who is reflecting on a recent post by energy blogger Scott Luft.

Luft believes that citizen opposition to giant wind power projects has resulted in substantial savings for Ontario.

I thought I might extract a few of the more salient points that would be of interest to Wind Concerns Ontario.
The article is intended as a status report on industrial wind in Ontario, measured three years after the last batch of feed-in tariff contracts were awarded.  Three years ago, the contracted capacity from wind generators increased from around 4000 MW to around 5800 MW, according to the Ontario Power Authority (OPA). The OPA showed 1958 MW “in service” in 2011.
The Independent Electricity System Operator (IESO), in contrast, currently reports that “installed generation capacity” for wind is 1824 MW, well below the OPA’s figure for 30 months ago. The discrepancy between the two agencies is unexplained. Scott Luft’s interpretation is that actual generation from wind sites has been only about 12.5 % of the grid-connected wind sites. He also estimates, based on OPA data, that Ontario currently has about 2800 MW of generation capacity from industrial wind turbine generators. This is less than half the capacity that was contracted for three years ago.
He believes that the delays in construction of the contracted capacity is clearly the result of “rural NIMBYism”; in other words, the strong efforts of rural communities to push back against wind developers.
How much has this saved Ontario ratepayers?
The feed-in tariff contracts were to pay $135 per MWh. At 2850 MW, a delay of one year in construction pushes back about $1 billion in contract payments. However, the savings to be realized from wind opposition go further. Contracting, which was planned to go to about 8000 MW of capacity, was curtailed below 6000 MW three years ago, and the 2013 Long Term Energy Plan rolled back wind plans by an additional 1200 MW. The deferral on contracting 2000 MW of wind for three years is worth about $2.5 billion, and cancelling 1200 MW altogether could be worth another $8.5 billion over the 20 years of the contract term.

Ontario’s massive debt: what voters didn’t want to hear

02 Wednesday Jul 2014

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Here from Ottawa economist Robert Lyman, a review of Ontario’s debt situation: it isn’t pretty.

ONTARIO’S DEBT – THE STORY ONTARIO VOTERS REFUSED TO BELIEVE 

Several pundits have commented on the reasons for the major victory by the Liberal Party in the Ontario provincial elections held on June 12. Many have judged that voters were simply unwilling to believe the Progressive Conservative message that fiscal responsibility required reductions in spending, including where necessary reductions in the number of public service positions and programs. Voters said that the debt was not a problem that they wanted to worry about.

Even after the event, it is may be a good idea to examine exactly what the facts are with respect to the financial situation of the provincial government and what this may mean to the people who live in Ontario in future.

  • According to the Ontario Financing Authority, the consolidated provincial debt as of June 14, 2014 is $295.8 billion.
  • The debt has grown significantly over the past generation. In 1990, Ontario’s debt was $38.4 billion. It grew to $115 billion by 1998, and has almost doubled again since then.
  • Ontario has only been able to sustain this increase in debt because of interest rates that are at all-time historic lows. Even so, in 2013-2014, annual debt service costs to the provincial treasury were about $10.6 billion, the fourth largest expenditure item after health, education and social services.
  • The 2014 budget that was defeated projected that debt service costs would rise to $12 billion by 2015-16 and $13.3 billion by 2016-17. This is by far the fastest growing item in the provincial budget, growing twice as fast as the health budget.
  • The Liberals are committed to increasing program spending for at least the next four years. This year the $3 billion increase in program spending will increase the annual deficit to $12.5 billion from $11.3 billion last year. The deficit will be much higher if the Liberals’ projection of a 4 % annual economic growth rate turns out to be too optimistic.
  • There are very few reasons to believe the optimistic growth forecasts. Ontario’s productivity growth lags behind that of the United States, as does business investment. The province’s cost competitiveness has eroded, due to higher taxes and fees and much higher energy costs.
  • In the short term, the debt service cost could be increased further if the various investors’ services downgrade the province’s credit rating. Ontario has $250 billion worth of bonds rated by Moody’s Investor Services. The province’s ability to pay back those bonds, known as the debt-to-revenue ratio, is 237.7 %, the worst rating among all Canadian provinces.

Read the full paper here: ONTARIO’S DEBT

Email us at Ottawawindconcerns@gmail.com

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