I am lucky to have Parker Gallant to push data summaries to – it is saving me a lot of writing lately!
One thing I’ll add: last Wednesday the Hourly Ontario Energy Price (HOEP) hit its 3rd highest level ever ($1711.03/MWh, or $1.71/kWh). The records may be altered as the IESO often reviews, and sometimes reduces, these price events – this one may explain their recent inability to produce daily reports.
The Ontario Energy Board has a Market Surveillance Panel which investigates price spikes above $200/MWh.
With a nuclear reactor shut down during the weekend of surplus still offline, hour 22 yesterday saw the HOEP spike to $281.25.
Despite April having plenty of supply, and very low demand, last night’s was the 5th $200+/MWh hour of the month, which is a record for April since market opening.
The inability to produce reports may not be the system operator’s most significant challenge.
Count the eggs! $50 million plus, lost in just 3 days!
The nice weather on Easter weekend in Ontario disguised the fact that April 14th, 15th and 16th were really bad days for electricity customers.
Scott Luft’s daily reports detailed the bad news, even before the Independent Electricity System Operator or IESO got out their daily summary for April 12th. Some of the information in Scott’s reports are estimates, but they have always proven to be on the conservative side. These three reports paint a disturbing picture of what’s going on, and how badly the Ontario government is mismanaging the electricity file.
Here are a few of the events that our Energy Minister Glenn Thibeault and Premier Wynne should find embarrassing. They also confirm what many of us have been telling them for several years.
I thought, presumably as most do when seeing a graphic such as this, I should reproduce this work, and extend it to the present time. Not being overly ambitious, I simply use Consumer Price Index data (from CANSIM Table 326-0020), so my graphics will omit data from industrial entities; not being without curiousity I also grabbed data for average annual residential electricity prices (from the U.S. Energy Information Administration (EIA) site).
A little math to reset the base years that will equal 100% and:
It’s not been a good 3 decades for Ontario electricity consumers.
The Bank of Canada’s inflation calculator indicates 8 2005 cents equate to 9.6 2016 cents.
In 2016, Ontario announced new Large Renewable Procurement (LRP) contracts at 8.6 cents/kWh
5 wind contracts totalling 299.5 MW, with a weighted average price of $85.94/MW…
Comparing the cost of industrial wind turbines in Ontario by the procurement cited in the 2005 report, and the one run by the IESO in 2016, there has been little change in price.
In between these two procurements, over a decade apart, prices soared. There are no consumer benefits from the feed-in tariff mechanisms, introduced after the passage of the Green Energy Act. Between the start of 2009 and the end of 2012 the government, through the Ontario Power Authority, contracted about 4,400 megawatts of industrial wind turbine capacity at rates around $135/MWh. The increase in rates above those shown in 2005, $40/MWh (4 cents/kWh), would add about $500 million a year to Ontario’s electricity costs for the 20-year terms of the contracts.
Ten billion dollars is not the full-term cost of the contracts, only the incremental cost of the feed-in tariff mechanism employed – and/or the rank political culture that employed it.Read More »
written by Gary Mooney, and reproduced here with permission.
I contacted the Ministry of Energy by phone to ask if 20-year electricity generation contracts – e.g. wind and solar — were going to be extended to match the government’s new 30-year amortization period for capital expenditures.
The answer that I got back was:
* There will be no negotiations to extend contracts at this time.
* But generators will be offered the opportunity to continue producing electricity beyond the 20-year point, at the market price (or a negotiated price, not sure which was mentioned).
This is consistent with Minister Thibeault’s comment, in justifying a longer amortization period, that wind turbines have a useful lifetime of 30 years.
The idea of an extension of wind contracts will be a major concern to those living with turbines, as they have been expecting that the problem will go away after 20 years. And worse, if there are no negotiations now, these folks will have to live with uncertainty for anywhere from 10 years (the earliest contracts) to 20 years.
To make an extension of the amortization period work, the province needs continued power generation over the whole period out to thirty years, either:
I started receiving messages last night on a sorta report by Environmental Defence (ED), and as I am still receiving them, I thought I’d write some thoughts – if only to simply copy a link when again asked for my thoughts.
Here is how ED’s Keith Brooks begins a blog post on their latest “work”:
Electricity prices in Ontario have risen in recent years, putting the squeeze on some Ontario residents and businesses. There are many reasons for the increase in electricity prices and renewable energy is one of them. However, the role of renewables in diving up electricity bills has been vastly exaggerated.
I wrote on a poor 2014 ED work and noted their new backgrounder contains a graphic with the same information as Figure 1 of their 2014 work. Without acknowledging any level of competency in the compilation of data for either ED graphic, here’s the elements of residential electricity bills as they report them for 2016 and 2014:
Perhaps the “role of renewables in driving up electricity bills” is perceived as being significant because:
“Atlantic Power Corp. has announced it is idling plants in North Bay, Kapuskasing and Nipigon but will be paid until the end of its contract on Dec. 31, 2017, while Northland Power’s Iroquois Falls facility says it will produce less power until April.
TransAlta Corp. has stated that its new contract provides a fixed monthly payment until Dec. 31, 2018, with “no delivery obligations.”…
The IESO will not provide information on how much the NUGs are paid, but told the Toronto Sun that the replacement NUG contracts will generate “ratepayer savings of up to $53 million over the next two years.”
Should numbers be disclosed, the value of the IESO’s employees in “conservation” roles could be established. The difference between the cost of not having supply from the four contracts redone/bought-out for 2017 and having that generation should benchmark the price of conservation to evaluate spending in that area.”
So now that we have a number of “up to” $53 million, I’ll use that to estimate the value of the IESO’s conservation spending.Read More »
Following a recent post in which I displayed the growth in hours the market failed to produce a positive price for electricity I was advised a much better indication of Ontario having too much committed supply is when the price exceeds the taxes on hydroelectric generators. I’ve since performed some research, and analysis, that do show this is a better methodology for estimating periods of surplus baseload generation (SBG).
The Ontario Ministry of Finance shows two charges levied on hydro-electric (hdyro) generators: property taxes and a water rental charge of 9.5% of “a stations’s gross revenue from annual generation”. The property tax escalates with the production level: 2.5% (of revenues) on the first 50 gigawatt-hours (GWh), 4.5% on the next 350 GWh, 6% on the next 300 GWh, and 26.5% on all annual generation above 700 GWh. This makes the top rate 36% (combining water rental and property tax).
OPG’s hydro generators have a number of rates, but all are between $40 per megawatt-hour (MWh), and $45/MWh. For simplicity, I picked $15/MWh (36% of $41.67/MWh) to query IESO data in order to estimate the percentage of hours Ontario has experienced surplus baseload generation.Read More »