I just left a comment on an article at the Globe and Mail with the topic of importing power to Ontario from Labrador- which I’ll post below.
Yesterday the National Post broke a story about Ontario looking to import electricity from Labrador. There are lots of ugly aspects to the tale, and some interesting ones – but it’d require a lot of time to examine a “promise of cheaper, cleaner power [that] is, in effect, nothing more than a distraction, a promise that will never be fulfilled” – as Terence Corcoran aptly describes it.
My comment in the Globe criticized the Minister of Energy’s nonsense spin on saving money by not utilizing the natural gas fueled power plants contracted since the election of the Liberal party in 2003. If you believe Mr. Ciarelli is an honest man, it’s not that he doesn’t understand the system inherited, but that he doesn’t know the system his government created.
An astonishingly innumerate government.
Since 2005 Ontario has contracted natural gas-fired generation plants on net revenue requirement contracts – which mean Ontario ratepayers pay the full operating and financing costs, along with a margin to give the plant operators a return of investment, regardless of plant use. Consequently, the cost of the next unit of gas-fired generation is essentially only the cost of the fuel required to generate it.
Dump all the committed cost into the first MWh generated this way, and it’d cost Ontario ratepayers about $800 million – and two more sites are still to come (the Oakville plant not being built way out in Bath, and the Mississauga plant now being built in Sarnia).
The Union Dawn hub price for natural gas closed at $3.83/mcf (on the 17th), so being conservative in multiplying by 8, that’s $30.64/MWh (megawatt-hour).
Want a be an environmental hero and slap a carbon price on that? How about the $30/tCO2e we hear BC has going?
That’d make the price about$43/MWh
$800 million for the 1st MWh
$43 for all following ( if taxed )
$30 for all following in today’s reality.
Bob wants to cut out the $30 ones while still building on the $800 million cost of the first one.
And that doesn’t include the cost of the two gas-plants to be added, and the oil/gas Lennox plant contracted out to 2022 (just recently) or the Thunder Bay and Atikokan biomass plants likely paid the same way.
I’m not dumb enough to believe a word from Ciarelli, or Wynne, or Murray, but he should come up with a better lie as to why he’s pursuing this. Some twerps might find it credible, but twerps are what got Ontario’s class B consumers a 25% second quarter year-over-year commodity rate increase – which I suspect would be the highest on the planet.
PS: if you’re skeptical but curious, check out the “Hourly Ontario Energy Price (HOEP) Report” for July 20th, as during much of the day natural gas-fired generation was the supply on the margin (setting the price)
Off the top of my head:
- there is unlikely to be any carbon price on natural gas-fired electricity generation, because the “Class A” scheme requires an extremely low Hourly Ontario Energy Price (which gas pricing should often set)
- if transmission was created to surpass Quebec, it would go through the RGGI cap-and-tade jurisdictions … while avoiding Quebec (and California), the jurisdictions Ontario has chosen to join.
- I like many Americans -none of whom would allow a transmission line through their jurisdiction to carry clean power from a foreign country to another part of the foreign country at rates lower than they pay; electricity isn’t cheap in New England
- Ontario entities tasked with examining the possibility of replacing nuclear in Ontario with Quebec imports didn’t bless the idea, but reported the substantial problems.
- yesterday Ontario was, as it often does, exporting natural gas-fired generation into the United States at fuel cost pricing.
If all goes according to the Globe’s scenario, we’ll contract expensively from provinces to our east while running gas fired-power plants we pay for to supply Americans with heavily subsidized gas-fired generation.
Addendum: and furiouserer
Some operational details, with costs attached: Tom Adams and Ed Hollett: Gull Island, dead duck
The Wynne government wants to save money by avoiding using 4 cent/kWh by contracting from a company currently hoping to hit 16 cents/kWh.