Conservation: wasted in Ontario

If you follow my work you already knew of natural gas-fired power plants having their contracts essentially bought out. Antonella Artuso has provided the opportunity to read the story presented with the skill of a professional journalist – and she uncovered an estimate on the savings provided:

“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.

Included in my post on the same topic;

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.

Over the past 5 years my tracking shows the 5 power plants with re-worked contracts (or buy-outs) produced, on average 2.5 million megwatt-hours (MWh) a year. Two of the contracts would have ended with 2017 (Kapuskasing and North Bay), and in the second year the remaining sites would have produced approximately 1.9 million MWh (based on the average annual production since 2011).

$53 million dollars divided by 4.4 million megawatt-hours  yields an average cost of $12/MWh – the equivalent of 1.2 cents per kilowatt-hour.

My claim is spending to reduce consumption that occurs while the IESO saves only 1.2 cents/kWh by avoiding generation is not simply a waste of program spending, but a waste of spending on the personnel employed to spend on conservation programming.

From the IESO’s conservation page:

In 2015, Ontarians achieved 1.3 TWh of energy savings, representing 15 per cent of the total 8.7 TWh target to be achieved by 2020 through the Save on Energy and Industrial Accelerator Programs.  These programs were delivered at a cost of under four cents per kWh, providing the most cost-effective resource to meet the province’s long-term energy needs, as well as opportunities for consumers to take advantage of the many benefits of energy efficiency.

“cost-effective”?

Perhaps from the perspective of those paid to deliver conservation properties getting spiffy baubles for themselves, but it’s a scandalous waste for the average consumer.

A lot of Ontario’s electricity system, and the multitude on numbers and units, can be confusing, but “under four” (more precisely 3.537 – see page 7),  is more than 1.2. In this case the metrics are cents/kWh: 3.537 is the cost of reducing demand, and 1.2 is the cost of reducing production.

I refuse to believe this is too complicated for anybody who deserves remuneration.

and yet…

In between my article on buying out generators (essentially) and Antonella Artuso’s, the IESO offered this update on a “Conservation Framework…Review”:

… the IESO has appointed the members of the Conservation Framework: Mid-Term Review Advisory Group based on the 30 applications received. The Mid-Term Review Advisory Group, made up of a variety of representatives, will provide support to the broader engagement and tackle more detailed discussions. The first meeting of the Advisory Group is being targeted for later in February, where members will have an opportunity to provide input to the scope of this initiative.

Here are the members:

  • Housing Services Corp. -Parry, Myfanwy
  • LaFarge -Nuvoloni, Walter
  • Loblaw -Schembri, Mark
  • University Health Network -Rubinstein, Ed
  • CBRE Limited -Abraha, Amha

I encourage readers to write these companies and ask if they consider 4 less than 1 – and avoid using their services until a satisfactory answer is received.

Local distribution companies “advising” on further waste are:

  • Customer First Inc. -Barker, Chris
  • Entegrus Powerlines Inc. -Rodd, Margaret
  • Hydro One -Katsuras, George
  • PowerStream Inc. -Bond, Raegan
  • Toronto Hydro-Electric System -Marchant, Michael

CLEAResult Canada Inc. and Nest Labs are electricity service providers/consultants with employees advising on more waste, and the IESO Chair of the group is Katherine Sparkes.


 

One might conclude that in 2015 the IESO spent about $46 million if 1.3 million megawatt-hours were saved at an average cost of 35.37 per megawatt-hour, but that would be wrong. $345.5 million was spent. The rate published by the IESO should be after accounting for the reductions in future years that will be achieved due to that spending.

In 2015 22.6 million megawatt-hours were exported, with an average value of  $21/MWh estimated using the Hourly Ontario Energy Price (HOEP), and another 4.8 million MWh of contracted supply curtailed altogether. In 2016 the revenues on exports was far less (estimated at $13.68/MWh using the same process), and curtailment much higher.

This is, in part, reflective of the fact conservation spending in prior years had a far lower value than cost.

The waste on conservation in recent years far exceeds the alleged billion dollar boondoggle with moving Mississauga and Oakville gas-fired power plants far away from Mississauga and Oakville – and the conservation waste continues today.

If the IESO is serious about contributing to lower electricity costs in Ontario, they have obvious opportunities for cutting internal costs.

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