Lower Mattagami could become a $10 billion boondoggle

Today the government of Canada approved a pipeline, which some see as contrasting with it declaring a climate emergency yesterday. To assuage the concern the government has promised to do blindingly good things with profits from the pipeline, including promising “every dollar the federal government earns from this project will be invested in Canada’s clean energy transition,” and launching, “the next phase of engagement with Indigenous groups on ways they could share in the benefits of the expansion, including through equity ownership or revenue sharing.”

When the Prime Minister was elected he brought two veterans of Ontario’s Liberal government to Ottawa as his top advisors, so this seems an opportune time to examine one “clean energy” initiative geared to invest in Aboriginal communities.

The $2.6 billion expansion on hydroelectric generating stations on the Lower Mattagami river.

Ontario’s nominally public generator says of a hydro project completed for 2015:

The $2.6 billion Lower Mattagami Project has allowed Ontario Power Generation [OPG] to produce more clean, renewable electricity from new generating units.

I checked – all the way back to the construction of the first of 3 generating stations OPG built on the Lower Mattagami. A fourth site, Smoky, already existed but it was a private generator until 1991, so I had to estimate that data. If the completed project has allowed OPG to to more, OPG has found other reasons not to do so.

view graphic in Google Sheets

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Niagara Fails

A quick post with commentary on a graphic.

NY_ON_comparable hydro gen YTD

I’ve been writing little but learning more recently. I’ve written multiple times on the inability of Ontario to fully utilize its water rights on the Niagara river, so that’s some data that I looked to learn some new data connections and summary techniques. Having advanced to where I can easily update to the latest available data I thought I’d share this view summarizing it – and offer some brief comments explaining the significance.

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OPG’s 2017 results grate

Yesterday Ontario Power Generation released their 2017 Financial Results:

Ontario Power Generation Inc. (OPG or Company) today reported net income attributable to the Shareholder of $860 million for 2017, compared to $436 million in 2016.

That must be considered a great number in the context of the income history at OPG as it’s the highest they’ve ever accomplished. The apparently excellent results may leave some wondering what critics commenting on the sector have been braying on about. I, a critic, have reviewed the results and found some things to bray about.

OPG annual financial results

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Spilling: Ontario’s water taxes and surplus baseload generation

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 »