The magic of the phantom demand

The Ontario Energy Board’s Market Surveillance Panel (MSP) released a report on December 19th which attracted some attention:

“Over the 11- month period in question, the estimated impact on the HOEP and transmission loss uplift combined could have ranged as high as between $450 million to $560 million, although a simulation accounting for additional potential variables could yield lower estimates.”

Some big numbers, but upon investigating I initially generated a thread on Twitter which concluded, “the impact of this mostly-grey money forensic investigation is an imperceptible lessening of the cost shift from class B to class A consumers.” My position was supported when the system operator (IESO) responded to the MSP report:” IESO analysis shows a net market impact across all customer groups of less than $10 million.”

And that’s sort of the end of that hysteria, but since I looked I can’t shake the feeling something is very wrong with the analysis – from the OEB report to the IESO response and the reporting on what occurred.

New Ontario Government cancels renewable energy contracts

The official news release includes:

TORONTO — Ontario ratepayers will benefit from $790 million in savings thanks to the Government of Ontario’s decision to cancel and wind down 758 renewable energy contracts, Minister of Energy, Northern Development and Mines Greg Rickford announced today…

All of the cancelled projects have not reached project development milestones. Terminating the projects at this early stage will maximize benefits for ratepayers.

Rickford also confirmed that the government intends to introduce a legislative amendment that, if passed, will protect hydro consumers from any costs incurred from the cancellation. Even after all costs are accounted for, ratepayers can expect to benefit from $790 million in savings from this one decision.

I thought a short post is in order as the incoming mainstream media reports are not informative or in any way helpful.

Henvey Inlet isn’t harbouring honesty

A short post to debunk some belligerently dishonest claims regarding Ontario’s most inane electricity/social science project, Henvey Inlet Wind.

Background: Clement/Thibeault $billion negligence: Henvey Inlet Wind

The contract, according to the IESO’s contract list, was signed in June 2011 under the feed-in-tariff (FIT) program that paid $135/MWh, plus up to another $15/MWh as an “Aboriginal Price Adder.” While those contracts were expected to be operational 3-years after the project data, apparently this one is exceptional in ways other than costing $150/MWh (roughly 5 times what new 2019 wind in Alberta will cost).

Here are the claims I’ll rebuke (emphasis added):

Development of wind energy will help Ontario in meeting its goal of phasing out coal-fired power generation.

The windfarm is expected to displace 851,000t of carbon dioxide emissions a year, which is equivalent to the amount of carbon dioxide released by 200,000 cars. It will also offset 4,100t of sulphur dioxide, 1,200t of nitrogen oxide, and 13.4kg of Mercury emissions per year.

Unlike coal-fired power plants, the project will not use water leading to the conservation, which normally uses approximately two billion litres of water a year.

The project, of course, missed the coal era in Ontario’s electricity sector. The “goal of phasing out coal-fired power generation” is long since met.

The IESO’s June mistake, and the July victims

Ontario’s electricity system operator (IESO) made a mistake in June.

In July they made it better for themselves in a way that specifically punished one set of consumers – Class B ones not covered by Regulated Price Plans (RPP). The OEB’s lacklustre oversight in recent years continues to harm this same set of consumers. This will be a wonkish post but if you’re connected with a company with a substantial electricity bill, it will alert you to probable overcharges.

This situation should be difficult to explain, because I’ve had friends questioning the IESO on it for half a year and I haven’t seen any evidence that a fulsome explanation is pending. That may be due to the beginning of the tale.

The beginning was the final global adjustment calculations the IESO made for June 2017. They erred in calculating total consumption. The inability of the organization to admit that, along with the regulator’s (OEB) disinterest in monitoring the IESO’s collection of global adjustment charges, is why confusion persists.

I noted on Twitter when the figures were released that they made no sense. To explain why requires getting into some obscure details.

• the IESO reports “Ontario Demand” hourly, but that figure is essentially demand for supply from their market participants,
• the IESO elsewhere reports a summary breakdown of this figure as “Monthly Energy Demand” which shows some of that figure is “Generator Consumption” and some is “Losses”,
• the IESO has not reported on generators embedded in the Local Distribution Companies (LDC’s) it services, but in the past couple of years it has noted monthly distribution-connection (Dx) figures in it’s 18-Month outlooks,
• the Global Adjustment process requires knowing the share of consumption for each consumer, so that reporting includes a “consumption” figure .

If you took the time to subtract out the generator consumption and losses from the IESO’s reporting of “Ontario Demand”, and added the embedded generation, you’d find you were usually about 1% short of the consumption as shown in the global adjustment reporting.  In June 2017 the difference was far greater:

behind the bad Ontario electricity news

The Globe and Mail published an article by its Ontario legislative reporter Justin Giovannetti, In Ontario, hydro’s future gets murkier as costs of leaving the grid decline. The article posits, “a future where Ontarians produce their own power and cut the cord to the wider grid appears to be approaching.”

It’s a very bizarre assortment of factoids that supports the proposition.

Often stories are planted. I mean no disrespect to Mr. Giovannitti when I say this little fact is planted by somebody promoting a story:

…Feb. 18 could be seen as the start of the province’s electrical transformation. On that Saturday, with the sun blazing and a strong wind powering turbines, demand for electricity from the province’s traditional generating stations was actually lower in the busy middle of the day than it had been when most people were sleeping hours earlier.

That is a possible description of what happened that February Saturday. It was the first day since 2003’s blackout where mid-day “Ontario demand”, as defined by the system operator, was the day’s lowest – which is not a fact many would know how to locate. It’s only happened once since – on Friday April 14th, 2017, which the pious among us will recognize was Good Friday. The situation signalling the start of a transformation has occurred twice as often as the event that occurred on the third day following Good Friday – and the claim is the reprecussions of this event will be of similar significance.

On February 18th my daily estimates show 64.7 gigawatt-hours dumped on export markets, 32.5 GWh curtailed altogether, and 337 GWh consumed in Ontario – so over 23% of supply was worthless.

My estimates for Good Friday also show nearly 25% of supply was unusable in Ontario and worthless outside of it.

These are not days I want to preview the future.

Ontario Wind: Worst value getting worser

A spreadsheet I regularly update with data on industrial wind turbine (IWT) generation in Ontario is cited in Parker Gallant’s recent, Wind: worst value for Ontario consumers. The same post cites the Canadian Wind Energy Association (CanWEA) commentary on Ontario’s recently released Long Term-Energy Plan 2017, which included:

New wind energy provides the best value for consumers to meet growing demand for affordable non-emitting electricity.

Let’s examine the “value” as electricity – as there is no market in Ontario for any subset of that commodity, including “affordable non-emitting”.

Two definitions of “value” from the Oxford dictionary are pertinent:

1. “The regard that something is held to deserve; the importance, worth, or usefulness of something.”
2. “The worth of something compared to the price paid or asked for it.”

By the first definition wind is clearly the least valued generation type in Ontario. Using only very basic hourly data sets of Hourly summary totals of grid-connected (Tx) generation by type, valued at the Hourly Ontario Energy Price (HOEP), value factor can be calculated. A value factor above 1 means more valuable than average, below 1 means less valuable, and the lowest number consistently means wind.

This graphic is captured from a page I created to view summaries of basic IESO data sources:

another bad Ontario Energy Report

There’s an Ontario Energy Report (OER) that drips out quarterly.

It’s often got a mistake on the first page. Half of that page is static graphics. The other half is some simple data presented in big fonts.

The report could be useful as it contains data that is difficult to find elsewhere. The intent when it started, as I understood it, was to bring data from multiple sources together in a coherent fashion.  I suspect it was supposed to be definitive – to avoid people getting information from rogue sources such as Parker Gallant and I. The official data would be a good thing if it were credible – but the first page often reveals it is not.

This quarter the very first data set – the “Transmission Grid-Connected Generation Output (Q1)” –  has errors.

Ontario’s use of gas in generation electricity during the first quarter was very low. It was lower than it’s been in over 50 years. But it wasn’t this low.

Ontario’s system operator reports 200% rise in annual wind curtailment

The IESO has updated its 2016 year-end supply data page to include annual totals for “wind dispatch” and “Nuclear Manoeuvres and Shutdowns.”

Added to data from OPG on “hydroelectric generation due to [surplus baseload generation] conditions” this provides a more complete picture of annual curtailment.

Negative pricing, and other, thoughts

A new post at the Energy Institute at Hass blog, Is the Duck Sinking?, discusses the growing appearance of negative pricing in California:

What do the negative prices tell us? At a fundamental level, they tell us that we have too much of a good and suppliers need to pay people to take it off their hands. Right now, California has too much renewable electricity. Emphasizing this point, a recent briefing from the California Independent System Operator [CAISO] noted that renewable “curtailments” were at record levels in March 2017, amounting to over 80 GWh, which is more than a typical day’s worth of solar production that month.

Is there anything to do about the negative prices? Negative prices certainly highlight the value of storage, where the basic idea is to buy low and sell high. Buying when prices are negative is especially lucrative…

Another solution is to expose more retail consumers to wholesale prices, or find other ways to encourage customers to respond to real-time prices. Economists have bemoaned the disconnect between wholesale and retail pricing for years…

If Catherine Wolfram’s post represents a significant concern for curtailments and negative pricing, it’s worth noting the situation in Ontario with Ontario’s system operator, the IESO.

It’s worth noting both because CAISO is noting the curtailment, and negative pricing, and it is acting on it.

This graphic, from the CAISO presentation noted above, shows monthly curtailment in their system:

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.