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 »

Brown, Wynne, share ignorance of $500+ million ratepayer hit

The Ontario PC party put out some tweets that tweeked my interest yesterday, on payments due to a court ruling.

The parties in the case included those in a ruling I wrote about in May’s Ontario appeals court upholds sentence of higher costs for ratepayers – but the hit on ratepayers in the case I wrote about IS estimated at over half a billion dollars.

After watching an exchange between Premier Kathleen Wynne and Leader of the Official Opposition Brown, I decided to see what they were on about.

It turns out I knew most of what they were on about, it was just hard to be certain as neither of them did.

Two new pieces of information since I wrote on the court case in May:

  1. the case was appealed to the Supreme Court
  2. additional payments/penalties were paid to compensate for more months of generation. [1]

The Ontario PC party seems totally unaware what the nature of the case is, and it seems blissfully oblivious to the fact the latest $94.7 million payout was not the first payment, nor will it be the last if the court case fails – and Northland is only one supplier getting the payouts as a result of the court case against the Ontario Electricity Financial Corporation (OEFC).

The exchange in the legislature doesn’t reveal:

  1. the payment is less than 20% of the cost impact of the court judgement
  2. the OEFC is a shell corporation
  3. the control of the OEFC is essentially under the Minister of Finance [2]
  4. the contracts involved in the court case originate prior to 1995, under Premiers Peterson (Liberal) and Rae (New Democratic Party) [3]
  5. the court case is due to changes in payments due to calculations changed with the introduction, for 2011, of the Industrial Conservation Initiative (ICI – or Class A global adjustment mechanism)

Read More »

Curtailment of contracted electricity supply still rising in Ontario

October 1st is here, so the third quarter of 2016 is now history. Seems like a good time to review some things – like Ontario’s move towards world leader status in the curtailment of potential supply from wind turbines – mostly paid whether or not their output can be handled by the grid.

Over the first 3 quarters, I estimate curtailment of supply from industrial wind turbines is three and a half times greater than the same period in 2015 – and 14 times higher than in 2014.

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The kicker here is that the greatest period for curtailment in the past has been the fourth quarter.

Curtailment data is difficult to find (which is why I produce it), but increasingly of interest across the world. China is often noted for high curtailment – one report shows 21% of all potential generation in that country curtailed in the first half of 2016.

It’s difficult to compare jurisdictions, but Ontario seems to be chasing China for lowest utilization of potential wind output. Depending on whether or not calculations included estimated distribution-connected turbines (which we have little reporting on in Ontario, but expect can’t be curtailed), I have the 12-month running average curtailment levels at 16-18.3%, and I expect that to rise rapidly until cold sets in.

A warm December and Ontario could set a record for annual wind curtailment levels.Read More »

Estimating Ontario’s Electricity Supply Costs with OEB data

I’ve been asked on a couple of occasions for costs of Ontario’s electricity from unbiased sources. I answer with a single snapshot source, but that – in my opinion – can’t communicate much about what is behind changing pricing, so I also provide some other sources so people could estimate costs in 2013, 2014 and 2015.

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In this posts, I’ll cite the data sources, run the estimates, note some shortcomings – and end with a look at some of my own estimates.

The singular best data is from  the 2015 Auditor’s report chapter on power system planning – only the Auditor has extracted a coherent set of numbers on both production and costs from the system operators (IESO).

The data the IESO provided the Auditor is different than the data the IESO posts on its website. The difference is due to generation embedded in distribution networks, and the IESO’s inability to update its reporting to include that supply.

Most starkly, the IESO reports on its website 2014 solar generation of 0.0185 TWh (billion kWh). With the auditor they revealed 1.8 TWh-essentially 1.8 billion kilowatt-hours more.

So… for reputable accounting of annual generation and costs, I suggest looking at the less frequent, but more reliable, documents from the Ontario Energy Board (OEB).

Read More »

Ontario Energy Board points to $1.35 billion solar costs hidden by IESO

The Ontario Energy Board (OEB) has finally released Ontario’s System-Wide Electricity Supply Mix: 2015 Data. Previous years’ versions of this reporting have been almost unique in providing an indication of the costs of embedded generation.

Although the OEB supply mix data shows only percentages by supply types, assuming all nuclear is grid-connected (Tx, or direct) generation, it’s reasonable to use the annual nuclear generation reported by the IESO (including curtailed nuclear) to calculate estimated generation from each source – and having done that to estimate the cost of the generation not reported by the IESO using estimated unit costs from Table 2 of the most recent OEB Regulated Price Plan supply cost documentation.

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There’s $1.35 billion in hidden solar costs here!

Why is the IESO contracting more solar when the can’t provide any accounting on what they’ve already contracted?

IESO reports show failure to address systemic changes

Yesterday Ontario’s system operator released a number of reports. Personally these reports provide opportunities to check the performance of the system compared to my expectations, and estimates, and they also provide an indication of how well the IESO adjusted to taking over the responsibilities of the former Ontario Power Authority (OPA) after 2014.

The data released includes:

  • Updated Ontario Energy Report website with 2016 1st quarter information, with related electricity report (.pdf), and data file (.xlsx)
  • 2016 Q1 Progress Report on Contracted Electricity Supply (.pdf)
  • 18 month outlook (.pdf) and related date file (.xlsx)

On first flip through the reports, the graphic that most caught my eye was the 18-month outlook’s “Table 4.1 Existing Generation Capacity as of…” This table shows not only what the IESO considers the capacity, by fuel type, participating in their market, but also what I will call “Capacity Value” and they call “Forecast Capability at Outlook Peak.” This is an important number because it’s used to measure the system’s ability to meet anticipated peak demand. The numbers that caught my attention were a 280 megawatt (MW) capacity of solar, with the forecast capability at peak of 28 MW.  The 10% capacity value that indicates is sharply reduced from the 18 month forecast of June 2015.

IESOoutlookChange.PNG

Let’s ignore the low installed value for solar for a fleeting moment, and concentrate on the reduced capacity value. This June’s 18 month report explains it:Read More »