The declining value of Ontario exports

Yesterday Statistics Canada’s daily news included Electricity supply and disposition, 2016. 

Geoff Zochodne, a reporter at the National Post, gleaned this message from the release:

“Ontario exported more power to the U.S. last year than it has in a decade, and at a relatively low value.”

This initiated some e-mailing, which drew me into the data quagmire again, but also reflecting on my history reporting on exports. Instead of putting my thoughts into private e-mails, I thought I’d make them the content of this public blog post.

I’ll return to the newly posted Statistics Canada data later, but for now I’ll declare my bias as printed in the Financial Post early in 2016: “…StatsCan data is awful. It can’t be the basis for anything.” The recent release has mostly meaningful data, but some big errors mean it’s far from the best data to serve in analyzing Ontario’s exports – or anything else.

Some background on my involvement reporting on exports – if only to satisfy my sudden nostalgia.

Reporting on losses of exports is what got my blogging noticed back in January 2011. I’d started writing a couple of months earlier – to maintain skills in data analysis and, hopefully, develop some writing ability. January 1st, 2011 was warm (for winter) and it was windy. I wrote of records:Read More »

ON Politics: polls first

Some recent political stories that caught my attention.

A story by Alison Jones, of the Canadian Press, was carried on the CBC website with the title, Ontario government polling shows improving numbers on hydro file:

…polling conducted by the Gandalf Group — headed by the man leading the Liberals’ 2018 re-election bid — found large support for the government’s plan for a $15 minimum wage, general support for carbon pricing, if not necessarily the specifics, and even improving assessments of the hydro file, over which the government has been consistently hammered.

The Gandalf Group is led by David Herle, Premier Kathleen Wynne’s campaign manager. Mr. Herle is, in my opinion, a very good policy person and astute pollster. I wrote on his work influencing policy last September (opposition Finance Critic Vic Fedeli cited my work in his Focus on Finance 4).

This isn’t meant to imply policy-by-poll is a good thing. It’s entirely possible the people polled prefer not only poor policy, but ignorance.

Within days of the first story on new government policies polling well (without noting they became policies because they polled well), the Liberal Party friendly Toronto Star published Kathleen Wynne wants you to like her policies, not her. The Premier has implemented this shtick in her canned pre-campaign appearances.

There is a saying in politics that “anger is not sustainable.” I believe that, but I’m not sure most potential voters are simply not liking, or even angry with Premier Wynne. Anger is an energy, but disgust is a sense.

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Turbine Approval Revoked

Bayshore broadcasting reports:

Approval for wind turbines in Clearview Township has been revoked.

The Environmental Review Tribunal released its decision today (Wednesday) to revoke the previous Renewable Energy Approval.

Although the article notes the proponent has 15 days to appeal, I’ve switched the status to “Cancelled” on my map of industrial turbines in Ontario.

The Environmental Review Tribunal’s action might prove contagious. It’s unclear why the IESO is not exercising contract clause’s to revoke other feed-in tariff (FIT) contracts. I reviewed FIT 1 contracts and found this:

Article 9
TERMINATION AND DEFAULT…
9.1 Events of Default by the Supplier
(j) The Commercial Operation Date has not occurred on or before the date which is 18 months after the Milestone Date for Commercial Operation, or otherwise as may be set out in Exhibit A.
So I checked my import of data from an IESO contract data listing (should match this). Aside from the Fairview site just cancelled, the off-shore contract persists despite a ban on offshore. The Amherst Island project has advanced to the stage of barge sinking in harbour – but not far beyond that, while White Pines was greatly reduced by the ERT yet ponders a future despite having run out the clock.
IWTpassedTime
What’s in Exhibit A of these deals preventing the IESO from terminating?

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.

OER 2017 Q1 wrong

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.

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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:

CAISOcurtailment

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Ontario’s perceived electricity cost inflation

Why are Ontarians upset by electricity prices?

The other day I read a paper* that referenced 1997’s, “Direction for Change: Charting a Course for Competitive Electricity and Jobs in Ontario.” Skimming the document that moved the province towards the current assortment of public, private and toxic entities, I came across the following graphic within a section titled, “Ontario Hydro’s Unsatisfactory Business Record.”

Unsatisfactory.PNG

I thought, presumably as most do when seeing a graphic such as this, I should reproduce this work, and extend it to the present time. Not being overly ambitious, I simply use Consumer Price Index data (from CANSIM Table 326-0020), so my graphics will omit data from industrial entities; not being without curiousity I also grabbed data for average annual residential electricity prices (from the U.S. Energy Information Administration (EIA) site).

A little math to reset the base years that will equal 100% and:

increased sharply.png

It’s not been a good 3 decades for Ontario electricity consumers.

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cutting wind in Ontario

If the wind project is paid $0.08/kWh (the average tariff for projects in the province’s first renewable RFP)…

The quote is from a 2005 document, Ontario Landowner’s Guide to Wind Energy, produced by the Ontario Sustainable Energy Association.

The Bank of Canada’s inflation calculator indicates 8 2005 cents equate to 9.6 2016 cents.

In 2016, Ontario announced new Large Renewable Procurement (LRP) contracts at 8.6 cents/kWh

5 wind contracts totalling 299.5 MW, with a weighted average price of $85.94/MW…

Comparing the cost of industrial wind turbines in Ontario by the procurement cited in the 2005 report, and the one run by the IESO in 2016, there has been little change in price.

In between these two procurements, over a decade apart, prices soared. There are no consumer benefits from the feed-in tariff mechanisms, introduced after the passage of the Green Energy Act.  Between the start of 2009 and the end of 2012 the government, through the Ontario Power Authority, contracted about 4,400 megawatts of industrial wind turbine capacity at rates around $135/MWh. The increase in rates above those shown in 2005, $40/MWh (4 cents/kWh), would add about $500 million a year to Ontario’s electricity costs for the 20-year terms of the contracts.

Ten billion dollars is not the full-term cost of the contracts, only the incremental cost of the feed-in tariff mechanism employed – and/or the rank political culture that employed it.Read More »

Can 20 year contracts be amortized over 30 years?

written by Gary Mooney, and reproduced here with permission.

I contacted the Ministry of Energy by phone to ask if 20-year electricity generation contracts – e.g. wind and solar — were going to be extended to match the government’s new 30-year amortization period for capital expenditures.

The answer that I got back was:

* There will be no negotiations to extend contracts at this time.

* But generators will be offered the opportunity to continue producing electricity beyond the 20-year point, at the market price (or a negotiated price, not sure which was mentioned).

This is consistent with Minister Thibeault’s comment, in justifying a longer amortization period, that wind turbines have a useful lifetime of 30 years.

The idea of an extension of wind contracts will be a major concern to those living with turbines, as they have been expecting that the problem will go away after 20 years. And worse, if there are no negotiations now, these folks will have to live with uncertainty for anywhere from 10 years (the earliest contracts) to 20 years.

To make an extension of the amortization period work, the province needs continued power generation over the whole period out to thirty years, either:

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Alternative (Energy) Facts – from Environmental Defence, et al.

I started receiving messages last night on a sorta report by Environmental Defence (ED), and as I am still receiving them, I thought I’d write some thoughts – if only to simply copy a link when again asked for my thoughts.

Here is how ED’s Keith Brooks begins a blog post on their latest “work”:

Electricity prices in Ontario have risen in recent years, putting the squeeze on some Ontario residents and businesses. There are many reasons for the increase in electricity prices and renewable energy is one of them.  However, the role of renewables in diving up electricity bills has been vastly exaggerated.

I wrote on a poor 2014 ED work and noted their new backgrounder contains a graphic with the same information as Figure 1 of their 2014 work. Without acknowledging any level of competency in the compilation of data for either ED graphic, here’s the elements of residential electricity bills as they report them for 2016 and 2014:

edcomp2

Perhaps the “role of renewables in driving up electricity bills” is perceived as being significant because:

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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.Read More »