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:

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

Federal Liberals should bail out stupid Ontario counterparts on northern transmission debacle

I really don’t mean this to sound ugly – but it is about race-based political policy, so I won’t waste too much time prettying it up either.

Brian Hill has produced another report on the Global News site: Ontario hydro customers could pay $650 million to connect remote First Nations communities:

Despite recent promises from the federal government of more than $185 billion in infrastructure spending over the next decade, Ontario electricity customers could soon be on the hook for up to $650 million toward the cost of connecting 16 remote First Nations communities to the province’s electricity grid.

I’ve written on this transmission line, and want to recap here, hopefully as an addendum to Hill’s work, and to demonstrate how stupidly Ontario’s novice Minister of Energy, Glenn Thibeault, proceeded with this project.

A timeline, for context:

image from National Post

On March 10 the government announced contracts for a number of totally unnecessary renewable energy projects, including one for a wind project unwelcomed by a large majority of Dutton-Dunwich residents. That contract was won based on points received for First Nations participation in the bid -participation largely from northwest reaches of the province.

On June 27th the first Directive from a new Minister Glenn Thibeault to the Ontario Energy Board was to come up with Options for an Appropriate Rate Assistance Program for On-Reserve First Nations Electricity Consumers.

On July 14th Minister Thibeault says high electricity bills in rural Ontario were not a crisis.

On July 29th the government of Ontario announces the project:

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.

"This $95 million court case isn’t new to this government. The OEFC and Northland have been battling it out in court for years" @brownbarrie

— Ontario PC (@OntarioPCParty) October 26, 2016

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)

Electricity rates held steady by Ontario’s inept energy regulator

The Ontario Energy Board (OEB) released regulated price plan (RPP) rates for Winter 2016-17 on October 19th, leaving rates unchanged from summer 2016 rates. The lateness of the news had me expecting they were being politicized, so maintaining existing rates didn’t surprise me. Reading the report rationalizing the prices, there is some good news for consumers as rate pressures decrease (as predicted in the government’s Long Term Energy Plan forecasts). There’s also some very bad news for consumers, as the OEB has negligently punted costs down the road – again.

Reviewing and setting prices every six months protects consumers from fluctuating commodity prices and provides stability and predictability on the electricity line of their bills. It also ensures supply costs are fully recovered so that the system continues to operate effectively.   – OEB news release

The goals of rate setting are to recover the full costs of supply with “stability and predictability.” The rate setting methodology for accomplishing this is set out in Regulated Price Plan Price Reports – I’ll call these RPPPR.

Essentially these reports forecast all supply cost, how much of that cost is to be recovered from Regulated Price Plan (RPP) consumers (while the vast majority of consumers in Ontario are charged this way, the exclusion of larger consumers from the plans means only a little over 40% of all provincial consumption). The RPPPR is very much a forecast of what the market rate, plus the “class B” global adjustment rate, will average over the next 12 months (although rates only apply for 6 months, when the process repeats). For those familiar with the sector’s jargon, the RPP is a forecast of the Class B commodity rate.

Part of the RPPPR process is recognizing a variance account tracking the extent to which the RPP fails to recover the full costs, or recovers too much. Ignoring the variance account, the newly released Winter 2016-17 RPPPR calculates a rate of $110.13 per megawatt-hour (MWh), or 11.013 cents/kWh. One year ago the RPPR calculated a rate of $109.49, but the variance account provided a reduction of $2.22/MWh a year ago, whereas the recent report included a charge of $2.26/MWh reflecting rates not recovering the full cost of supply over the past year. This is curious – keeping rates down despite the variance account growing indicating rates were too low to recover all supply costs.

“[Ensuring] supply costs are fully recovered,” is a stated goal of the regulator.