How the IESO is Managing Surplus Supply

The Independent Electricity System Operator (IESO) has been dealing with many hours where Ontario's baseload supply exceeds Ontario's demand - a situation now referred to as surplus baseload generation (SBG). In recent weeks, SBG is a condition that has existed up to 70% of all hours. Today, a media news release from the IESO included, "Exports have played a significant role in managing Surplus Baseload Generation (SBG) conditions in the past and the IESO will continue to utilize exports and other available options to address the SBG that is expected over the 18-month period," said Bruce Campbell, Vice President of Resource Integration.”

Exports have played a role. So has supply curtailment.


2009 introduced the SBG term, as the trend of lower demand increases which had turned to a gentle decline after demand peaked in 2005, was exacerbated by a deep recession. As 2009's annual reports were released, Ontario Power Generation noted water spills at its regulated hydroelectric generators, and attributed 0.6 TWh of lost production to SBG. 1 The private nuclear provider, Bruce Power, noted, in it's annual report, “hundreds of power manoeuvres in response to conditions of Surplus Baseload Generation when Ontario had more supply than demand. CAMECO's 2009 annual report quantified the amount of 'deemed' generation, at the 4 Bruce B units, at 1.2TWh. The discovery that we paid for at least 1.8TWh of electricity not to be produced in 2009 should be considered as the Ontario Power Authority prepares a second Integrated Power System Plan.

Baseload, in Ontario, refers to generation that will run if nothing halts it deliberately. That is most significantly nuclear, secondly hydro, thirdly it is a group of generators producing with natural gas under old contracts (Non-Utility Generators/ NUGs), other smaller suppliers (<10MW), and most recently, and increasingly, wind and solar supply. Supply can be baseload because of the technology, or the economics, or the contracts (and any combination of those).

Several weeks ago I started hoarding hourly generation output data from the IESO site. I thought I'd share a series of graphs that coincide with the IESO weekly reports. graphing production by groups of generators against consumption, import/export and pricing metrics. Reverse engineering from the data outputs, I think I can share some conclusions about the methods the IESO is using to control the market during SBG periods.

Starting on the week of March 30- April 5th, here's the weekly graph I've developed to illustrate the curtailment actions of the IESO. This is the control graph - it's the last week there wasn't curtailment. The yellow bars are measured on the right axis (in MW), while all the lines, for generator groups, are measured on the left axis. Bruce B (the light blue line) frequently utilizes steam bypass, which allows the nuclear reactor to continue operating while generating significantly less electricity (about 40% less, and there are 2 reactors that utilize this often, and another 2 less often). Base Gas is simply a group of producers that always seemed to be on, but discussions I’ve had confirm there are Non Utility Generators (NUGs) and the 1000MW total proves to be pretty accurate (if you follow through the series of graphs). The base hydro is again eyeballed, including, most significantly, OPG's regulated hydro assets. This line increases during the spring freshet - but the control graph is a week where the 2000-2500MW expectation is what we get.



The next week we see the preferred curtailment action for an overnight period of SBG. 3 consecutive nights Bruce B had generators produce less output for a small number of hours, and then return rapidly to full output as the morning brings suddenly increased demand. This is a logical choice for this situation, where it is known a quick ramping source is needed within the next few hours:



The next week brings an example of reducing what I’ve referred to as “base gas” – which are primarily, if not entirely, NUG contracts. These contracts are curtailed for longer periods of time, as with the weekend of April 16th and 17th (they return coincidentally with the morning surge in demand). The reasons for this are complicated. The NUG’s had contracts with Ontario Hydro. When Ontario Hydro was broken up, the contracts for the NUGs ended up with the new financing company, OEFC. So … for the system operator to curtail this production they must contact the OEFC to deal with the NUGs. These curtailments therefore occur when the SBG condition is fairly certain days in advance, large, and will remain for an extended period of time. Note Bruce B still has dips overnight (the chart starts Wednesday, and then also Thursday night/Friday morning – we also see one of the 4 units going offline for maintenance, as the weekend arrives), but the BaseGas reduction only occurs Friday night and then lasts through the weekend.



Easter weekend sees the same reduction in the group of natural gas producers (presumably NUGs):



The next weekend the gas is allowed to keep producing, while steam bypass periods increase. Exports jumped to over 1400MW each hour, and the price dropped to average only $20.60/MWh.



The next weekend they went back to shutting down many of the NUGs (BaseGas), and exports jumped again, but the price bounced back a little, to $25.08/MWh:



And the same again the next week:



I won’ have all the data for the graph until Friday (at the earliest), but the generation over the long weekend shows both nuclear and gas curtailed as deeply as at any time this year:



All of this impacts the Global Adjustment, which is the charge added to the bills of Ontario’s companies, and calculated into it’s residents’ bills, to recover all the generating costs (including the costs of not generating!). April set a record for the global adjustment( $43.89/MWh).
May will probably break that record.

1 Page 15 of the 2009 Annual Report