Saturday, January 29, 2011

McGuinty Thinks This is Fun?

There is a clip on YouTube of Premier McGuinty, with a loyal Dwight Duncan at his right hand, refuting claims that have been made on this blog.



The Premier says some things in it that I need to rebut. 35 seconds in he says "Last year we had some extra electricity."  This is true.  As it was in 2009, and 2008, and 2007, and 2006.  The trend deserves the most attention.
About a minute in the Premier states, "“If you had to choose between having too much electricity, and too little electricity, I’m for having too much electricity.”   This is a common refrain we've been getting from his team - and it is not intelligent.  We export because you can't choose to have too much or too little (Donald Jones provides some electrical engineering insight on this here).
This is the meat of the issue.  Mr. McGuinty's perspective appears to be that we should always order 10% more than we need.  We pay for the full amount, and if export markets pay even 1 cent for the other 15,000,000 MW, it is money in the bank.  $300 million for 15TWh is 2 cents/kWh.  I assume Mr. McGuinty means that on Net Exports (exports less imports), we ended up $300 million ahead by exporting a little under 9TWh less than we imported (which brings exports close to 3.5 cents/kWh as opposed to the 6.5 we paid in Ontario).

I'd point out my first article that gained some attention, by costing out exports for a single day, did compute on net exports.  Mr. McGuinty says in the video clip; “I know there’s some fun, and some excitement, associated with the stories that have been in the media lately, but I think it’s really important to tell the full story.  Net we are ahead by $294 million dollars.  I haven’t seen, written yet, that we’ve been paid to take Michigan electricity.”  
There's two reasons for that.  I don't have any data on Michigan, and I don't think Ontario's populace is concerned about Michigan subsidizing them.  I do think my concern that we are increasingly paying producers to produce unnecessarily, and that our friendly neighbours, with whom we compete for industry, are benefiting from that at the expense of Ontario's residential, commercial, and industrial consumers of electricity, should concern most, if not all, Ontarians.

Months of argument are chronicled here, but I'll attempt a summation.  I'll also emphasize that the reason I can blog on these issues, and they do get to the mainstream press, and critics in the opposition parties, is that the data is public - the text (.csv) feeds, and figures for the global adjustment, are directly from the IESO site.  I don't provide any unique data, nor do I deliberately write things that can't be verified.

Mr. McGuinty is the person in the province most entitled to his opinion.  He was elected for it to be relevant.
But nobody is ever entitled to their own facts.

There is a market for electricity, and that market has seen the price move depending on the balance between supply and demand.  This graph shows that, in 2005, when demand and supply balance, there was a market price(the red bars).  As our methods of procuring power increasingly results in production exceeding our consumption, the HOEP drops accordingly.


The discussion regarding the cost to Ontarians of exports relates to the blue bars in this graph - which is the Global Adjustment.  If you consume electricity in Ontario, your price is, either directly or indirectly, the HOEP plus the Global Adjustment.  Outside of Ontario, it's likely only the HOEP that gets paid.  We can therefore calculate the figures for how much less external users pay for Ontario electricity than Ontario users do - it's exports at the Global Adjustment rate, and I've graphed it as a 12-month running total:




When the NDP critic, Mr. Tabuns, speaks of exports and subsidies, one could quibble with the vocabulary, but not the meat of the argument.
We have fallen into being an exporter concurrently to becoming a high cost producer.  Neither strikes me as good - together they seem bad.

Dwight Duncan should know better - regardless of the Premier's delusional opinions.

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