Wednesday, March 9, 2011

Premier McGuinty Links Kindergarten and Electricity Policy

As our federal government is cited for contempt of Parliament, it is notable that our provincial government also seems to be lacking in respect for the provincial legislature.
From the Hansard for March 8th (heavily edited to try to get just the question, and answer, and the two follow-ups):
Mr. Tim Hudak:
“...Premier, exactly how much higher are hydro rates going to go to pay for your mismanagement?”
Hon. Dalton McGuinty:
“... if he’s truly committed to ensuring that we keep costs down for Ontario families, then he’s going to want to take the opportunity right now to commit to full-day kindergarten for all four- and five-year-olds in Ontario.”
Mr. Tim Hudak:
“... Premier, can you explain to Ontario families why you say you’re going to cut the civil service by 5% on one hand but they’re going to get stuck with a bill for 300 new employees at Hydro One? Why are rates going through the roof?”
Hon. Dalton McGuinty:
“...If he’s committed to ensuring that Ontario families have some help with their costs, then he’s going to want to commit right now to putting in place full-day kindergarten for all four- and five-year-olds.”
Mr. Tim Hudak::
“...Premier, when will you rein in the public sector costs? Why do Ontario families always get stuck with the bill for your mismanagement of the energy—“
Hon. Dalton McGuinty:
I expect this will be a recurring theme. My honourable colleague says it’s important to rein in public sector costs. I want to translate that so that Ontarians can better understand what he means by that.
“Public sector costs” means we can’t afford full-day kindergarten for our four- and five-year-olds in Ontario. “Public sector costs” means we can’t afford the smaller classes that we have in our schools. “Public sector costs” means we can’t afford the 11,000 more nurses that we’ve hired in Ontario. “Public sector costs” means we can’t afford—“
Mr. Hudak took his opportunity for a second question to follow the same theme along another tack:
Mr. Tim Hudak: “...Premier, why are the only families getting any relief in hydro customers in Quebec and New York? Why are you sticking families with the bill?”
Hon. Dalton McGuinty:  “I’m not sure there’s any foundation in fact for any part of that question whatsoever...”
Mr. Tim Hudak: “...Premier, why is it the only families getting a break today are families who live in Montreal and in Buffalo?”
Hon. Dalton McGuinty: “Again, I disagree fundamentally with my colleague’s assertion and with those numbers...”
Mr. Tim Hudak: “…Premier, you’ve signed deals that make us get the most expensive power—your pie-in-the-sky schemes for solar and wind—even when we don’t need it, and then you have to discount bills to people in Montreal and Buffalo. Why is it the only way to get relief from the hydro bill is to go across the Peace Bridge into Buffalo, New York?”
Hon. Dalton McGuinty: As they say, everybody is entitled to their own opinion, but not their own facts...In 2002, under the previous government, $500 million was what we paid for importing power. In 2003, we paid $400 million to import power. Since 2006, as a result of the massive investments we’ve made in new generation and new transmission, we have so far $1.5 billion for net exports. We’re now in the business of exporting and making money off of our systems. We didn’t have enough electricity in the past and we were buying electricity. That’s the difference. Those are the facts.”

Those are indeed facts, according to both the National Energy Board Exports and Imports of Electricity reports, and statistics available from Ontario’s Independent Electricity System Operator (IESO).  They are facts devoid of the context that would note $1.6 billion since 2006 is attached to 34,404,312MW hours, averaging $46.44/MWh since 2007, but only $35.01 in 2009, when a large customer in Ontario would have paid $62.17/MWh (page 30 here), or $27.16/MWh less in export markets than Ontario – and $41.44/MWh in 2010, when Ontarians paid $65.03/MWh – which is 57% more than foreigners paid/MWh.
The IESO figures aren’t available for all of 2002 – but in 2003 the imports compute to around $600 million (close to $300 million was charged on exports), and the totals from 2006-2010 are $1.5 billion for 42.13TWh of net exports.  The largest reason the data sets differ is interprovincial trade (not in the NEB data), which indicates Quebec is receiving Ontario exports cheaper than the US customers.
Those are the facts, and the context for them, that answer Ontarians' questions.  But the Premier also mixed in a lie with his statement – and 2002’s figures help illustrate the supply mix problem that is increasingly Ontario’s burden.  Exports, in 2004, averaged $40/MWh, while imports were $71.45 (NEB data) – which is typical of Ontario’s large baseload capacity (we imported to match peak demands and exported in off-peak hours).  But the difference in total output between 2002 and 2010 is only 1 TWh, while nuclear output has increased 20 TWh due to 2 Bruce and 2 Pickering reactors that came back online by 2005 – projects initiated by the predecessors of a McGuinty government.  The spike in exports is due to the supply mix we have and the declining demand we have experienced – the Premier’s government has been ineffectual at halting what was occurring despite it.
Mr. McGuinty illustrates the confusion when politicians forget the opposition is there as representatives of people.  He is likely avoiding an answer to avoid what it would mean to his LTEP hallucination and his FIT fantasies, but he is certainly demeaning debate.  He is demonstrative of why Prime Minister Harper may not pay much of a price for his government being found in contempt of one of the country’s legislative bodies.
Everybody else is.
The data from the IESO starts in May 2002.  These charts are created, by me, from base data files available at the IESO site for imports/exports, HOEP pricing, and Global Adjustment figures.  2011 data on pricing is current as of March 1st.
Imports have not changed to nearly the extent exports have - most notably in 2008, as demand began it's decline.
Import/export pricing doesn't include the Global Adjustment (GA), which is the mechanism used directly (Wholesale market), or indirectly (RPP customers) to recover the cost of contracted supply (now over 92% of all supply).  The Wholesale/MWh in this graph is the HOEP plus the GA.  The contracts are driving up the price in Ontario - the low usage is driving the price down elsewhere.
An update, inclusive of February data, for the running 12-month total of how much less export markets are paying, for the power they receive from Ontario, than Ontarians would pay for the same MW total (and the supply/demand relationship that necessitates dumping the excess production elsewhere):



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