Wednesday, May 2, 2012

Dead for Left: Greenpeace has a new lie


"Nuclear Main Source of Increased Electricity Prices In Ontario" was posted to the Greenpeace Canada site yesterday, by Shawn-Patrick Stensil.  The piece was timed to defuse the news around price hikes effective May 1st, and coordinated with remarks by the formerly socialist NDP party's marginal leader Andrea Horwath.   Green Party leader Mike Schreiner was parroting the message, "OEB report reveals nuclear causing electricity rates" on Twitter, and Energy Probe's Norm Rubin was on one site bleating he was "impressed with SP Stensil's recent analysis of OEB reports showing OEB's nukes are responsible for way more of our rate increase than the FIT renewables."  It's a lot of support for an idiotic spin either done deliberately to deceive, or simply out of ignorance and a fear of big numbers.

The premise of Greenpeace's position is that the Global Adjustment (GA) is the increase in electricity bills - with a figure from the OEB's Market Surveillance Panel's latest report.  On page 59 the MSP report states 45% of the GA is attributable to nuclear units, and on the next page states 6 percent is attributable to 'renewable assets.'  Stensil stupidly opens with "Nuclear has been responsible for 45% of recent increases on your electricity bill. Meanwhile, the impact of renewables on your electricity bill has been minor – about 6%."  

The global adjustment (GA) is one component of the commodity charge on many bills in Ontario; the other being the Hourly Ontario Energy Price (HOEP).   Because most supply is guaranteed a price in advance, much of it on a must-take basis, at the end of the month the difference between what was paid at the market, HOEP, price, and what was paid to suppliers, must be recovered from Ontario's consumers - the Global Adjustment is the mechanism to do this.  But the total of HOEP recoveries, and GA recoveries, is what is relevant.  As the first chart, of 12 month moving average show, the total value of the commodity charges from the entire market is currently a little over $10 billion - and less than it was at the end of 2005.  The HOEP has been recovering a diminishing amount of that total, so the global adjustment is recovering more.

Most people equate electricity pricing with $/MWh - which is, for those capable of thinking about it, a fraction.  The denominator hasn't moved much, so if the figure has changed, clearly the denominator has.  The graph shows the 12-month moving total market demand, and a price calculated by taking all market and global adjustment charges and divided by the total market consumption.   Notice the price is currently around $66/MWh.  Average residential and small business/commercial pricing, from the OEB, moved from $75.65 in April to $80.69 in May.  The difference between the $66 and $76 is actually the point of the OEB report Greenpeace so deliberately misunderstands - it's about the cost to the rest of Ontario of the removal of Ontario's largest electricity consumers from the previous global adjustment model, which shrinks the denominator, and therefore inflates the rate, for the rest of the province.

Demand peaked in 2005, and when it started to drop, total pricing (GA plus HOEP) corrected and consumers benefited.  When demand collapsed in 2008/09, pricing continued inflating, and that is because of over-contracting of supply.  The contracted supply during this period is renewables and natural gas - the natural gas having net revenue requirement (NRR) requirement because they don't run as much as those in a competitive market would (they are to back up the renewables).  During this period, it is the increased supply and decreased demand that not only has driven up prices, but prevented consumers from recognizing savings in reduced consumption (which is a bizarre thing for environmentalist to oppose, and something socialist should support).

The growing impact of the global adjustment does impact Ontario's electricity sector a number of ways.  The one I write most frequently about is that export customers aren't charged it.  Over the most recent 12-month period, this means we've averaged $66/MWh in expenses, and exported at a little over $26/MWh.  That results in a loss of $526 million.  Again the cost isn't easily attributed to a single generation type, but a general procurement orgy that has bred too much supply.

The OEB article is about the shrinking of the group that the global adjustment is applied to.  John Spears "You Pay higher hydro bills, big business pays less" dealt with the same OEB MSP report, and the cost impacts of the GA changes were best dealt with long ago by Aegent Energy Advisors -and also recently on this blog.

It isn't interesting that Greenpeace is afraid of big numbers - it's especially understandable given their inability to comprehend them.
It is disturbing that Ontario's traditional left-wing party has abandoned the lower income households in Ontario in order to wage Greenpeace's war on nuclear ... and truth.

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