Wednesday, May 16, 2012

Not the News: The Toronto Star's Electricity Sector Coverage

On the day Ontario's official opposition party, Tim Hudak's Progressive Conservative Party, released a white paper on energy policy, the Toronto Star published, as front page news, a story that seemed to be about the expensive nuclear generation in Ontario – although it didn't actually provide a price figure. The Star report is structured as if it was built around the Power Advisory report cited in the article; a report created for the Ontario Energy Board. That report is dated April 20th, 2012 – and contains no information created after 2010.

The report provides figures for nuclear units operated by OPG for 2008-2010, and those figures show declining performance. The report does note that OPG's reporting had attributed the reduced performance factors in 2009 and 2010 to Vacuum Buildign Outages (VBO – 2009 at Darlington and 2010 at Pickering). The Power Advisory report didn't note that any idiot could confirm that ... nor did it confirm it.

49 days prior to the date on the Power Advisory (PA) report, on March 2, 2012, Ontario Power Generation released it's 2011 Financial results.  Using some of the figures available in that report, I can come up with a pretty good estimate of 2011 to add to the stale-dated Table 2 in the PA report: 

Darlington Pickering A Pickering B Totals
Capacity (MW)
3512 1030 2064 6606

2011 29.3 6.1 13.8 48.6
Net Generation (TWh) 2010 26.5 5.5 13.7 45.7

2009 26 5.7 15.1 46.8

2008 28.9 6.4 12.9 46.8

2011 95.2% 67.9% 76.2% 84.0%
Unit Capability Factor 2010 87.6% 62.4% 76.3% 80.1%

2009 85.9% 64.2% 84.0% 81.9%

2008 94.5% 71.8% 71.4% 83.7%

2011 looks like a better year than any of the 3 preceding years – and the value of reporting based on aged data that, based only on 3 years,  including two years with vacuum building outages (which occur once a decade, per site), is questionable.

The report does note Benchmarking reports done by ScottMadden Inc. The second of these was filed with the OEB, as EB-2010-008, on May 26th, 2010 (although the report was delivered to OPG).  This valuable ScottMadden report provided the following figures: 

Metric Best Quartile Median Pickering A Pickering B Darlington
3-Year Total Generating Costs per MWh ($/Net MWh) $28.66 $32.31 $92.27 $58.68 $30.08
3-Year Non-Fuel Operating Costs per MWh ($/Net MWh) $18.06 $21.28 $82.62 $50.95 $25.10
3-Year Fuel Costs per MWh ($/Net MWh) $5.02 $5.37 $2.64 $2.68 $2.62
3-Year Capital Costs per MW DER $32.79 $46.22 $32.07 $32.44 $18.79

This table (which is actually for even older data) shows the basis for The Toronto Star's claim: “Pickering A’s cost per megawatt hour was close to triple the industry median. Pickering B’s costs were nearly double the industry standard.” It's worth noting that even at 3 times the price it was cheaper than the new supply being procured in 2010, and with 1/3 of the Pickering units at $93/MWh and 2/3 of the units at $59, the average price was around $70 for Pickering – which isn't far off Bruce A's figures, and what Ontarians paid for what they consumed in 2010.

Is it strange John Spears didn't note the high price was $92.27/MWh, in a province where new procurement has been starting at $135 despite a glut of supply – or that he failed to note the improved 2011 results?

I don't think so.   I think it's disappointing the article tackled the issue pointlessly instead of finding an opportunity to report on the benchmarking that occurred being followed by a movement in the right direction on production, OM&A expenditure, and profit metrics.   It also is surprising that Mr. Spears actually ignored the point of the Power Advisory report - which was to explore mechanisms the Ontario Energy Board might use to set rates for Ontario Power Generation (OPG).  OPG's output is now sold for about $2 billion more, each year, than they are paid for it's production (noted here); it's not the area I'd prioritize for controlling costs.  Regardless, the reason the Power Advisory report existed wasn't part of the news report citing it.

I doubt the point of John Spears' “Pickering nuclear units among the most expensive, least reliable in the world" was to report the news.

Quite the opposite. It seemed timed to distract from news ... of the Ontario PC's position paper.

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