Saturday, October 27, 2012

The Weekend: Electricity Facts And Queen's Park Commentary

Quick comments from my review of data for the 42nd week of the year (ended Oct. 23).

Coal: Up - again (7th consecutive week)
Gas: Down
Nuclear: up.
Demand: Flat
Market Pricing: Down

One new thing is a surge in daytime imports from Quebec which, along with a drop in gas generation,  might indicate Quebec is now exporting at prices below the fuel component of gas generation.

In the press this week, efforts to close the door on the gas plant scandals lest the issue drags on and forces journalist to actually learn something about it..

Here's an excerpt from one report that was passed - as analysis of the downfall of Energy Minister Bentley:
By the standards of ministerial accountability, this one could be pinned more directly on Mr. Bentley, and there is some question of whether he waited too long to acknowledge what had happened. But it seems more or less to have been a case of bungling by mid-level bureaucrats at the Energy ministry and the Ontario Power Authority.

Blaming current events on "mid-level bureaucrats" is too nonsensical to ignore.
So is pinning the burden of responsibility on Minister Bentley.

Let's revisit September 24th: the day the relocation of the Oakville Generating Station was announced.

Minister Bentley's official statement included 2 reference to $40 million:
  • The total costs that cannot be repurposed at the new site are approximately $40 million. This includes all payments made in relation to the original site, including the cost of engineering design and permits.
  • Over the coming days and weeks you will read and hear lots of numbers related to the cost of the plant relocation. The only accurate cost to taxpayers for this relocation is $40 million.
I've spent a couple of hours surfing through the documents released related to the relocation, and both these statements may well be true, despite being misleading.  Bruce Sharp's $733 million estimate is the best out there, but $693 million of that may be paid by ratepayers (in rates for electricity).   Bentley uses the term "taypayers" and narrows down the description of what constituted the $40 million.

Conversely, the Mississauga plant was stated to cost $180-190 million, and that money was coming out of taxpayers - not ratepayers in the rates they will pay for electricity.

So Mr. Bentley chose his words carefully. 

This week, our government announced we are relocating a gas plant from Oakville to eastern Ontario. The total cost of the relocation is $40 million. This follows another settlement to move a natural gas plant from Mississauga to Sarnia. The cost of that relocation was $190 million.
There's no carefully chosen words there.
It's dishonest.
The cost is far higher, but it will mostly be paid through higher rates.

Tom Adams has posted searchable versions of released documents related to the scandal of cancelling/relocating the plants.  My first impressions from jumping about with searches - and exchanging some e-mails:
The Oakville plant cancellation was going to cost, and the OPA folks wanted to get some value by awarding a sole-sourced contract to TransCanada for a generating station needed in the Kitchener-Waterloo-Cambridge area.  TransCanada didn't like that option, and the idea was probably dead once Mississauga plant cancellations swung to the Lambton site (both the envisions KWC plant and Mississauga/Lambton are SCGT peaker plants, not directly comparable to the role a CCGT plant, which Oakville was awarded as, would fill.

The stalemate was not broken by mid-level bureaucrats, with the first reference I found to the eventual solution coming from the OPA Chair (pages 303-304 of this .pdf).  Parker Gallant has written the released documents indicate this generating station is anticipated to run at a capacity value of 10% - my work shows if this plant operates that infrequently the cost per MWh will be around $260, while comparable US plants will be producing at around $80/MWh (assuming gas at $7/MMBtu).

The solution announced is not only the responsibility of the top-level politicians and bureaucrats, they forced it upon lower level bureaucrats.

There is no reason to assume that hiding documents for another 2 weeks was not also forced by high level mandarins and politicians - particularly as it has been reported that the Premier knew of the omitted material weeks before the legislature was notified of their existence.

Is it the position of the Globe and Mail that 'mid-level bureaucrats' were muzzling the Premier?


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