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Sunday, September 1, 2013

Ontario Electricity Rate set to rise 30% in August

The total commodity charge for electricity is now estimated to be up 30% from August 2012 to August 2013.

The weighted average market rate (the HOEP) will be around $23.55/MWh and the freshly released 2nd stimate of the global adjustment rate is $68.99/MWh; the combined "Class B" commodity charge of $92.54 is 30% higher than 2012's $71.09.

August's 30% follows 3 months with inflation over 20% (as Parker Gallant and I noted here), so it does not come as a surprise to me, but it appears to come as a huge surprise to the market operator (the IESO).

I put together a short 2 question survey after seeing the initial IESO initial global adjustment estimate for August:
The IESO posted a preliminary estimate for the August Global Adjustment of $40.13/MWh. Do you think this estimate is:
  • plausible
  • remotely possible
  • indicative of a healthy optimism
  • indicative of politically directed lowballing prior to the August by-elections
  • indicative of incompetence
The few responding were split between "incompetence" and "politically directed lowballing"

The second question was:
Do you think the estimate, assuming it is meant to be of the Class B global adjustment, will be:
  • high
  • about right
  • 10-25% low
  • 25-40% low 
  • 40-60% low
  • more than 60% low
All answers rightly identified the $40 estimate as being far too low, and the most popular answer was "40-60% low."

The second estimate of the global adjustment rate ($68.99/MWh) is, in fact, 70% higher than the first estimate ($40.13/MWh); statistically that means the first estimate is 42% lower.

Perhaps the IESO saw the survey and decided they best up the next estimate to establish something akin to credibility; it's crud ability set September's estimate at 8.72 cents/kWh (or $87.20/MWh) - that's 18% above September 2012's combined HOEP (market) and global adjustment.

How high do you think $87.20 is going to be?

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