Electricity in Ontario as 2014 ends: high prices, demand destruction, and governance in decline

I ran my numbers earlier today to update my weekly shadow reporting page.  I expected the figures to be bad (they are), and this week I contributed to making them worse.

On average, each hour of the past week Ontario was exporting 2,827 megawatts more than it was importing.
That's a record for any week since the alleged market opened in 2002.

The weighted average Hourly Ontario Energy Price (HOEP) was $5.66/megawatt-hour (MWh), which is slightly over half a cent a kilowatt-hour and slightly under the charge Ontario's consumers pay to allegedly pay down an allegedly stranded debt.

The HOEP is calculated only on Ontario Demand. Weighting the hourly price to net exports indicates an average rate under $4/MWh over the just past week. The best price an Ontario electricity hostage rates is $77/MWh (7.7 cents/kWh). So the most optimistic presentation on the pricing of exports is that every hour Ontario's supply was sold outside the province for $206,000 less than captives of Ontario's regulated price plans paid for the same quantity of product.


One of the year's disappointments for me was the Ontario Energy Board's Market Surveillance Panel's rebuttal of statements from Parker Gallant. I can only assume the resolute imbecile willing to continue to numbers such as those from last week actually indicate a profit of $4/MWh on exports is first up for the next needless, yet lucrative, position.

November 2014 Sets another record—wind blows harder than ever!

By Parker Gallant and Scott Luft
[first appeared at Wind Concerns Ontario]

It was another “wow” month for the electricity sector in Ontario for November: power generation from wind set a new record of 879,000 megawatt hours (MWh). The cost for that production alone1 added over $108 million to ratepayer bills and coupled with curtailed wind production of over 70 thousand MWh cost ratepayers about $116 million dollars in a month that valued all generation at about $1.1 billion.2 

Wind made up 6.6% of total supply and represented 10.7% of what the market valued all generation at, but it also drives down the market rates which transfers costs to the smaller Ontario ratepayer. No small wonder why our electricity rates are continuing their relentless march upwards!

The Global Adjustment didn't set a new record as it did in October, but at $870.2 million it is the second highest on record, as is the $82.32/MWh class B rate. Coupled with the $16.49 HOEP (Hourly Ontario Energy Price), the “bare bones” price for the commodity will be 9.9 cents/kWh for most Ontario ratepayers. That price is before inclusion of all other nickel-and-dime charges such as regulatory, debt retirement, delivery, HST, etc.

The Market for Lemons

Breaking a long-standing rule, this is the first guest post published on my Cold Air blog

Bruce Sharp has "worked in the Ontario energy industry for twenty-seven years and have a background in power generation, energy management, industrial natural gas utilization, energy marketing and energy consulting."

I have nothing against energy retailers, but I think Sharp's work makes a compelling case they are inappropriate in today's residential electricity sector in Ontario.

_____

Introduction

The Ontario Energy Board has invited comments on the Effectivenss of Part II of the Energy Consumer Protection Act (ECPA). The problem is that optimizing this section of the Act is like perfecting a life jacket made of cement – the process may make sense in a very narrow quality sense but the product is ultimately very bad for the consumer. The prime question is “Why do we have at all an electricity retailing market for Ontario’s smaller consumers ?”

Summary

1. The Ontario retail electricity market suffers from an asymmetry of information and so is dominated by unsavoury sellers and gullible buyers. 
2. The Global Adjustment or GA – paid for by customers on regulated rates and those on retail contracts – already provides protection against varying spot prices. 
3. Ontario retail electricity contracts duplicate what is already being done by the GA, causing consumers to effectively speculate on the spot market price of electricity. These contracts are therefore very unnecessary. 
4. The extreme profit margins embedded in retail electricity contracts virtually guarantee a homeowner will incur an added cost. This cost can be $ 200 or more per year. 
5. If we must improve the cement life jacket, side-by-side bill comparisons should be proactively audited and verification scripts should be modified such that the retailer clearly identifies for the customer the option costs, the higher cost option and magnitude of the differential. 

What Goes Up is your price - as wind blows market rates down

The Fraser Institute recently released an analysis prepared by Tom Adams and Ross McKitrick that is particularly critical of wind energy as it impacts Ontario's electricity pricing, "What Goes Up: Ontario’s Soaring Electricity Prices and How to Get Them Down" (.pdf). Soon after the Canadian Wind Energy Association (CanWEA) issued a response (.pdf). Lorrie Goldstein wrote, in the Toronto Sun, that a paper Parker Gallant and I issued delivered the same message as the McKitrick/Adams study ("the study") . I suppose that's fair, and this post will show why criticisms leveled don't invalidate the study's conclusions, but do discredit the critics hired by CanWEA.[1]

McKitrick and Adams worked together to collect data and build an econometric model of the global adjustment (GA). I would consider myself as talented as almost anyone in data collection, formatting, storing, and querying, but certainly not statistical modelling, as McKitrick has done. I expect to complement the report in demonstrating some multipliers that do exist, but I won't comment on the model, Analysing at too detailed a level would reveal a myriad of problems with historical data, and cost shifting between months, and even years, incorporated into the global adjustment. None of which would be relevant to the implications and recommendations of the study.

One element of the study that I noted with pleasure was their model indicating wind acted as a capacity cost (and not an energy cost).

Many jurisdictions looking for the best way to keep the lights on are evaluating the best way to ensure reliable capacity exists to constantly meet demand. It's not uncommon to see a separation, at least theoretically, of "energy" value, or the worth of a unit generated, and capacity value - the value to be capable of generating "energy". The study claims wind shows to be a capacity purchase more than an energy purchase:

Wind capacity has massive explanatory power, effectively dwarfing every other variable except hydro capacity. This strongly suggests that ... the GA has evolved in a manner highly consistent with a system in which wind farm operators are contracted for capacity rather than merely generation.

Health Canada Wind and Health study unhelpful

It's been a tough week for some fighting Ontario's wind whimsy: part two

On Thursday Health Canada released Wind Turbine Noise and Health Study: Summary of Results. Media headlines in reporting on the release were largely along the lines of CBC's ignorant Wind turbine noise not linked to health problems, Health Canada finds, with some exceptions, including the Toronto Star's No definitive link between wind turbines and poor health, says Health Canada study, It seems to me the discussion now will be whether it is industrial wind turbines making people unwell, or people like me arguing that's possible that harms people.

The Star's introductory paragraphs do, I think, introduce the topic well:

Living near towering wind turbines can be extremely annoying but there is no connection between exposure to the wind turbine noise and health effects, says a new comprehensive Health Canada study.

Noise from wind turbines did not have any measurable effect on illness and chronic disease, stress and quality of sleep, the study found. But the louder the noise from the turbines, the more people got annoyed by different aspects — from the noise to the aircraft warning lights atop the turbines to the way they caused shadows to flicker.

But Health Canada said the study on its own cannot provide definitive answers and more research may be needed. It also pointed out that annoyance isn’t trivial — those who were annoyed were more likely to report other health issues.

From Health Canada's release:

Annoyance is defined as a long-term response (approximately 12 months) of being "very or extremely annoyed" as determined by means of surveys. Reference to the last year or so is intended to distinguish a long term response from one's annoyance on any given day. The relationship between noise and community annoyance is stronger than any other self-reported measure, including complaints and reported sleep disturbance.

Wynne government approval of Niagara Region Wind worst energy decision in years

It's been a tough week for some fighting Ontario's wind whimsy: part one

I co-wrote a piece with Parker Gallant that was put out by Wind Concerns Ontario on Wednesday, which received some attention before Health Canada released conclusions from a study regarding people and wind turbines the next day as Ontario's government approved the Niagara Region Wind Corporation (NRWC) project to erect 77 of the "largest turbines in North America" in West Lincoln. I hope to cover all these things today, but I must start with the NRWC decision, because I had planned to communicate why this rose to be the worst planned wind project after the contract for Big Thunder was eliminated - which was after I'd written that it was a big mistake.

The NRWC project is poor because of the environment it occurs within. The project was offered a feed-in tariff (FIT) contract on February 24th, 2011. At that time there was speculation this was a petulant award, placing industrial wind turbines in the opposition leader's riding shortly after suspending the possibility of turbines off the coast of the energy minister's riding. Said that minister at the time:

"Ontario could have taken the easy route and we could have not have made these critical investments - that was the advice of, frankly, both opposition leaders here in Ontario who have demonstrated a remarkable lack of leadership, fortitude and commitment when it comes to building a clean, reliable and modern energy system,"

From Hydro One's 2005 Annual Report

Let's talk about leadership, fortitude and commitment again - as I did in wasted on the traditional territory of the Mississaugas.

The NRDC project is located to the north of a transmission line the government has avoided entering into service for many years. That line was seen critical to increased trade, and growing the ability to "deliver 8000 MW more power ... from the Nagara Falls area to where it needs to be."

I'll try to show, with 2 maps, how the non-completed transmission project and the NRWC project relate.

A Carbon Tax for Ontario, today

There are lots of opinions about how to reduce global emissions of greenhouse gases. A carbon tax is frequently presented as the preferred choice of most economists, and it is a carbon tax that Ontario is ideally suited to introduce to its electricity sector. There need be no immediate costs to most consumers in introducing a tax which promises significant benefits.

A carbon tax could fulfil a political need, both domestically and internationally, to do something that is perceived as being about reducing greenhouse gas emissions. Every government wishes to present itself as active in reducing emissions. For the incumbent  Ontario government that will be important as the province is planned to enter a period of increasing emissions in its electricity sector. More significantly, Ontario could exert an influence beyond it's borders by introducing a very significant carbon tax in its electricity sector, and it could do so painlessly.

Figure 1: historical and forecast electricity costs

Since 2005 Ontario has recovered the cost of its electricity supply not simply through market rates, but through an additional "global adjustment" charge calculated to capture supply costs the market does not. That charge has been above $5 billion a year since 2010 and is anticipated to remain so for the next decade. Currently the global adjustment consists primarily of the costs of procuring supply less the money recovered from the sale of the supply to consumers.

One very contentious aspect of carbon taxation is what should be done with revenues. That should not be debatable in Ontario's electricity sector, because the revenues could simply be used to decrease the global adjustment charges currently payable by Ontario's consumers.

Another rebuttal to an Ontario Energy Board panel's decree of subsidy-free exports

“A wizard is never late ... nor is he early, he arrives precisely when he means to.”

Spoken by Gandalf in The Fellowship of the Ring -followed by laughter

The Ontario Energy Board (OEB) Market Surveillance Panel (MSP) last week released its Monitoring Report on the IESO-Administered Electricity Markets for the period from May 2013-October 2013. For the most part, the report is painfully boring and treats the irrelevant as if it's important, but it was interesting, to me, that for whatever reasons they spend time attempting to discredit claims that exports are subsidized, particularly as they site an example of those claims as an article by my friend, Parker Gallant.

Over the past year, the role of electricity exports in the Ontario market has been the subject of considerable commentary. Questions have arisen about the value that export transactions provide to Ontario consumers, and more specifically around the question of whether and the extent to which Ontario ratepayers are subsidizing export transactions (in other words, paying costs that are incurred as a result of export transactions). Two recent press reports have claimed that Ontarians paid over $1 billion to subsidize export transactions to neighbouring jurisdictions in 2013. The Panel considered the methodology that was used in arriving at this estimate, and examined in greater detail the costs that are triggered by exports to determine the extent to which those costs are not fully covered by the market price or by other charges paid by exporters.

I've added some emphasis to explain the premises required to fulfill the OEB MSP fantasy.

Over the past year professional sycophants may have taken direction from their government master to make something up to counter the reporting of Parker Gallant, and the NDP, but it is closing in on 4 years since I wrote McGuinty Thinks This is Fun?
Re-reading that post now makes me hesitant to continue here - I rebutted this drivel 44 months ago.

September 20th: Ontario electricity's cleanest day in my lifetime

Today is The People's Climate March day. Not being much for marching up and down the square, I thought I'd be better to write about the accomplishments and challenges in my province of Ontario, where this weekend may well be experiencing the lowest emissions from electricity generation in over half a century.

It's certainly the lowest emissions since I started capturing hourly data, which I have from September 1st, 2010. The reason is the scheduling off of non-utility generators, many of which are fueled by natural gas. Prior to yesterday the lowest value I'd seen for generation fueled by natural-gas was 291 megawatts; yesterday it dropped below that level in hour 3 and just rose above it as I write this (hour 8 of the 21st). I'm not certain the now closed Hearn and Lakeview generating stations would have operated at less than 200MW combined, so this really might be as low emission a day as Ontario saw in the past half a century.

The system operator (IESO) schedules curtailments of non-utility generators when Ontario is expected to have surplus supply for an extended period of time [2]. That is the case this weekend. Yesterday the IESO also required the curtailment of supply from Bruce Power's nuclear units after exporting as much as possible. [2]

My estimates of the supply Ontario ratepayers will pay for - including the curtailed supply

Midway into 2014, a lull in Ontario's electricity price hikes

There are a lot of lessons that might be learned from Ontario electricity system data for the first half of 2014. This post will show what I suspect are the most surprising numbers from the period.

Pricing

The Independent Electricity System Operator (IESO) June Monthly Market report that the year-to-date (YTD) weighted average Hourly Ontario Energy Price (HOEP) was $53.24/megawatt-hour (MWh).

That is up 89% from the $28.15/MWh in the June 2013 report.

The increase in the HOEP sounds expensive, but most Ontario ratepayers will see little inflation in the rate they pay for the commodity portion of their electricity bill. This is because Ontario applies another charge in addition to the HOEP, currently called the Global Adjustment (GA) charge. The GA exists to ensure the full cost of procuring supply is recovered by electricity consumers.

The GA is collected by different rates for different classes of customers and, for some classes, depending on where their billing cycle dates falls into the dates of the global adjustment process, but the most relevant rate is the "Class B" Rate: that rate averaged $32.65 for the first half of 2014, down 42.5% from the $56.86/MWh in 2013.

The Class B total "Commodity Charge" (the HOEP plus the GA) thus averaged $85.89 over the first half of 2014, up only 1% from the $85.01 for the first half of 2013.

The explanation for how an 89% rise in market pricing occurred concurrent with the lowest inflation in the actual commodity price in many years is not an easy one.

A Class A Crap Shoot

Under the summer's sun, Ontario's complicated electricity pricing mechanisms are increasingly causing functionally arbitrary pricing in the province.

A very brief review:

• Ontario introduced a competitive market for electricity supply in May 2002
• Ontario soon after froze prices for most consumers
• For 2005 Ontario regulated the pricing of it's legacy generation assets and introduced the "global adjustment" charge to recover the full cost of supply from consumers (essentially the cost of purchasing supply less the revenues recovered by sale in the market)
• For 2011 Ontario introduced a second global adjustment category, class A, intended to lower the cost of power to large users.

Prior to winning a majority in this year's election, the Liberal government initiated the expansion of the Industrial Conservation Initiative, which is the program where the "class A" global adjustment customer can lower their electricity costs by lowering their share of generation during 5 peak demand hours.

It is increasingly clear that Ontario's system operator can't determine Ontario's actual peak demand hours.

Estimating production from Ontario's solar panels.

When the Ontario Power Authority (OPA) released data projections made in supporting the development of Ontario's latest Long Term Energy Plan (LTEP) they showed the cost of purchasing generation from solar would grow about $280 million in 2014 (in 2012 dollars), and $443 million in 2015. The OPA anticipated that 45% of the growth in in generation costs from 2013 through 2015 would be due to the costs of purchasing production from solar panels.

45%

45% of the cost increase over a 2 year period puts solar, in 2015, as about 1% of supply but 10% of total supply cost (according to the OPA work for the LTEP).

I've spent some time trying to incorporate hourly estimates of solar input into my tracking of Ontario electricity data. It's not easy, and it's dynamic, so I'm writing this post to explain how I'm estimating solar production, why my estimates change, why they are better than anything else most, if not all, will see - and what the estimates show.

wasted on the traditional territory of the Mississaugas

"Ahnee, Bon Soir, Bojoo.

We’re gathering on the traditional territory of the Mississaugas of the New Credit."

So begins speeches in Toronto by Toronto's Premier, Kathleen Wynne. [1]

___

In March, 2013, Ontario Power Generation (OPG) announced, "Ontario’s new Niagara Tunnel is producing more clean, renewable, low-cost electricity at the Sir Adam Beck generating complex." The project had seen delays and early budget overruns which pushed the project cost up to $1.5 billion. The payoff for the work was to be "about 1.6 billion kilowatt-hours."

It hasn't been.

OPG announced the project complete and in service in March 2013. The growth in annual (12-month) production was ~600million kilowatt-hours, or 0.6 terawatt-hours (TWh). While this is less than 40% of the promised 1.6TWh, it is still presents far too favourable a picture of what happened after the tunnel entered service.

Ontario's electricity future isn't this Quebec Diversion

Importing electricity from Quebec is in the mainstream media again.
There are reasons the option appears attractive. Quebec has an abundant supply of hydroelectric power, so there is the appearance of an opportunity.  Additionally, the demand profiles of Quebec and Ontario could be considered complimentary: Quebec has a winter peak, and Ontario has had, in recent years, a summer peak.

Quebec figures from HQ document (Dec. estimated)

The peaks aren't as complimentary as they sound. Ontario acually has a winter energy consumption peak too. The peak use of electricity is usually in the summer as the province heats mainly with natural gas in the winter. That is not the case in Quebec, where the winter energy peak is an electricity peak.

Ontario has only had local calls for conservation over the past couple of years (Toronto area), but Hydro Quebec called for conservation during winter demand peaks in both 2013 and 2014.

Ontario's first (and only public) Integrated Power System Plan (IPSP), released in 2007, noted an additional 1250MW of "Quebec Interconnection" as part of supply intended to meet the desired "Renewable Resources Goal." That interconnection has since entered service.  I have been tracking hourly intertie data back to April 2011; connecting that data with Ontario's top 25 winter, and summer, demand peaks shows that the flow of electricity between the provinces is exactly as logic dictates it should be.

Ontario's next expense scandal: Endorsement and Condemnation

Tomorrow, Ontario votes to elect its next government.

It's been an interesting campaign for me, particularly because of some thoughts on the province's electoral politics I worked through writing on the last election, in 2011, and an ongoing interest in the relationship of numbers and narratives.

election results -
 as share of possible votes

My perception of provincial election campaigns are shaped by statistics on the share of possible votes (registered voters) achieved by parties. After 2011's election I began Lessons From Ontario's Record Low Election Turnout with:

One of Ontario’s 3 main political parties had a lower percentage of eligible voters opt for their party than had been the case since 1943.
That party won.

My premise has been that Ontario elections have been more about attracting voters, not moving the votes of voters from one candidate to another. This hasn't been true at the federal level, where the split in the Conservative movement returned successive majorities to the Liberal party, and it's not entirely true provincially, but the provincial conservatives should be able to win an election only by getting most of the people who vote Conservative federally to show up and do so provincially.

Not Honouring Ontarians: Wynne's Green Energy Contracts

I sent some numbers to Parker Gallant the other day, along with a question on political donations, and within days the prolific Mr. Gallant produced, "Constraining wind power in Ontario: Making your head spin..."

Before I introduce the figures behind that column, I'll provide some background on the Ontario Liberal party's approach to contracts.

Another election campaign in Ontario is underway, and some of it is a repeat of the previous election campaign; the Progressive Conservatives (PC) claiming they can better control costs and the incumbent Liberals claiming the PCs will renege on contracts. Contracts bind participants to obligations: the Liberal government has failed to protect the people's side of green energy contracts a couple of times since 2011's election - where there is a benefit to their party to do so.

First, there was the Korean Consortium (KC, aka Samsung). In April  2013 I wrote on how they weren't meeting contract requirements, or investing significant amounts of their own funds.  The KC deal, which PC leader Tim Hudak had stated, in 2011, he would kill, was re-written 2 months after I pointed out the Koreans weren't honouring the contract, but not killed.

The government claimed savings of $3.7 billion - money that they'd campaigned on not being possible to save in 2011.  Worse, the contract renegotiated - because the proponent had not kept it's initial contract commitments - guaranteed the KC a base price of 29.5 cents per kWh for the still contracted solar capacity; that's a price far exceeding what it would cost for, as one example, the public generator to provide grid-scale solar capacity.

So it looks like I saved Ontario $3.7 billion, but I could have saved far more if the Liberals had the decency to cancel a contract because contract obligations were not fulfilled by the proponent - instead of providing expensive plums to the negligent proponents in order to avoid having Tim Hudak be shown to be correct.

Hudak's numbers and the MSM's biased suspicion

I understand fact-checking political statements but let's be fair...

I'd read Maclean's "Infographic: Where the jobs are in Ontario", and was struck by a couple of things in the opening paragraph:

Ontario PC leader Tim Hudak is staking his electoral changes [chances] on a promise to create one million new jobs if elected, even while cutting 100,000 public sector positions. That may be a challenge since the provincial economy has created just 667,000 new jobs since the Liberals came into power in 2003. Nearly half of those jobs have been in the public sector.

Two things:

1. what is Hudak staking his electoral chances on? 
2. what message might the press be broadcasting? 

I think THE message here is that for a decade every time somebody got a job in the private sector another person was hired in the public sector. I'm going to discount the possibility those private sector jobs paid spectacularly well, and assume this is a big part of the $130 billion increase in Ontario's debt during the same period.

Ontario's electricity supply outlook is the worst in North America

Early last December Ontario’s Liberal government released their latest “Long-Term Energy Plan” (LTEP). The document indicated Ontario currently has sufficient capacity to meet “North American reliability standards,” unlike a decade earlier when the Liberals came to power in Ontario.

In 2004, Ontario’s supply outlook was not sufficient to meet North American reliability standards. Today’s margins are above required levels. This reflects the strong supply of electricity the province is enjoying. Ontario has gone from a deficit of 3,800 MW in 2003 to a comfortable surplus in 2013.

NERC 2013 Long-Term Reliability Assessment, page 5

North American reliability standards are the domain of the North American Electric Reliability Corporation (NERC). Within a week of the release on the LTEP in Ontario,NERC released its 2013 Long-Term Reliability Assessment, which noted, “In the summer season of 2018, the NPCC-Ontario Anticipated Margin falls below the NERC Reference Margin Level.”

4 years is a very short time for developing reliable supply.

Ontario supply was tight in 2003, but work was underway for more; ~1250MW of capacity returned to service by the end of 2003, ~1400MW in 2004, and another 500MW in 2005. [1]

The firm supply Ontario added from 2003-2005 is different than the capacity additions planned for the next few years, which is primarily from variable intermittent energy sources (vRES); wind and solar.

Zombie docs living in Ontario's zombie budget

The Ontario government delivered its budget on May 1st; the NDP announced they would not be supporting the government any longer on May 2nd, and the Premier threw in the towel putting Ontario into an election campaign.
The budget may never have been intended to be practical, but created solely to be a "zombie" document to reference during a campaign.

bad data illustration from page 134 of the 2014 Ontario Budget

I was surprised to see the budget repeated a graphic based on the same Hydro-Quebec (HQ) report I debunked in picking apart Environmental Defence's lousy report on Ontario Energy Costs.

The HQ report graphs values of 12.475 cents/kilowatt hour (kWh) on a 1000kWh bill) for Toronto [1] and 12.391 cents/kWh for Ottawa.

I don't mean to criticize the HQ report, although those are the two figures I know best in it and they are wrong.

I do mean to criticize the former Ontario government that cynically included numbers from HQ in an Ontario budget.  While I'm at it, I'll criticize their base too - apparently the urban voters favouring the Liberal party can't figure out what they pay for electricity, and that it is not what their government tells them Quebec's public electricity company reports they are paying.

Wither the I in the IESO: politics hit May's global adjustment estimate

It's called the IESO, for Independent Electricity System Operator, but it hasn't looked independent for some time, and never less so than this week.

On the afternoon of April 30th the IESO posted its "2nd Estimate" for April's Class B Global Adjustment (GAM) rates, and the "1st Estimate" for May's.  I noted a month ago how bad April's 1st estimate was; it was honestly bad.
May's first estimate of the GAM looks to be the opposite - dishonestly alright - and that's indicative of a bigger problem.

The budget released May 1st restated the Liberal government's desire to, "consolidate two electricity agencies — Ontario Power Authority (OPA) and the Independent Electricity System Operator (IESO)." A former bill to merge the two entities was introduced in 2012, but died when former Premier McGuinty prorogued the legislature and fled to Harvard. With the omnipresent threat of consolidation, there is not only the danger of a power struggle within Ontario's several electricity sector bureaucracies, but a danger that struggle will be won by sycophancy, and not capability nor competence.

The 1st Estimate

The public is not privy to the actual numbers used in calculating global adjustment estimates, but we do know the final figures, and the process is public.

pg 37 of  Market Manual 5, Part 5.5: Physical Markets Settlement Statements

Assuming consumption doesn't change a whole lot from month to month, we can use the rates ($/MWh) to estimate the 1st estimates. [1]

As an example:
last September the first estimate was a record $87.18/MWh.  That was close to the $62.45/MWh final GAM for August plus the difference between that final GA for August and the low 1st estimate ($40.13).  Ontario's record commodity rate, comprised of the Hourly Ontario Energy Price (HOEP) and the GAM, is $95.13(Feb. 2014), so the $87+ first estimate of the GAM component attracted some press attention at the time.

LTEP 2013: An unfinished plan

The Wynne Government's Achieving Balance: Ontario's Long-Term Energy Plan (LTEP 2013) isn't an energy plan; it's an electricity policy statement.

LTEP 2013 is inadequate; in it's sole focus on electricity, it does not address energy security and it does not address greenhouse gas emissions.
Ontario's electricity sector emits less CO2 equivalence than each of the car, light duty truck, diesel vehicle, and other residential energy consumption (furnace, gas) sectors. [1]  

The winter of 2013-14 showed an increasing linkage, in Ontario and other markets (particulary New England) of natural gas and electricity. Cold weather strained natural gas supply, threatening blackouts and sending prices soaring.

LTEP 2013 is therefore too narrow-focused to be an energy plan, and that limitation makes it unlikely to be a thorough electricity plan.  To the extent a plan exists, it anticipates increasing emissions from electricity generation while failing to plan for sufficient production to securely meet demand in a future that is, in planning terms, too close for comfort.

What LTEP 2013 "plans" on doing is continuing the mistakes that have driven prices up in the province since 2008.

The 5 principles of LTEP 2013

Wynne bungles elimination of debt retirement charge

Toronto's inept Premier has bungled the simple task of eliminating a billion dollar charge concurrent with halting a billion dollar credit.

Ontario intends to take the Debt Retirement Charge (DRC) off residential electricity bills, saving the typical homeowner $5.60 per month, after Dec. 31, 2015.
...The DRC would remain on all other electricity users’ bills, including large industrial users, until the residual stranded debt is retired.     [Ministry of Energy news release]

There's a great deal of trickery here as pre-electioneering results, again, in terrible electricity policy.

The Ministry of Energy news release notes the debt retirement charge (DRC) changes will occur as the, "Ontario Clean Energy Benefit (OCEB) ... is set to expire."

Some figures to explain the machinations:

• The DRC collects just under $1 billion a year, and the OCEB costs just over $1billion a year [1]
• The debt retirement charge (DRC) is 7/10ths of a cent on each kWh consumed in Ontario.
• Using a recent estimate of 17.25 cents/kWh, the DRC is 4% of all charges
• The OCEB is 10% of all charges (delivery, regulatory, etc.), but not on all kWh consumed
• The OCEB applies to residential, farm, and small business (less than 50kW average monthly peak) [source]
• more than half of all consumption is by large consumers/businesses not receiving the OCEB.

Consequently:

• With the end of the DRC and OCEB, voters' bills will go up for 2016, about 6% more than they otherwise would
• Expenditures on the Ontario Clean Energy Benefit will be reduced near 0
• Revenues from the Debt Retirement Charge (DRC) will be reduced by less than half, with the full burden of ongoing payments placed on the province's businesses.

Zombie Docs: Environment Defence's latest offence

This was first posted March 20th on my Wordpress site. My hope was the report being debunked would be generally ignored and this post would not have continued relevance. 

Unfortunately it's been a useful reference too often; as such, it belongs on Cold Air.

___

Environmental Defence issued what they consider a study, and it was treated as news (Globe, Star).
It shouldn't have been.

Your Home Electricity Bill: A Study on the Costs in Ontario includes some pedestrian costing estimation by a consultant, and regurgitates the spin from past reports that we had felt slain multiple times.

The costing breaks down a bill for $137 which it claims is "based on 800kWh/Month" - which I calculate as working out to 17.25 cents/kWh. The report also cites a Hydro Quebec study to demonstrate how Toronto and Ottawa, collectively known as Ontario (prices are actually higher in the rest of Ontario than these cities). One problem is the HQ data being graphed is in base units, with Montreal set to 100, as the base:  Montreal's $68.66/month (1000kWh residential demand) is the index, making Toronto's $124.75 182 on the index (because it's 82% higher).

This E.D. publication has Toronto rates at both 12.465 cents/kWh and 17.25 cents/kWh.

Awful.

Ontario Rates headed higher again - due to renewables

The Ontario Energy Board (OEB) has announced that electricity bills will be going up at least 2.4% a day from April 30-May 1st.

Fortunately it's only twice a year the OEB sets the Regulated Price Plan (RPP) rates for retail consumers in Ontario, so the annual increase isn't over 700%, but it isn't 2.4 either.
There's a couple of RPP plans; an old "tier" plan which charges less for the first tier of consumption, and the now more common time-of-use (TOU) scheme. Both RPP versions have rates set to average the the same amount; the calculations for that amount are communicated in a Regulated Price Plan Report.

Rates are set to average $92.50/MWh (9.25 cents/kWh) as of May 1, 2014; last year rates moved to average $83.95/MWh on May 1st.

Here's how the OEB's press release describes that annual 10.2% increase:

The price for consumers is increasing by approximately $2.83 per month on the “Electricity” line, or about 2.4% on the total bill, for a household with a typical consumption pattern of 800 kWh per month.

Ontario's rates are up near 10% a year since 2008
US rates are not [1]

So, the average cost of a kWh is going up 4% that day. Other portions of ratepayers' bills have been rising too, at times more rapidly than the charge per unit of consumption.

The rise in RPP rates has been a feature for over half a decade in Ontario. From 2008-2013 RPP rates increased an average of about 8.5% a year: US rates, over the same period, about 0%.

The OEB disguises the reason for the current hike in its news release:

The Global Adjustment, and a tale of a soaring wind and solar subsidy

It's been nearly 2 years since Greenpeace posted:

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%.

I responded at the time as the statement, and the misunderstanding of Ontario's convoluted pricing that lead to it, were nonsensical.  However, I thought I'd pull some quick figures to bludgeon truth in demonstrating how much cheaper nuclear has become, while the costs of renewables, and their friend natural gas, have skyrocketed.
And then I'll try to add a more accurate perspective.

I estimate figures on an ongoing basis and, according to my calculations, nuclear generation is responsible for ~38.7% of the global adjustment mechanism (GAM) charges over the most recent 12-month period.  That statistic is well down from the 45% Greenpeace sited.

What is escalating during this decline in nuclear's share?

Solar and wind generation is now up to 21.5% of the GAM, from the 6% cited less than 2 years ago.

LTEP 2013: The Liberals' Temporary Electricity Ploy

Ontario's short-term government announced a Long-Term Energy Plan (LTEP) in December, which they dubbed "Achieving Balance."  The well-written document has some promising language regarding cost control and flexibility, but is vague on how all demand situations will have supply to match.

The events of the past winter made it clear supply shortfalls are, in planning terms, imminent.  The LTEP is a flawed document in electricity planning, but it's a much worse if viewed as an "energy" plan.  It is a political document that doesn't foresee a comprehensive planning role for the Ontario Power Authority, tasked in the Electricity Act with producing an Integrated Power System Plan (IPSP) - presumably free from the glare of the political spotlight.
 "Achieving Balance" is a political document which ignores opportunities to leverage the low-emissions character of Ontario's electricity sector into positives beyond its borders, and could well harm the province's nuclear industry internationally.

The history of the planning of planning the electricity section is instructive for understanding the political placement of LTEP 2013, and the outcomes the last time planning structures were similarly ignored.

History of plans

The Ministry of Energy will work with its agencies to ensure they put conservation first in their planning, approval and procurement processes.

-Achieving Balance: Ontario’s Long-Term Energy Plan (Dec. 2013)

... future planning philosophy should be reoriented to emphasize demand management increasingly rather than maintain the focus on supply expansion, as is traditional.

-Report of the Royal Commission on Electric Power Planning: 1980 (Chaiman: Arthur Porter)

Stories tell numbers: Macleans silly Aglukkaq attack

John Geddes, sorta, has an article in Macleans: Aglukkaq touts emissions cuts, numbers tell another story.
Sorta, because the article is basically a longer version of claims made by economist Andrew Leach, a frequent contributor to Macleans, on Twitter.

According to Leach, "This answer from Min Aglukkak grossly misrepresents what the business as usual case in GHG modeling is":

Mr. Speaker, our government is committed to protecting the environment while keeping Canada economically strongly. Thanks to our actions, carbon emissions will go down by close to 130 megatonnes from what they would have been under the Liberals.

I described Leach's description of the Minister's answer as "a silly statement about a meaningless statement."
The Macleans articled subsequently calls the "130 megatonnes from what they would have been" a "meaningless comparison."

If life is a search for "meaningless", Macleans has done better than I: Minister Aglukkaq may have communicated that the government has the economy in mind as well as the environment, and that "carbon emissions will go down... from what they would have been under the Liberals."
Which would be a good political message in ~40 words.

Arbitrary pricing: The idiocy in the Ontario Power Authority's annual report

It's Figure 3, in browsing the Ontario Power Authority (OPA) 2013 annual report, that initially angered me.

You should know why, because it demonstrates why any business submitting to hourly, and/or monthly global adjustment mechanism pricing, is being charged arbitrarily, introducing unpredictable variability to their cost that cannot be justified and serves no purpose.

The problem is, appropriately enough, obscured in a bland taupe.  I have written a number of times criticizing the government's conservation/efficiency policies, which seem designed by well-paid people whose largest draw of electricity is their central air conditioning for well-paid people to benefit from programs centred on central air (as peak saver has been) - but I never imagined the allocation of "conservation" cost would exclude any allocation in July.

Fools' Day: Ontario's electricity sector gets more ridiculous

Oy vey

Ontario's electrcity system operator, the IESO, posted a 2nd "estimate" for March's global adjustment charge yesterday, along with an initial estimate for April's.

OPA tweet yesterday, featuring the IESO's
Bruce Campbell (with the glasses) and, on his
left side, the OPA's Colin Andersen

Both are bad - but the pricing of the last 3 months does provide some insight into Ontario's electricity sector worth pursuing.

The 2nd estimate is a credit of $8/MWh - based on a total global adjustment pool of $67.7 million. The final global adjustment has not been a credit since June 2008.
A credit would mean the market sales exceeded the contracted cost of supply, which might appear to be possible, as it did in February, when the weighted average Hourly Ontario Energy Price (HOEP) was $81.83; only slightly higher than March's $80.41.  Applying the arbitrary global adjustment charge to make March $21/MWh cheaper than February looks to ridiculous.

Were you wrong in February, or or are you wrong now?
This is not a question likely to get a response from the OPA/IESO global adjustment team. There is a near-total lack of transparency on the composition of the global adjustment which facilitates it being recklessly calculated and arbitrarily applied.

Smart - or not: Ontario's Regulator calls for more new meters

I looked into an Ontario Energy Board (OEB) Notice of Proposal after seeing a tweet:

The Board is of the view that, given the current metering infrastructure and pricing environment, it is appropriate to ... require a distributor to install a MIST [Metering Inside the Settlement Timeframe] meter on any installation that is forecast by the distributor to have a monthly average peak demand during a calendar year of over 50 kW.

The comments the OEB has received on the proposal are informative - as is the omission of comments from a couple of well-paid government organizations that should have an opinion.

This is, I assume, a complex subject - particularly for people under the impression all of Ontario's electricity consumers already have "smart" meters.

They don't.
The OEB proposal addresses, for better or worse, a gap in policy.

Essentially all residential consumers should now have "smart" meters reporting through designed protocols and networks.  According to the most recent OEB Annual Yearbook of Electricity Distributors, about 90% of all customers fall into the residential category, but they don't account for even 30% of overall demand.

Natural Gas hikes impact on electricity pricing in Ontario

"After re-checking its numbers, the IESO agreed that Luft was substantially correct"

The price of natural gas impacts Ontario's electricity price; probably in ways many people don't anticipate.

On March 18th, an article by John Spears presented generation figures from Ontario's natural gas-fired fleet that I perceived to be incorrect.  Ouput from the province's natural gas generators is down this winter.  I communicated my concerns to Mr. Spears and the source of the incorrect data, Ontario's Independent Electricity System Operator (IESO), and, on Friday a second article corrected the first.
I appreciate the efforts of both in rectifying the data error.

Data is much less powerful than narrative and, unfortunately, some incorrect narratives survive the correction of poor data.  I was aware of the mistake in the first Star article (claiming a rise in electricity generated from natural gas this winter) because I'd written of record natural gas generation during January's coldest period (much of it for export), and started a summary of February's electricity sector activity with, "February was a disaster for Ontario's electricity consumers - but not nearly as bad as it will be for Ontario's natural gas consumers."

Natural gas pricing is expected to remain higher than 1 year ago throughout the summer season as storage inventories are replenished for, primarily, next winter.  The implications for the future can be gleamed from the impacts of the past.

Refresher on Ontario's Market

Power at what cost: appraising Ontario Hydro's successors

It's been a decade and a half since Ontario Hydro was broken up into 5 successor companies.
Recently the generating company that is one of those successors, Ontario Power Generation (OPG), reported it's 2013 results - which weren't very good.  Earlier in the year Hydro One - the transmission and distribution successor - released 2013 financial results that indicated a record net income.

A day after OPG's 2013 results were released the government announced new Chairs to the Boards of both OPG and Hydro One.  It's not surprising that both new Chairs have backgrounds as politicians as both entities have image problems. A recent report by the Auditor General of Ontario hammering costs at OPG has many clamoring for changes in the governance there, and Ontario's Ombudsman has an active investigation into Hydro One's "billing practices and the timeliness and effectiveness of its process for responding to customer concerns."

OPG's 2013 performance is impacted by other entities.
This post is a broad overview of today's status of successor companies to Ontario Hydro [1], particularly in terms of their impact on the public generator.

Ontario Electricity Financial Corporation 

The Ontario Electricity Financial Corporation is, as noted in its first annual report, "the legal continuation of Ontario Hydro ... responsible for ensuring the prudent and efficient management of $38.1 billion (as of April 1, 1999) in debt, derivatives and other liabilities of the former Ontario Hydro."  Ontarians might think the OEFC is paying down debt, because since Ontario's wholesale market opened May 1st, 2002, they've been charged 7/10th of a cent on each kWh of consumption as a debt retirement charge (DRC).
That works out to around $1 billion a year.

Ontarians thinking debt at "the legal continuation of Ontario Hydro" is going down are wrong.

Looking at the history of annual financial reports, the total debt level of the OEFC is higher in the most recent report (see pg1-105) than it was in the report preceding the election of Liberal Dalton McGuinty as Premier of the province in 2003 (pg 16 here).

The blog, the question, the answer, and the wind moratorium?

I have a number of blogs - this being the main blog for my entirely my original content, and coldaircurrents the blog I usually post non-original content to, usually with some input as to why I find it relevant to the subjects I follow.
Yesterday I posted to a secondary blog I've been maintaining, partly to say more partisan, and meaner, things that I think may not fit with the brand I've built here.   The particular post is partisan, but its content is substantial, as indicated by both parties in an exchange in the Ontario Legislature's question period today.
I raised an eyebrow when commercial operation dates were mentioned in the question, but really couldn't avoid thinking there was a connection to my post when Minister Chiarelli says in answering:

the reality is since the first of award of contracts under the FIT program... there has been an actual moratorium on wind because we have not issued any new wind projects.

Where did that come from?
With the distinction between my blogs blurring ... here's a video of Lisa Thompson questioning Bob Chiarelli today, followed by my post of yesterday - which may have been known to both sides in the exchange.


Ontario Liberals Often Fail to Honour contracts (first posted at morecoldair.wordpress.com)

The Toronto Star ran an article recently indicating a political leader in Ontario would not honour contracts.   That leader was PC leader Tim Hudak, and since I've said in the past Ontario's ratepayers would have saved billions by electing Hudak's party when they had the change in fall 2011, I thought I'd take some time to show why that is, and how the current government has not honoured the contracts signed prior to that election. The PC's party "Changebook" 2011 campaign platform included;

We will end the feed-in tariff program that, in some cases, pays up to 15 times the usual cost of the hydro. Hardworking farmers and other Ontarians who signed contracts to host energy production on their property will have their contracts honoured. But there will be no more of these deals. We will end the king of all secret, sweetheart deals – the $7 billion Samsung deal...

As Mr. Hudak's stance of trying to end contracts is portrayed as being impractical, in the Toronto Star article and elsewhere, it's important to note that in the two years following that election there has been little new contracting of supply.    Comparing the OPA's 2013 Q3 – A Progress Report on Contracted Electricity Supply to the same report for the quarter prior to 2011's election, only 33.6MW more "wind" shows as being contracted ( 5,755MW total), and 62.7MW more solar (of 2,050MW total).    The majority of renewable supply contracted since July 2011 is the conversion of Atikokan from coal to biomass (Hudak is currently being criticized for supporting another biomass project).

Declining security and soaring industrial rates: February numbers show Ontario's Energy Policy is non-existant

February was a disaster for Ontario's electricity consumers - but not nearly as bad as it will be for Ontario's natural gas consumers.

Here's some storylines from my first look at February electricity data from the Independent Electricity System Operator (IESO):

• $81.39 weighted average Hourly Ontario Energy Price (HOEP), which is up $16.40 from January, and 178% over February 2013 ($29.31)
• Ontario Demand is shown [1] as 11.4% lower than January 2014, and 2.8% higher than February 2013
• Total market value of ~$1.05 billion, by HOEP, is up 5% from January, and 177% from Feb. 2013
• The 2nd estimate of the global adjustment is $178 million, up 10.8% from January's final, and down 66% from February 2012
• The total costs (market value at HOEP plus global adjustment) will be $1.23 billion if the global adjustment is not changed when finalized, which would be the highest monthly value since the market opened in May 2002
• Exports were ~966GWh, down 44.5% from January and 22.2% from Feb. 2013
• Imports were ~877GWh, up 88.5% from January and 248.6% from Feb. 2013
• Ontario's natural gas generators produced ~ 1.47TWh in February, down 39% from January and 36.5% from Feb. 2014

The increased HOEP is entirely a natural gas supply story: the victims in the story are the largest consumers in Ontario.  

The chart refers to "Class A" global adjustment consumers as "industrial" - which should be true, but isn't entirely correct

Should OPG sue the IESO and/or the OPA... and other questions from the market of 2014

Energy markets in Ontario have behaved far differently during the early months of 2014 than they have for many years. Most Ontario ratepayers will experience a rare instance of the total commodity cost dropping in January.  Unfortunately, that's not going to be a trend; the first 7 weeks of 2014 are more notable for questions the behaviour of Ontario's energy markets bring up regarding Ontario's markets, the reliability of it's energy supply chain, and the competency of it's bureaucracy to manage the system in a manner that provides value to both ratepayers and the overall public.

January's final numbers for the Ontario electricity market are a monthly average (weighted) Hourly Ontario Energy Price (HOEP) of $65.43/MWh (the highest since December 2005) plus a global adjustment rate (class B) of $12.61/MWh: the total, $78.04/MWh, is down from $81.58 in January 2013.

While the total commodity rate hasn't changed much, the changed composition of the price, a lower global adjustment charge and a higher market rate (HOEP), makes a big difference to Ontario Power Generation (OPG).  Here's how Parker Gallant and I put it last May:

The big lag on OPG’s earnings has been the unregulated hydroelectric segment. It contributed more than $500-million or 46% of OPG’s pre-tax generation in 2008. Now it loses money. The reason for the loss is simple: OPG’s non-regulated hydro-electric assets are the only significant generation in Ontario exposed to the market price of electricity, which has collapsed under the McGuinty Liberal green energy manipulations. OPG’s non-regulated generation has fallen by 31% since 2008, revenue by 58%.

In 2014, coal-fired generation is removed from the market place, and suddenly the value of production from OPG's non-regulated hydroelectric assets is receiving ~$71/MWh, instead of the $33 it received for the corresponding period in 2013.  I estimate the difference is nearly $90 million in revenue to OPG, and we are only 7 weeks into the first year without coal.

January's exceptional electricity market

It's been cold.
The temperature impacts energy pricing.  Ontario's electricity system operator shows an average Hourly Ontario Energy Price (HOEP) of $65.43 per megawatt-hour (MWh) - which is the highest it has been since 2005, although well below the ~$89/MWh (8.9 cents/kWh) that regulated price plan consumers will average.
A couple of entries on the "Ontario Network for Sustainable Energy Policy" blog (parts 1 and 2), dealing with temperature and price caught my attention this week; the first of which concluded observations "stimulate further discussion about the drivers of Ontario’s electricity system, "which can then feed into conservation and demand management discussions...and about sustainable energy service provision in this province more broadly."   

I'll analyse based on two months with comparable demand data; comparing two similar demand periods migh communicate more about the impacts of supply and pricing changes.

This being Canada, it doesn't seem that surprising that January provides the majority of the highest demand months over the past decades[1]. 

This blog has covered a number of pricing/demand matters before - so let me skip through the main points that might stimulate discussions outside of schools:

Debt and indecency in Wynne's Ontario

Toronto's Premier Wynne has sent out Energy Minister Chiarelli to sing to the masses on the debt retirement charge burdening Ontario's electricity bills.
In the past we've seen Minister of Energy Chiarelli mangle the accounting related to electricity exports and the profitability at the public Generator, OPG; my rebuttal to the claims of profit levels at OPG included:

Profits that exceed those considered a fair return to the shareholder (the Province) for it's equity in OPG (all of it), were also to pay down the stranded debt.
And yet you still have a stranded debt charge applied to your hydro bill.

Now, regardless of how ridiculous the claim is following the last ridiculous claim, the Wynne government is looking at a line item charge (charges are BAD) on electricity bills, introduced by a Progressive Conservative government,(see what charges are) and telling us it should probably stay on the bill.

Compassionately, they are looking at a line item credit on the bill (credits are GOOD), the Ontario Clean Energy Benefit (OCEB) introduced by a Liberal government (see what credits are), and thinking maybe it should stay on there.

The Toronto Sun reported:

Hydro customers pay an amount toward that stranded debt with every bill.
Chiarelli said retiring that debt is taking a little longer than originally anticipated.
“The financial projections turned out not to be as precise as they were anticipated,” he said.
The ministry is now looking at options to ensure that when the OCEB comes off the bill, residential customers don’t face additional costs, he said.

At least until after another election, I'm sure it's useful to partisan Liberals to have a Conservative charge on the bill, amounting to 0.7 cents/kWh, and a Liberal credit, amounting to twice that amount (or more), but the existence of the debt retirement charge (DRC) has nothing to do with the existence of the OCEB.

Heck, the existence of the DRC has nothing to do with the debt levels either.

Power Surge: 2013's annual commodity cost increase equals rise from 2006-2012

2013 Ontario Electricity Annual Review: Part 2 

The cost of the electricity commodity surged in 2013. I estimate the total cost for electricity grew from approximately $10.2 billion in 2012 to almost $11.9 billion in 2013; $1.7 billion is also the growth of the commodity cost between 2006 and 2012.

The price paid by most consumers in the province is determined by two things: the costs of purchasing supply, and the distribution of those costs between consumer classes.
  

TABLE 1: costs are increasingly being recoverd via the global adjustment

The simplest method to estimate the total cost of the market is to take the IESO's "Total Market Demand" valued at the Ontario market rate, and add the Global Adjustment (which is the charge for the supply costs not recovered by the market price). 1

Between the IESO's hourly data and the monthly global adjustment values, not only the overall value of the market can be estimated, but the costs per unit for different consumer segments.

GRAPH 1: Note that exports are far below the "Total market", or average rate; making the Class B rate above the average

Wynne winding Ontario down

Today the U.S. Energy Information Administration (EIA) announced "new tables and maps in the Electric Power Monthly provide detailed accounting of generator additions and retirements"
The statistics presented will provide no comfort to Ontario ratepayers smarting from 16-17% electricity price hikes in 2013 as they look to surviving 2014.

The EIA figure for planned capacity editions in next 12 months (as of November) is 2,091.8 megawatts (Table 6.1).

The latest 18-month Outlook from Ontario Independent Electricity System Operator (IESO) indicated 1,884 megawatts of wind capacity due in 2014, but that is simply for generation on the IESO's direct grid.  Additional supply can be embedded within local distribution company grids.  The IESO's outlook notes:

Over the next 18 months, Ontario continues to expand its renewable resource capacity as more than 3,300 MW of wind, solar, hydroelectric and biomass capacity are expected be connected to the transmission grid. By May 2015, the total wind and solar generation connected both to the transmission and distribution networks in Ontario are expected to exceed 7,000 MW.

The EIA's figure for additional "Renewable Sources" to be added in its next 12 months in 5,566 MW.

This week's cold snap, accompanied by large exports to the United States, put an exclamation point on the stupidity statement that is Ontario's green energy waste.

Exports setting Ontario electricity market price

Parker Gallant and I recently wrote on the previous cold snap and noted that the market price in Ontario is sometimes set by exports.

Today that's the case.

Today I'll show some indicators of the day's pricing in the markets likely to impact pricing in Ontario.

Some quick background: the Ontario price I usually show is the Hourly Ontario Energy Price (HOEP), which is really an average of a market control price that is set every 5 minutes.  The U.S. screen captures (and links) below are locational marginal prices (LMP), which I believe are also 5 minute prices set by zone/location.  However, I believe Ontario only has hourly schedules of imports and exports, so the hourly change in exports can/should reflect what is about to happen to LMP's in the export markets.

MISO (Midwest Independent System Operator)

Polar Vortex almost generates a profit for electricity exports from Ontario

This post is a "re-blog" of sorts, as it is co-written with Parker Gallant, and has been posted to the Energy Probe site.  There's a couple of edits here, and I've included footnotes to support a number of the statements

The first 7 days of 2014 ended with an average market price higher than it had been in years.[1]  On January 2nd prices were sent upwards as neighbouring Quebec appealed for conservation during bitter cold which sent demand to near record levels.

When “total” demand, which includes exports, peaked at 25,980 MW at 7 pm of the 7th day, Ontario’s system operator indicated generation on it’s grid was greater than it had ever been[2]; strong nuclear, hydro and wind output was supplemented by record output from Ontario’s natural gas generators.[3]

The Hourly Ontario Energy Price (HOEP) was a high $278.93/MWh, but it wasn’t due to Ontario’s demand stressing supply. The key price drivers were coming from the grids connected to Ontario’s.[4]

As demand peaked on the 7th, exports averaged 3,187MW with multiple U.S. jurisdictions hitting winter demand records due to the cold impact of what is being called a polar vortex.[5]   This made January 7th a record day for revenue on net exports, with 62 GWh valued at approximately $7.3 million dollars (~$117/MWh). [6]

How profitable those exports were for Ontario entities is a matter of opinion. The same day saw record production of over 44 GWh from industrial wind turbines in Ontario. That production, even when fetching an average price of $111.41/MWh, wouldn’t make any profit.