Ford government contracts new solar (and wind) generators

 Yesterday Ontario’s electricity system operator (IESO) announced its first procurement of grid-scale solar, and wind, generators in over a decade. The reported average price of $87.80 per megawatt-hour is presented as attractive in a historical context, but analysis reveals a far different trend for wind and solar within Ontario.

The government’s press release following the IESO publishing results of its “Long-Term 2 Energy Supply (Window 1)” procurement (LT2) includes:

Unlike the former government, Ontario is following the Auditor General’s recommendation on competitive procurements resulting in a 73 per cent cost reduction for ratepayers when compared to the previous Feed-in-Tariff contracts and 21 per cent lower than the Large Renewable Procurement (LRP). These results have proven more affordable than similar procurements in comparable jurisdictions across North America…

There’s a few reasons to wince at this boasting. Regarding pricing across places and time, it is not unimportant that the federal government introduced Investment Tax Credits (ITCs) and Accelerated Capital Cost Allowances (ACCAs), benefiting the latest pricing. More notably, if the results are 73% below the awful Feed-in-Tariff (FIT) contracts of 16ish years ago, but only 21% below the LRP of a decade ago, that’s a pretty good indication the previous Wynne government had acted on pricing.

Shortly after achieving power the current governing party, under Premier Doug Ford, cancelled the contracts from the previous government’s last procurement (LRP-Large Renewable Procurement). From the March 2016 announcement of the LRP results:

five wind contracts totalling 299.5 MW, with a weighted average price of 8.59 cents/kWh;

seven solar contracts totalling 139.885 MW, with a weighted average price of 15.67 cents/kWh; and

four hydroelectric contracts totalling 15.5 MW, with a weighted average price of 17.59 cents/kWh.

Yesterday’s announced price is 8.78 cents/kWh, which is quite similar to 8.59 cents/kWh: although they come a decade apart, and there is a time-value adjustment that ought to be made, there is also the increase in federal incentives for project developers. Wind pricing is little changed.

Whatever the government wants: The only explanation for Ontario electricity costs in Premier Ford’s 3rd term

 I hastily posted some nasty thoughts on X today after looking up an obscure “Final RPP Variance Settlement Amount”. It will take some work to explain what that is, and why it affirmed my worst thoughts of some people in current government and the formerly public service areas of the energy regulator (OEB), and perhaps the electricity system operator (IESO).

Here’s the OEB’s description of the RPP Variance Settlement amount (the amount):

This amount will reflect the consumer’s share of any accumulated variance between the actual price paid to generators and the forecast price paid by RPP consumers. If consumers have been paying more for electricity than was paid to generators, this amount will be a credit. If consumers have been paying less, it will be a charge. 

The best I can do to estimate and evaluate the amount posted on February 18, 2026 is to use figures for January. To use the OEB’s method: If the $128/MWh regulated price plan is more than the average of approximately $98/MWh class B commodity rate for the month, there is a credit.

There is not a credit: there is an increase of $343 million.

The timeframes don’t line up and it’s only one month: but applying my estimation method and the OEP’s reported amounts back to 2000, it is a month that is exceptional in a way my most cynical self anticipated. For the statistically inclined, the average difference between my method’s estimates and the OEB’s reported variance change was a little under $6 million prior to yesterday, but the standard deviation was about $75 million – which indicates the expected inability to line up timeframes but most months the moves are directionally the same, and larger deviations correct in the following months. This monthly the difference in my estimate is $545 million, breaking the  previous record of $211 million in what is a 4-sigma event; probability of which is 1 in 15,787.

But I expected something like this.