Monthly Ontario Electricity Bills Soar and Fall with Nonsensical Global Adjustment Charge

A certain type of electricity consumer in Ontario is subject to billing based on their hourly usage at a market rate, plus a global adjustment charge.

The Global Adjustment (GA) is the difference between the total payments made to certain contracted or regulated generators/demand management projects, and market revenues. (IESO)

The 2nd estimate for January's global adjustment charge, posted January 31st, is $623.6 million, or $50.65/MWh.

Which is nonsense.

An average "Class B" consumer, if charged by the calendar month, had a November 2012 commodity charge at $80.90/MWh, the highest rate since 2002 (not accounting for inflation).
The next month, December, the charge dropped to $66.15/MWh; the lowest price in 27 months.
I estimate a preliminary figure for January of $82.84/MWh, smashing through November's elevated level (HOEP of $31.59 in addition to the $50.65 2nd estimate of the global adjustment).

There is no rational basis for this monthly roller-coaster, lottery inspired, pricing.

2012 Ontario Wind Production Impacts Exports and Price

I've run some data analysis and noting a couple of metrics that indicate characteristic impacts on an electricity market of increasing intermittent generation guaranteed priority access to the grid.

For each of the main sources of electricity generation in Ontario, I found the minimum and maximum levels of the past couple of years and then grouped the production into 8 levels, calculating average HOEP (Ontario market price), and net export volume for each.

As expected, net exports were much higher during hours of higher wind generation.  This is in stark contrast to hydro, coal and gas generation.

Ontario's Electricity Exports Surge: Are they killing us?

I noticed some large export volume moving out of Ontario yesterday, and took a couple of minutes to see how often, in the past, we had been exporting at this level.

Not often.  
The answer is instructive as to the nature of Ontario's reporting of statistics in it's generation of electricity.

IESO Intertie Schedule and flow data summarized by state/provinde

The immediate data indicating import/export activity is the Independent Electricity System Operator (IESO) Intertie Schedule and Flow Report.  I've been capturing the hourly data from that report since April 1, 2011; Hour 14's 3707 MW is the highest net export level since I started collecting the hourly data from this report in April, 2011.  The fact this record occurred at 2 pm will surprise many as the very common opinion is that Ontario's high export levels are driven by excess production from baseload plants during low demand periods.

Hundred of millions of dollars kept by Ontario's Ratepayers

The price of the electricity commodity in Ontario was only 2% higher in 2012.  The figure is a lot lower than anticipated, and it's worthwhile reviewing why that might be.

Sometimes I think it's a sin
When I feel like I'm losin' when I'm winnin' again. 

-an incorrect recollection of Sundown

According to the year-to-date "commodity charge" noted on the Independent Electricity System Operator (IESO) Decembers' reporting, the commodity charge was $73.3/MWh in 2012, up from $71.95 in 2011 (for a class B customer).

The increase is far less than anticipated in Ontario's Long Term Energy Plan.  The introduction of the Green Energy Act, in 2009, was accompanied by claims the impact on bills would be "about 1% per year of additional rate increase associated with the bill’s implementation over the next 15 years."  Expert analysis, such as that performed by Bruce Sharp, would soon show the costs would be much higher, and the government's November 2010 Long Term Energy Plan revealed "residential electricity prices are expected to rise by about 7.9 per cent annually" for the next 5 years.

With a market value of approximately $10 billion, total cost inflation in 2012 amounts to approximately $550 million less than anticipated.

Ontario's Decision to Close Coal Plants: Air Quality/Emissions Savings Likely Overstated

The Ontario government has finally announced the closure of the remaining coal-fired units at Lambton and Nanticoke.  For some time the message has been that the government was on track to meet it's revised goal of 2014 (initially 2007 - then 2009), and yet there are no generation projects planned that make the ability to turn off the plants any greater in 2014 than they have been since September of 2012.

Premier Dalton McGuinty was in Newmarket today to announce the Lambton and Nanticoke coal plants will stop burning coal by the end of 2013. The early closure is a result of Ontario's strong conservation efforts, a smarter electricity grid and a diverse supply of cleaner energy. Shutting down the last coal plants in Southern Ontario will significantly reduce greenhouse gas emissions and save the province $95 million.

I think the move will save money, and I'll not question $95 million.
The reducing greenhouse gas emissions I will question.

Background on why the coal-fired generators weren't already retired 

Rebuttal to conservation and demand management claims

Ontario's Environmental Commissioner produced yet another report and newspapers reported on it.
I won't waste any more of my life reading clerical bureaucratic irrelevance produced by the innumerate Mr. Miller (I've suffered through 2 in the past), but seeing reference to costs, and savings, from demand reduction programs, I did quickly flip through the 2011 Conservation report from the Ontario Power Authority (OPA released in December 2012) - enough to get the impression that the claims are that from 2006-2011 $2billion in spending on conservation and demand management (CDM), with a cost in 2011 of about $30/MWh, has resulted in $4 billion in savings for customers.

I don't want to repeat an eroneous implication I made two years ago that the OPA just makes these things up (I'm OK providing the link), but I do want to state most of the claims are probably nonsense.

The frequency where the HOEP exceeds $30 is decreasing

If you pay $30 to reduce a MWh of consumption, and the consumer generally pays over $60/MWh, the savings is not $30.
Most supply in Ontario is either publicly owned with the capital costs already incurred and the operation costs set regardless of production, contracted on a 'must take' basis, or subject to "net revenue requirement" guarantees that essentially guarantee recovery of capital costs regardless of production.  The separaton of capital and non-fuel operating costs from the market price means that reducing the total MWh consumed primarily increases the price of the remaining consumption, with very little overall savings to the consumer.

New Years Bring Record Wind Generation in Ontario

According to initial IESO data there were some records set by wind generation in Ontario on January 4th 2013 - as there was on New Year's Day 2012, and January 1st 2011.

On January 4th, industrial wind turbines in Ontario produced a daily record of ~36,873MWh.
An hourly record of 1640 MW was set in hour 18.

At hour 18 Ontario was a net exporter of 2086MW, and the Hourly Ontario Energy Price (HOEP) was $24.32/MWh - if all the wind output was purchased at the initial feed-in tariff (FIT) price, the loss on exporting the wind power in that one hour would be ~$181,500.

The average HOEP for the day was $22.07/MWh, which, under the same assumptions the day's revenue for wind generators on the IESO-controlled grid at ~$4.8 million, with the resale value at ~$800 thousand.

A $4 million loss.

2012 Ontario Electricity Statistics Show increased use of Fossil Fuels

Postscript, added January 12th, follows original post of January 3rd.

A first look at 2012's electricity statistics yields the surprise conslusion that prices charged to Ontario ratepayers were far more stable in 2012 than anticipated, and that the Green Energy Act darlings of wind and solar generation contiued their growth while demand did not grow.  Closer looks show these may be rather meaningless stats - hiding increasing emissions, and increasing shifting of the costs of our electricity from the ratepayer to the taxpayer.

Growth in wind and solar generation in Ontario's electricity system was accompanied by growth in coal and natural gas-fired generation.
Greenhouse gas emissions likely rose along with coal and natural gas-fired generation, despite wind output growing a little under 20%, and solar growth I estimate above 60% (~540 GWh).
Solar figures are necessarily estimates because none exists in IESO's reporting, as it is all embedded (as is, in all likelihood, a significant amount of wind production).
The cost of the additional solar generation in 2012 I estimate in the $100 million range.

The IESO will likely report a very small decrease in Ontario demand for electricity in 2012.  That will be true only because the IESO reports Ontario demand as the sum of generation that is on the IESO controlled grid plus imports - meaning the growth in embedded generators is not reflected in IESO figures for demand.

In summarizing 2011 the IESO claimed, "Ontario's wind generators are playing an increasingly important role in meeting demand for electricity."  The passage of time makes that statement increasingly nonsensical.  Again in 2012, net exports rose - and again, the rise was similar to the rise in wind generation.  Net exports spiked during the dramatic drop in Ontario's demand in 2008/09, but the trend since 2006 is evident.