Now and then: Jose Etcheverry Opines on Nuclear Power in Ontario

Yesterday's Toronto Star included an opinion/commentary from Jose Etcheverry [1]; Cancellation of Ontario gas plants pales in comparison to nuclear repair costs.  That the article appeared on a particular day is probably relevant to some campaign being run through The Star, but the article isn't timely.  Etcheverry has been saying the same thing for a decade; which allows for a review of his statements today to include his public work from years past.

The bill for the Darlington nuclear plant rose from the original estimate of $3.95 billion to a final cost of $14.4 billion. Despite the cost, Darlington — like every nuclear plant built in Canada — failed to perform as planned and now demands costly repairs. - Now

Source of graph explained here 

Failing to perform as Etcheverry planned a decade ago is true, because Etcheverry expected very poor performance.

In 2004 The David Suzuki Foundation published Smart Generation: Powering Ontario with Renewable Energy; Jose Etcheverry is listed at the top of the authors list (just above Paul Gipe).  Table 2 of that document predicts 51.2 TWh of production from nuclear generation in 2010 (it was 82.9), dropping to only 22.8TWh in 2015 - when the most recent figure I've seen from an Ontario Power Authority expert, is 93TWh.

The cost of a sunny week in Ontario

Ahhhhh, springtime, and a streak of brilliantly sunny days in Ontario.
Obviously my mind turned to capturing some changes to Ontario's electricity sector that are not being reported on by the system operator (the IESO), or the writers of all the contracts for supply (the OPA).

Now that streak is broken, and the rain is here, I've taken a couple of minutes after updating my weekly reporting figures to compare the 7 day periods starting on the 18th Wednesday of 2009 (when Ontario had virtually no solar) and 2013 - when we have some (my estimate was between 650 and 700MW).

Hours are not adjusted to Daylight Savings Time (hour 8 is 9am)

All solar capacity in Ontario is considered by the system operator as "embedded" generation - which means they don't see it or report on it.  What the IESO reports as 'demand' is not the amount of consumption in the system, but the amount of generation.  So without any solar data, the best way to estimate the impacts of solar output on Ontario's electricity sector is to compare the 'demand' shape from a period of comparable demand before solar capacity was substantial, and a brilliantly sunny week.

The change is quite dramatic.  While some of Monday-Friday changes might be explained by load shifting due to time-of-use pricing, the weekend is always off-peak pricing, and on the weekends the darkest hours are little changed, while what is being reported as demand is sharply down in the sunny hours.

Debt; Data, OPG, Water and Wind; Week end Update:

Thoughts on some recent articles of interest - combined with fresh Ontario electricity system data for week 17 (Apr. 24th-30th), and preliminary reporting for the month of April, (including new supply cost estimates)

Parker Gallant and I co-wrote a column which appeared in May 2nd's Financial Post.  A couple of graphics might have emphasized a core argument in Ontario Power Generation turning water into debt: that the hit to OPG's earnings in recent years is in driving down the profitability (now a loss) of the unregulated hydroelectric business segment.

Some comments on the article indicate people have been conditioned/brainwashed to repeat claims about OPG in general, and nuclear in particular, but the facts we point out indicate other business segments have not changed much.- the only generator left exposed to market pricing is OPG - and they are only exposed in the unregulated hydro business segment.

In Ontario, A Preference for Fraud

Yesterday the Chief Executive Officer of the Ontario Power Authority provided an updated estimate of the cost of bungling the Oakville Generating Station (OGS) in the morning; in the afternoon the current Premier of Ontario appeared before a committee investigating the gas plant boondoggles.

The Premier is described in one paper today as being "in the finest traditions of Sgt. Schultz," and yet from her words we can learn something, even when they are mainly communicating that she knows nothing.

"If we don't learn from the situations in Misssissauga and Oakville then we have failed those residents all over again," Wynne says     — (@AdrianMorrow) April 30, 2013

To Schultz/Wynne it's still only about the votes in Liberal-friendly ridings.

___

OPA Chief Andersen delivered a document on "The Costs of Relocating the Oakville Generation Station" - a document prepared for the OPA by yet another consultant (NERA).  I didn't read through that document having already reviewed the presentation slides used by Andersen [1], by pulling up the estimates written by star electricity analyst Bruce Sharp over 6 months ago (also here).  While the numbers vary a little, Sharp's methodology seems to be, once again, vindicated.

Determinants of electricity pricing in Ontario: Beyond the Global Adjustment

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 battle for the future of Ontario energy continues to be fought over many irrelevant numbers, such as how many billions nuclear added to the global adjustment pot over the past number of years.  It seems obvious to me that if the Global Adjustment plus market revenues equals the contracted price of power, what would raise prices is not the size of the global adjustment alone, but the size of the contracts.  In Ontario there is a lot of noise from forces communicating that $135-$800/MWh contracts aren't inflating rates, but $58/MWh contracts are.
Perhaps I'm a bad judge of obvious.

A breakdown of 'theoretical' figures will put the issue in a perspective on the performance of a contract-heavy electricity sector that may be of use somewhere beyond Ontario's borders.

The assumptions in the scenario (spreadsheet here)

The mix I've mocked up is based on Ontario's 2012 generation, and elements of the current supply mix.  There is nuclear production with guaranteed rates for output, others with a guaranteed base rate (Bruce B), set rates for solar and wind generators, fixed regulated rates for some hydroelectric generators, but not for others, and natural gas generators all have some assurance of revenues. [1]

Increasing the market rate (in Ontario the HOEP - Hourly Ontario Energy Price) therefore impacts only the unregulated hydro, and the natural gas production, until the HOEP exceeds the base rate for Bruce B.

In 2012's Ontario the HOEP averaged under $25/MWh, largely due to the natural gas price being depressed across North America.  Theoretically the market price should be just above the cost of fuel for a natural gas plant.[2]

Stranded Debt - Abandoned Responsibility

On April Fools' Day, 1999, Ontario Hydro was broken up into five separate companies, including "the Ontario Electricity Financial Corporation (OEFC) to manage the legacy debt and other liabilities not transferred from the old Ontario Hydro to successor companies." [1]   

Each year that followed, from 2000 to 2011, the OEFC produced an annual report.
Then they stopped.
As I write this 612 days have passed since the OEFC last produced an annual report.

2012 Budget graphic (forecast removed)

During the summer of 2011 the Progressive Conservative (PC) were attempting to make the elimination of a debt retirement charge (DRC), introduced by the same legislation that divided up Ontario Hydro into 5 successor entities, an issue in the pending fall election in which they hoped to displace the governing Liberal party.  My review at the time indicated the PC's had a plausible argument.  Subsequently:

• the OEFC responded with the seemingly early release of a highly politicized 2010/2011 annual report.[2]; 
• post-election, in December of 2011, the Auditor General of Ontario's 2011 annual report included a section on the electricity sector's stranded debt;
• the 2012 Ontario Budget, delivered late in March, 2012, did, at long last, contain a graphic illustrating an annual figure for the "residual stranded debt" as well as the "unfunded liability."

The budget graphic, upon reflection, is a reminder of how misunderstood the "stranded debt" (aka "Unfunded Liability") is.  The Electricity Act defines the stranded debt as "the amount of the debts and other liabilities [that] .. cannot reasonably be serviced and retired in a competitive electricity market".

The "residual stranded debt" is the share of the stranded debt that is not expected to be repaid by other "dedicated revenue streams" defined in the Electricity Act.
The Debt Retirement Charge (DRC) exists in order to service the residual stranded debt.

The concept of a stranded debt is now farcical to the point where the alleged financing authority, one that simply carries the credit credentials of a greater financing authority, cannot even produce a simple annual report.

Stupidity at the Toronto Star: the renewed campaign of deception

This is a brief entry, with lots of pictures, in an attempt to correct the head-twisting impressions spread in The Toronto Star's Mad about your hydro bill? Blame nuclear and gas plants.

The Star article is a rehash of the nonsense spread by ENGO's last year, instigated by The Star's Liberal masters as part of a renewed campaign to re-ignite the dishonest campaign that preceded the relatively decent period when Chris Bentley was the Minister of Energy.

The material to construct the article is apparently something delivered to the IESO by Navigant consulting: Navigant designed the global adjustment mechanism in response to Dwight Duncan's desire, back in 2005, to force down rates of public generation in order to fund private projects (explained here).  The IESO is currently holding stakeholder initiatives built around the musings of consultant Navigant on how to further steal from residential ratepayers and their public generator in order to enrich the participants at the circle-jerk. stakeholder initiative.

Billion Dollar Implications from AG Report on Gas Plant Cancellation Costs

Yesterday Ontario's Auditor General released a "Special report" titled "Mississauga Power Plant Cancellation Costs."
Sections grabbed my attention as I scanned the document, and are, I think, worthy of commentary.  A couple of points reflect on the competency of the Ontario Power Authority (OPA) in contracting electricity supply; others point to enormous costs ratepayers will incur due to the many, many contracts not investigated.

First, and most petty:

The OPA paid Eastern Power about $41 million in labour costs that Greenfield said it had incurred between 2004 and 2012 (we advised the OPA that $5 million of this amount is HST and can probably be claimed back from the federal government by the OPA) [pg 9]

OK.
Good to know - though I'm surprised the OPA (Ontario Power Authority) was not previously aware of how that whole tax thing worked.

In a previous column on another gas plant cancellation I noted the saying, "your first loss is your best loss" - another portion of the AG's report that got my attention was the timeline, particularly:

March 2009 | OPA amends contract with Greenfield, extending completion date and providing a significantly higher monthly payment for the electricity produced once the plant is operational [pg 6]