Not another Long-Term Energy Plan

The Minister of Energy will produce a Long-Term Energy Plan (LTEP) in the not too distant future. I've offered commentary during the planning period of two earlier LTEPs, in 2011 and 2014, but my advice this time didn't require complying with any official input period because it would be officially rejected anyway.

My advice on preparing 2017's Long-Term Energy Plan is simply this: don't.

I've been asked for thoughts on the new LTEP a couple of times, so I'll present some here primarily for the frequent readers of my work, including some authentic public servants, and hopefully also for a Minister of Energy - although probably not today's.

The primary reason for individuals to avoid the LTEP process is it's been a gimmick - a tool to present Ontario Liberal Party (OLP) policy to the electorate as if it was professionally and independently developed. The connection of professionally developed policy and elections began in 2007. The OLP had come to power in 2003 aided by displeasure over the handling of the electricity file by the previous Progressive Conservative (PC) government. It worked quickly in redesigning the sector to include a professional planning body, the Ontario Power Authority (OPA), which was tasked with producing an Integrated Power System Plan (IPSP):

1. The initial IPSP was submitted to the Ontario Energy Board for consideration in August 2007, just in time for the OLP to campaign on the document for the October 2007 election,
2. the first LTEP was put out early in 2011 to be the basis for an IPSP, and the OPA did have a draft IPSP on the minister's desk prior to the election in October 2011, although the OLP never did let that draft into public view,
3. the next LTEP came out late in 2013, and served as the basis for OLP electioneering on energy in the election that followed in June 2014.

Participating in the development of an LTEP is participation in developing an OLP election platform.

The occupant of the office of the Minister of Energy is currently Glen Thibeault, signalling this LTEP will be as politicized as ever. Last May a report indicated then Minister of Energy Bob Chiarelli, "at loggerheads" with "Environment Minister Glen Murray ...over the possible effect [of carbon costs due to the Climate Action Plan] on electricity prices." At the time Glenn Thibeault was Murray's Parliamentary Assistant, so the introduction of Thibeault as Minister of Energy, in June 2016, was confirmation Chiarelli's concern for electricity pricing had lost the battle. During his first 6 weeks as Minister of Energy Thibeault directed the construction of a $1.4 billion hydro line to service 10,000 distant consumers and refused to recognize electricity pricing as a crisis.

Eight months later, Thibeault sat with the Premier at a press conference due to a crisis. It's unclear if the crisis was electricity pricing or their party's polling numbers, but the actions taken to resolve the crisis don't address the fundamental factors that drove prices higher - so it's probably the polling.

Ontario's next Long-Term Energy Plan is to be produced by a rookie minister three-quarters of the way through his first year in the office, during which he's moved from not seeing a problem with costs to burdening a future generation in order to offer 25% off electricity pricing to 2018's voters.

enough of experts: The End of the IESO

“I think people in this country have had enough of experts...
enough of experts from organisations with acronyms saying that they know what is best and getting it consistently wrong.”  -Michael Gove, June 3, 2016

Gove's "enough of experts" was one of 2016's most mocked phrases. Those considering themselves on the side of angels/experts ignored the nuance, but perhaps the public did not as Gove's side won the referendum to separate the United Kingdom from the European Union, and later in the year the ultimate establishment candidate failed to be elected President of the United States despite the obvious flaws of her opponent. When people stop to examine if they've had enough of experts from organizations with acronyms, like IESO, many discover they really have.

Perhaps the people have a point, and modern "so-called experts" are simply those who benefited from the current situation. As "the victors write the history", the profiteers win the title of "expert".

It has been an eventful few months for Ontario's electricity system mandarins.

On September 1st the IESO delivered an Ontario Planning Outlook (OPO) to a rookie Minister (of Energy) - a report they were directed to produce by the former, veteran, Minister of Energy. Surging electricity rates were considered the main issue in a by-election held the same day, in which the government lost a seat that had been a traditional stronghold.
Before September was over the government suspended its Large Renewable Energy procurement, justifying the decision with, "The IESO has has advised that Ontario will benefit from a robust supply of electricity over the coming decade to meet projected demand." 
Before November was over the novice Minister of Energy was sketching out themes for a long-term energy plan built upon market concepts the IESO frequently enunciates.

By the end of November the Premier had stood before her Liberal Party and referred to high electricity prices as "her mistake."

It's important to review what created the current situation in Ontario - as I've been doing on this blog - but it's also pertinent to ask "who" did this. An old saying implores commentary to "play the ball and not the player," but eventually everything is about people.

The failure of the global adjustment: a renewables story

I recently was asked about the cost of buying out one group of Ontario solar contracts. The microFIT (feed-in tariff) contract exposure I estimated at $3.9 billion. This is the eventual cost of all your neighbours' panels, but not the larger arrays, which I estimate will cost another $33.9 billion. Call it a $38 billion liability which matches the most famous liability in Ontario's electricity sector history: the $38 billion attributed to Ontario Hydro at dissolution in 1998 - liabilities attained in building almost all of the province's generation, its transmission infrastructure, and much of its distribution infrastructure.

The solar contracts that carry the $38 billion total will produce about 4.3 terawatt-hours (TWh) of electricity a year, which is roughly 3 percent of Ontario's demand.

This solar story is about the failure of the global adjustment mechanism.

Nuclear Ontario - and giving electricity away

first posted on cold air currents.

Since I posted Reliable Electricity Generation Capacity declining in Ontario the IESO's NPCC 2016 Ontario Interim Review Of Resource Adequacy was published.
It's exciting stuff:

The Independent Electricity System Operator (IESO) submits this assessment of resource adequacy for the Ontario Area in accordance with the NPCC Regional Reliability Reference Directory #1, “Design and Operation of the Bulk Power System.” 

Spoiler alert!
The report concludes Ontario's system can meet Loss of Load Expectation (LOLE) criteria for the 2017 to 2020 planning period once Emergency Operating Procedures (EOP) are assumed. EOPs are indicated to be essentially 1/3rd public appeals to reduce consumption, and 2/3rds voltage reductions.

Phewff.

I wrote "With the exception of 2013 the capability at peak has declined every year since 2010, despite IESO-connected generator capacity being greater now than it was six and a half years ago," so I thought it only fair I offer a brief analysis of how the IESO is meeting the reporting requirements for resource adequacy - and the repercussions of how they are doing so.

Historical ignorance: on energy losses in decadent Ontario

"marked by decay or decline"

Accusations of losses on electricity exports, and government denial of the fact, is far from news, but the reappearance of the topic in Ontario's legislature demands it be reviewed anew.

Progressive Conservative Leader Patrick Brown says the province sold $9.4 million worth of excess electricity for just $144,000 on Nov. 10...
Brown says Ontario has "given away" $6 billion in surplus electricity since 2009 by selling it at a big loss...
Energy Minister Glenn Thibeault...says Ontario made $230 million in 2015 by selling excess electricity to neighbouring jurisdictions.
Thibeault says Ontario suffered through power shortages and brown outs when the Conservatives were last in power, and had to spend up to $500 million a year to buy electricity from its neighbours to keep the lights on.
   -the Canadian Press via ctvnews.ca

I wrote on the costs to Ontario ratepayers of cheap exports almost 6 years ago, in rebutting the same spin as the Minister delivered yesterday when presented by a previous Premier. Later, in 2013's Ways to estimate Ontario's losses on electricity exports I demonstrated multiple methods to quantify losses on exports. The estimates of losses vary by methodology and assumptions, but if methods are applied consistently all indicate increased costs to Ontario consumers from producing far more electricity than necessary to meet their demands .

I won't revisit all the arguments I've made in the past, but instead tailor a response to the rookie Minister's old denials, emphasizing how poorly he is prepared to undertake the task of developing a plan for the sector.

Reliable Electricity Generation Capacity declining in Ontario

Ontario's electricity sector provided some material worthy of commentary over the past week.

A new 18-month Outlook issued by the IESO (the province's system operator) begins cheerfully enough:

The outlook for the reliability of Ontario’s electricity system remains positive for the next 18 months, with adequate generation and transmission to supply Ontario’s demand under normal weather conditions.

This is reassuring - unless there's a particularly hot run of weather:

Under extreme weather conditions, the reserve is below the requirement for 19 weeks over the entire Outlook period, with the largest shortfall being approximately 3,000 MW.

19 weeks in 18 months is 24% of the time - corresponding with the quarter of the year known as summer. In a province introducing carbon pricing in January (poorly), apparently the government is unconcerned about local warming.



There has been similar language in previous 18-month outlooks:

During the Outlook period, the...forecasts show that Ontario’s available generation exceeds projected demands...there are periods when Ontario’s available reserves are forecast to be ...below the IMO’s required planning reserve levels.

That from the Outlook produced in April 2002.

I'm sure today's Wynne government finds comfort in how well Ontario's system coped with heat waves in 2002 and 2003 - despite their braying indicating the opposite.

Ontario Energy Minister Previews Long-Term Energy Plan Themes

"I've really come to respect the enormous complexity of the energy and electricity system in Ontario."

Ontario's rookie Minister of Energy, Glenn Thibeault, is now confident enough of his grasp of the province's energy system that he unveiled themes for an upcoming Long-Term Energy Plan in a speech to the Empire Club:

1. Nature and style of procurement should be technology agnostic
2. Ontario's electricity market renewal/reform to provide better value
3. Empowerment of consumers

These are ambitious themes. Unfortunately Minister Thibeault didn't display an understanding of the institutional barriers to change, and he's going to need to confront the demons of the sector before meaningfully advancing any of these goals.

He seems to expect the barriers to deliver change.

something about electricity rates: the Premier's mistake

Premier Kathleen Wynne is calling high electricity prices her “mistake,” begins a report on her speech at the Ontario Liberal Party's annual general meeting. The statement would appear sincere if accompanied by an explanation of exactly what she thought her mistake was. As a political tactic, as I think it is, it's a good move in positioning the Liberal party for the election coming in 2018.

...a contrite Wynne told 850 Liberal delegates at the party’s annual general meeting here that her “government made a mistake” by allowing rates to soar.
“It was my mistake and I’m going to do my best to fix it,” she said...

Tactically, I think the move is based on two things:

• the political rule that the electorate's anger is not sustainable
• most expensive electricity contracts have now entered service and, combined with OPG's poor rate application, upward pressure on rates was, and is, planned to be less severe over the next couple of years.

These realities may allow the Premier to now position herself as responsive to people concerns. Adrian Morrow's report shows how she'd like to end up positioned for the 2018 campaign:

“I will do my very best to listen, to respond, to lead, and to serve you and the people of Ontario better,” she said. “I will be right there with you: As premier, as leader, I’ll be there with you as Kathleen, a proud mother and grandmother.”

These are the factors that put some wind in the sails of Wynne's Liberal ship. An article by Robert Benzie notes some of the content presented to the assembled Liberals by master strategist and Liberal campaign chief David Herle:

Even though [opposition leader] Brown publicly broke with social conservatives in August — saying he supports abortion rights, same-sex marriage, and the modernized health lesson plan — Herle’s findings suggest the Liberals plan to paint him as one.

Simply put, the Ontario Liberal Party is positioning the party for a culture war - with a caring grandmother running against a jerk.

It's a promising but risky tactic.