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.