ONTARIO POWER; BLOG # 157; NOV 14, 2014

THE MESSAGE:

October 2014: Ontario’s breath-taking, record-breaking month for electricity bills reveals that wind power plays a significant role in surplus power sell-off at a substantial loss.

MY MILK HURTS! YOU GUYS GO AHEAD. HURRY!

REPORT BY PARKER GALLANT AND SCOTT LUFT

New figures reveal that in October, the Ontario government paid $1 billion more for electricity than the electricity market value of that power. Numbers released by the Independent Electricity System Operator (IESO) show the Global Adjustment Fund for the month of October topped $1.0 billion for the first time ever. This estimate exceeds the September estimate by more than $200 million.

TO THE MOON!

The record-breaking month will eventually affect all electricity users, but the immediate direct impact will be on any electricity user holding a retail contract from one of the re-sellers of electric power in Ontario. In November, they will be charged an additional 10.1 cents per kWh on top of their contracted price, likely in the range of 4 – 6 cents per kWh. For an average household using 800 kWh per month, this would mean an extra charge of $80. For industrial or agricultural users, the added cost would be much higher.

The situation has developed as a result of Ontario’s rush to incorporate renewable energy in the form of wind, solar and biomass into the grid without proper planning on how this new capacity would align with demand. The result is that during the spring and fall seasons, when demand is lower, IESO has a surplus supply capacity of over 100% during many hours of the day. Through the 'Global Adjustment Fund', Ontario’s electricity consumers pay contracted generators to idle or curtail generation of thousands of megawatts.

HOLD IT BOYS! CUT BACK ON THE FLOW! 

In October, wind power generators produced almost 600,000 MWh of electricity at a cost of $81 million and additionally were paid for another $11 million for 100,000 MWh that they could have produced, but were asked not to add to the grid. Due to the glut of power in October, Ontario sold this surplus power to neighbouring jurisdictions at an average of 4.31 per MWh or $2.6 million, resulting in a loss of almost $90 million for Ontario electricity users.

This estimate does not include the amounts paid to Bruce Nuclear for 400,000 MWh of “steamed off” nuclear production. The reason is that wind power is guaranteed priority access to the grid under the 'Green Energy Act'. Other sources of production must be reduced in the event of surplus wind and solar power generation.

Despite this situation, Ontario continues to push for an expansion of unreliable wind power capacity. Currently there are over 700 megawatts of capacity that are under construction, or in the approval process, or the subject of various appeal procedures. In each of these cases, the Ontario government has options to do the sensible thing and end these projects, saving Ontario electricity consumers from a 20-year commitment to the green energy folly. Instead, the Ontario Power Authority has plans to issue an RFP for an additional 300 MW of on-shore wind capacity in early 2015.

THE ONTARIO CONSUMER

Have your wages gone up 65% in the past 8 years? The price of electricity in Ontario has. Incredibly, despite these massive historical increases, power rates are projected to rise by and additional 40 per cent over the next four years. This means we will be paying more than twice what is paid in neighbouring provinces and states. 

LOCAL ONTARIO HYDRO UTILITIES

If you decide to buy your hydro from your local Ontario hydro utility, the electricity rate that you pay is set by the government of Ontario (the RPP rate). This price generally changes every 6-months, on May 1 and November 1. 

Since 2009, utilities across Ontario replaced meters used by residential customers to introduce Time-of-Use meters, so called, "Smart Meters". The utility companies use a different pricing formula for customers with time-of-use meters, since these meters can not only report on how much electricity you use but also when you use it. 80% of Ontario's Hydro users are now billed based on time-of-use. With the latest increase on May 1, 2014 the price of off-peak power was increased to 7.5 cents/kWh. Mid-peak power was raised to 11.2 cents/kWh and on-peak power increased to 13.5 cents/kWh.

ONTARIO ELECTRICITY RETAILERS

Ontario Electricity Retailers cater to consumers who want long-term electricity price protection. Electricity retailers in Ontario can provide a fixed electricity rate for up to five years. For residential consumers, electricity retailers generally offer one fixed price per kWh, regardless of when the electricity is used and how much hydro is consumed. 

When comparing fixed electricity rates offered by energy retailers with the RPP rate charged by your local utility there is one very important difference of which you must be aware. It is known as the Global Adjustment Fund (formerly called Provincial Benefit). All of the extra fees on your hydro bill (such as delivery fees, admin, debt retirement, etc.) will generally be the same regardless of whether you purchase hydro from your local utility or an electricity retailer.

The one exception is the Global Adjustment Fund. This will be added to you bill (or theoretically removed from your bill since it can be negative) only if your electricity is supplied by a retailer (since this charge is already embedded in the RPP rate). Lately the Global Adjustment has been about 5 cents/kWh so it makes a big difference and must be considered when comparing rates.

THE QUESTION:

    

DID YOU KNOW? The average person spends 3 months of his / her lifetime sitting on the toilet.

THE LEMON GOES TO:

Tom Mitchell, president and chief executive officer of Ontario Power Generation whose compensation is $1.7 million.

THE QUOTE:

"As a dad, you are the Vice President of the executive branch of parenting. It doesn't matter what your personality is like, you will always be Al Gore to your wife's Bill Clinton. She feels the pain and you are the annoying nerd telling them to turn off the lights." 

- Jim Gaffigan

THE CLIP: