Early Childhood Education in Ontario: Bad Governance

In June of 2009, Charles E. Pascal, Special Advisor on Early Learning, wrote a Letter of Transmittal presenting a report he had been tasked with completing. It began:

“I am pleased to submit my report, With Our Best Future in Mind, which provides you and your government with a comprehensive plan of action regarding the implementation of your early learning vision. As per your direction, I have situated full-day learning for 4- and 5-year-olds in the broader context of moving further on Ontario’s Best Start goals for a seamless and integrated system to support children from 0 to 12 years old and their families.”

In December 2010, McGuinty is prepared to kill that plan entirely – implementing instead only his view of enriching his wife's union by stupidly putting teachers where none are required.

The Pascal report did note a role for the “Teacher” in early childhood education, but weakly. The report cites the responsibilities of the Teacher:

“Evaluates children's developmental progress withing the context of the Early Learning Program Curriculum expectations and provides summative reports to parents.

Prepares children for transition to the Grade 1 curriculum”

Both seemed forced at the time, and Mr. Pascal has since noted some concern with the actual staffing mix, where ECE programs were implemented, being prohibitively expensive.

The Toronto Star has an article today claiming the only thing the government will maintain is expanding the Teachers union role further into younger ages. In fact, over the past 15 years it looks like what will be accomplished is teaching 4 year-olds, instead of 18 year-olds (as grade 13 was ended and JK is implemented).  The Star article notes the concept of the “seamless day” from Pascal's report, but fails to note his direction was to develop a plan that put kindergartens into the context of an early childhood care strategy.

Which he did – I think, in the opinion of many, he did it very well.  But starting from scratch, it isn't clear the current primary school would be the appropriate vehicle for children younger than 8, and certainly not less than 6.

Should the Star article prove correct, the end strategy will be what McGuinty, maybe Mr. - maybe Mrs. - scribbled on an envelope prior to expert input being sought.

Which shouldn't be surprising to Ontarians – that's the exact same way our electricity policy was developed.

Both have other similarities. The OECD PISA test results for 2009 show Ontario has received nothing for investing an extra 40% in the teachers' fiefdom – and consumers pay 100% more for electricity now, which we use less of.

Both increases have the same cause.

A micromanaging government that discards expertise as easily as they discard representing the broader public interest, to benefit the narrow special interest groups they serve.

Seat Distribution in the House of Commons

RE: Jeffrey Simpson's Electoral injustice: Cities are getting the shaft

Statistics Canada, and the census, should not be the basis of seat distributions. For starters, census figures are heavily manipulated (they count a million fewer people than the population estimates they give, which they consider more accurate). Secondly, they have an assumption that non-citizen residents will become citizens in their forecasting of future electors..

This drives up the forecasted number of voters in BC and Ontario, both of which have much higher census counts than the registered voter counts, from Elections Canada, would indicate.

Between 2004 and 2008, Alberta's population growth, and its growth in 'electors' (registered voters) were both roughly 12%. In Ontario the voters did grow quicker than the population (6.5 to 4) as they did in BC (9% to 4%). Those results give some credibility to Statistic Canada's assumptions, but not much. Alberta voters are increasing quicker, probably due to interprovincial migration.

I think in general people believe in one citizen, one vote - the census is not a good source of counting citizens, and the statistics Canada modeling of future voter patterns based on it certainly looks flawed to me. Ontario's economic performance has trailed Canada's for the past 7 years, and has become a net loser in interprovincial migration. Current StatsCan pop estimates have Ontario and Quebec growing at about 2% since 2008 (AB at 3.6% and BC at 3.4%).

The baseline for proportional representation should be Quebec - the smaller provinces are set at their guaranteed levels, and Quebec is guaranteed 75 seats. … so let's look at 2008 seats per elected voter, keeping in mind both Alberta and BC are now growing faster than Ontario

	2004			2008
Province	Electors	Seats	Average	Electors	Seats	Average
Alberta	2,171,584	28	77,557	2,433,695	28	86,918
British Columbia	2,750,577	36	76,405	2,996,864	36	83,246
Manitoba	841,061	14	60,076	835,401	14	59,672
New Brunswick	597,440	10	59,744	590,984	10	59,098
Newfoundland and Labrador	405,032	7	57,862	410,411	7	58,630
Northwest Territories	28,619	1	28,619	28,787	1	28,787
Nova Scotia	706,932	11	64,267	727,875	11	66,170
Nunavut	17,041	1	17,041	17,089	1	17,089
Ontario	8,294,928	106	78,254	8,834,987	106	83,349
Prince Edward Island	109,031	4	27,258	108,211	4	27,053
Quebec	5,800,109	75	77,335	5,954,763	75	79,397
Saskatchewan	723,922	14	51,709	715,291	14	51,092
Yukon	20,345	1	20,345	23,281	1	23,281
Grand Total	22,466,621	308	72,944	23,677,639	308	76,811

In 2008 Albertans were the most poorly represented citizens, with one seat for each 86918 electors (not voters), Ontario at 83349, BC at 83246 also exceeded Quebec's 79397 electors/seat.

Adding the 2006 proposal for 12 seats, deemed unacceptable by Premier McGuinty, Ontario's figure dropped down to 74873 electors/seat. That was always going to be a non-starter in Quebec. If Quebec is the yardstick, then 5 seats in Ontario, 3 in Alberta and 2 in BC would be the correct figures.

Putting Ontario to 18 was simply appeasing the thankless Premier of Ontario – and it made sense only in terms of predicting BC and Ontario to have quicker voter growth through non-citizen residents becoming citizens.

In order to set Quebec as the baseline Quebec would need another 10 seats, in addition to Ontario's 18, BC's 7 and Alberta would also need to be bumped up to 7. If we were to do that, the big 4 would have roughly 70000 electors/seat, while the remainder of the country would have about 55000/seat.

Maybe that is desirable, but I doubt it. Ontario 5 seats, BC and Alberta 2-3 each. That would bring them close to Quebec's figures, and be easily justified.

Regardless, the next time you are offered 12 seats, just say thank you and take them.
--------------
Another way of looking at it might be more helpful.  The following list, working directly from Elections Canada 2008 data, shows the smallest riding in Alberta by number of electors, plus the ridings in Ontario with fewer electors than that - note much of the Ontario list is very, very, urban:

Electoral District Name/Nom de circonscription	Population	Electors/�lecteurs
Kenora	64291	42794
Algoma--Manitoulin--Kapuskasing	77961	59595
York West/York-Ouest	103948	59674
Timmins--James Bay/Timmins--Baie James	80791	59876
Thunder Bay--Superior North/Thunder Bay--Superior-Nord	82589	62338
Thunder Bay--Rainy River	85153	63128
Etobicoke North/Etobicoke-Nord	108501	63700
Davenport	104615	66189
Scarborough--Guildwood	108813	67124
Scarborough Southwest/Scarborough-Sud-Ouest	102196	67988
York South--Weston/York-Sud--Weston	114458	68978
Sault Ste. Marie	89028	69272
Parry Sound--Muskoka	90281	69514
Nipissing--Timiskaming	90963	70178
Scarborough Centre/Scarborough-Centre	108010	71094
Nickel Belt	89377	71107
Don Valley East/Don Valley-Est	109640	71366
Fort McMurray--Athabasca	100805	71621

This is my argument - the representation criteria should be eligible voters.  The population argument is quite different.  Here's the riding with the least population in Alberta, and the ridings in Ontario with less population than that - note the very, very, urban ridings are not on this list:
 

Electoral District Name/Nom de circonscription	Population	Electors/�lecteurs
Kenora	64291	42794
Algoma--Manitoulin--Kapuskasing	77961	59595
Timmins--James Bay/Timmins--Baie James	80791	59876
Thunder Bay--Superior North/Thunder Bay--Superior-Nord	82589	62338
Thunder Bay--Rainy River	85153	63128
Sault Ste. Marie	89028	69272
Parry Sound--Muskoka	90281	69514
Nipissing--Timiskaming	90963	70178
Nickel Belt	89377	71107
Sudbury	92161	74228
Leeds--Grenville	99206	75075
Renfrew--Nipissing--Pembroke	98803	75223
Edmonton--Strathcona	99267	75254

 

 The argument for Ontario having 18 seats is a bad one from many perspectives, but the fundamental premise is representation by population, regardless of citizenship.
Voting can be seen as an obligation of the citizen, or as a benefit of citizenship.  That vote should not be diluted through statistical trickery to include non-citizens.

Dim bulb in Ontario’s Highest Office

The Star has printed an editorial by their Premier.
Some rebutting is in order.

Mr. McGuinty was in the legislature prior to 2003. He is fully aware he is mostly making things up in his editorial. Between 2003 and 2005, Pickering 1, Pickering 4, Bruce 3 and Bruce 4 all came online – about 2600MW of nuclear production that had nothing to do with him. The generators were a stop gap plan alright – because the plan was already in motion and only required a stopgap temporarily.


Dalton also writes that "we had become net importers of electricity — relying on even more dirty coal from the United States." This year Ontario will import about 6.5 TWh of electricity, which is down from 2003 by about 4TWh, but with about 20TWh more supply from the 4 nuclear reactors noted previously. The draft supply mix directive suggests our system continues relying on imports; "The Plan shall consider … the availability of imports from other … to meet Ontario's reliability and operability requirements throughout the duration of the Plan." I've previously noted why this will increasingly be the case due to an increasingly foolish supply mix.

Dalton opines that the previous government had no 'long-term plan to rebuild', which just speaks to his pride in his ignorance, as the previous government's plan not only came out of an all-party committee, it is what has kept the lights on as McGuinty pulled useless initiatives out of his arse. Premier Dad actually created a bureaucracy to plan the system - the Ontario Power Authority - and then ignored the Integrated Power System Plan in favour of a little green etching some high school grad scribbled on a napkin. The 2003 Eves' government plan, that Dalton now wishes didn't' exist, not only included eliminating the use of coal generation by 2015, it planned on installing SOx and NOx reduction technologies in the interim. A curious person could see the USA has reduced these smog creating emissions by half in the past decade. McGuinty ran in 2003 on a phase out by 2007 – and OPG's 2003 reporting shows a write-off of $500 million due to the depreciation of their assets to reflect a 2007 closing. In our reality, all he did was prevent scrubbers from 2003 to 2014.

When McGuinty speaks of dirty coal, it is a coal he has actively sought to keep dirty. When he speaks of $3 billion, he is mindlessly repeating a number coming from sources he wouldn't mention, in the unlikely event he has any idea where it comes from at all (Physicians against Math and Testing Models is the probable source).

The 7 million cars figure is silly too, but it still completely misses the point. We burn coal, and natural gas, to produce electricity when it is demanded. Neither nuclear, solar, or wind compete with these technologies, and none can fill the role in the system. 1200MW of wind is relied on for absolutely nothing by the system operator. Why would more be any different?

Mr. McGuinty writes that prices went up 3.6% a year for "families and small businesses", for the past 20 years. I can't find stats back that far, but personally I now pay about 17 cents/kWh of metered consumption, and in 2004 it was about half of that. For him to be telling the truth the price would have needed to remain at 8.5 cents/kWh from 1991-2003. Perhaps he mistyped 3.6 accidently, as those numbers are close to the "1" on the keyboard, and the average annual household increase during Dalton's administration is 11%.

Or maybe he simply lied.

Or maybe we are supposed to ignore small businesses, and residences, have had their delivery rates hiked 200% during his term, while their consumption has declined dramatically. Should we consider only the one line on the invoice with the mythological $/kWh?

Mr. McGuinty notes how his energy policies have benefited the economy.

The Ontario economy is the worst performing in the country under his leadership.




 

Comment on the Draft Supply Mix Directive

I will comment on the directive, in this blog and anywhere else possible, but the title is directed at the reader. The last section of the directive notes a 45-day period for commenting started November 23^rd, and public input is considered. I emphasize this as the Long Term Energy Plan , in Appendix Two, notes 2500 online responses were made as it was being formulated, between Sept 21^st and Nov. 18^th.
Hopefully the other 2499 responses also helped to tone down the machinations of the handful of people presenting themselves as hundreds of organizations in the Stakeholder sessions (Parker Gallant notes some of the connections between the many groups).

30 years ago I was in a high school chemistry class where the teacher would ask for a characteristic on the element/substance of the day. There was one kid who would invariably raise his hand and begin a sentence with, "It tastes …", which would get cut off each time by the teacher admonishing all not to put the element of the day in their mouths.

Sometimes it is best to compare objects without one attribute being considered. In Ontario's electricity mix, that attribute is CO2 emissions. I consider myself a non-hysterical warmer, but testing this attribute first is clearly clouding the judgment of the current government. In terms of attributes relevant to an efficient supply mix, I'd include ability to meet demand (load following), availability, and cleanliness (ignoring CO2 – but referring to smog).

Nuclear is always on (in reality, and in the LTEP); wind is totally intermittent. Demand is relevant to neither. Demand is also not relevant to solar, but it's production better matches real demand periods. Hydro in Ontario is split. I'd estimate 25% of hydro capacity is always on, the remainder can be load following when available – this summer only about half was available (due to water levels). Natural gas and coal both are used to meet demand, although increasingly about 1000MW of gas seems to be needed 24X7 (that's simply an observation, I don't know if that is a requirement for keeping the grid stable due to wind increasing, or the grid design in general), and coal is now only used for meeting high demand periods.

Here's the 20-year history, by source. I've moved wind to just above hydro, as these are the two that don't follow load at all, and above that is the hydro which follows load for, I'm estimating, 60% of the supply. On one Y axis is the annual production, and on the other on "net imports." It's only 20 years. But the imports, significant in 1990, become huge exports as the amount of supply that does not match demand grows in the early 1990's, recede as nukes are idled later in the 90's, and as idled nukes are reactivated in the latest decade, we again return to high export levels. Conversely, the more load following supply in the mix (coal and gas, along with 60% of the hydro), the closer supply matches demand.

The draft directive notes:

"The June 2006 supply mix directive required that the OPA plan to use the existing base of 7,850 MW of renewable energy (hydroelectric generation) and to double this capacity to 15,700 MW by 2025 including hydroelectric, wind, solar, and bio-energy.

Since then, there have been a number of renewable energy procurements through initiatives such as the Renewable Energy Supply (RES) programs (RES I, II and III), the Renewable Energy Standard Offer Program and the FIT Program. As a result of these successful procurements, as well as the Green Energy Investment Agreement, the additional renewable capacity expected to come into service is greater than the levels envisaged in 2006. Based on forecast assessments of what the system can accommodate, the OPA shall plan for 10,700 MW of renewable energy capacity, excluding hydroelectric, by 2018.

The government will look for opportunities to incorporate additional capacity from renewables into the Plan taking in to consideration the cost-effectiveness for Ontario electricity consumers, planned transmission additions, and electricity demand growth.

It is expected that the Plan shall provide for renewables, excluding hydroelectric, to account for approximately 10-15 per cent of total Ontario electricity generation by 2018."

This is nonsense. Most clearly it has the trick of excluding hydroelectric to make it look like the current government did not abandon cost considerations as it lost control of the procurement process via the the Green Energy Act and poorly conceived FIT offerings (which needed quotas –and to far better protect the public from connection costs). Here is how the previously submitted IPSP answered the call for 'renewable' supply as it was directed by the ministry to "Maximize feasible cost effective contribution from renewable sources":

The OPA's approach to determine the feasible and

15 economic contribution of renewable supply is as follows:

16 • All feasible hydroelectric resources are included on the basis that hydroelectricity is

17 the most economic of the renewable resources;

18 • Bioenergy, wind (small sites) and solar resources were included generally on the

19 basis of the expected response to standard offer procurement programs; and

20 • Large wind sites were used to provide the remaining resources needed to meet the

21 goal. The sites were included on the basis of lowest "all-inclusive unit cost" (in which

22 the cost of associated transmission is included).

Allow me to paraphrase. It was determined to seek out hydro first – because it is useful. The small stuff second because of the expected results from existing programs (a reminder 100000 solar installations was set as a target by the Eves government), and wind last because it was the cheapest way to meet the quota. There was never any indication the quota was intelligent, and there was plenty of indication the value of wind, which is very close to nil, was known. The cheapest 8000 MW is the 8000MW that can't be relied on at any time.

The proposed supply mix calls for more of it apparently solely out of inertia.

I wrote in a previous post about the cost to Ontarians of not matching supply to demand.  I have on my 'to do' list a critical view on time-of-use pricing, and some of the data I've worked with is relevant here. I've noted previously that peak demand reduction programs don't seem to limit the impact to peak demand, as average and minimum consumption drop on a roughly proportional scale. This chart shows the average hourly Ontario consumption since IESO data starts in 2002, by season (the seasons are by month; ie. Dec, Jan. and Feb. are winter). As an aside here, you can see the winter hours between 7 am and 11PM (23), for 14 hours, all exceed the consumption of 'peak' hours in spring and 'fall'. Regardless, on a typical summer day, based on the last 8 years, demand will be about 6000MW higher at one point than it will be at another. We know on extreme days, consumption rose above 25000MW this summer, and, at the other end, dropped to around 10600MW on Easter weekend.

This Long Term Energy Plan contains past, current, and projected figures in Appendix Three on page 63. What it says is by 2030 we plan of having 5000MW less of supply that can follow load, and 9500MW more supply that can't.

Here's some feedback for next October - we need a new government.

I'm not to sure what to say for January – if anything.

UPDATE JANUARY 6TH, 2011 
I did submit a comment, and I've also posted it here

Thoughts on the Long Term Energy Plan

I read through the Long Term Energy Plan on Tuesday. I've felt I should have strong opinions on it, but there was very little new it.

The plan is only about electricity, and contains no discussion about discouraging the use of natural gas, gasoline, or any other form of energy. That may be nitpicking , but immediately any truly environmental efficiency programs built around increased efficiency from more central heating/cooling servicing for new communities, combined heat and electricity, and electrification of transit seem off of the radar.


Through the early pages I was put off by a political cheerleading tone from an Ontario Power Authority official document. I perked up at the section for expected growth, having recently written an entry on the existing trend in the province, and was particularly curious about the graph on page 14 (which is essentially unchanged from the forecast in 2008's revised IPSP – which I'll get back to):

Why would a downward trend turn up? In the context of the original concern with "energy" instead of "electricity" in the plan, I was once more annoyed. I'm likely one of the few who would like to see increased use of electricity, albeit at the expense of direct use of gas, but there is nothing in the 'energy' plan to encourage more electrification.

The U.S. Energy Information Administration's Annual Energy Outlook with Projections to 2035 contains a graph which is very similar to Ontario's long term demand growth change. It is less pronounced, probably as the U.S. had a population shift to the south due to the widespread use of air conditioning. Regardless, the U.S. forecasting doesn't have the trend magically adjust in 2015, and does seem to be headed to where Ontario arrived back around 2002 – which is no growth.

Onto the energy mix, which I found refreshing for the most part – having long argued for refurbishment of the nuclear units, with the exception of Pickering, I was somewhat encouraged to see that in the LTEP. More encouraging than that is to see Tyler Hamilton's recent blog entry include "I'm quite resigned to refurbishing, where appropriate, much of the nuclear fleet we have (sorry, Greenpeace), but I'm not as keen about building new reactors." From the opposite side of the argument, I'm quite pleased at refurbishing the fleet at Bruce and Darlington, and I'm not keen on the proposal I suspect will be made for additional reactors either. The LTEP included "Nuclear plant operational design and economics depend on the plants being able to operate steadily throughout the year." One advantage (theoretically) of the ACR 1000 design, that was at the heart of the recent bidding, is the ability to load follow. That would be an advantage if not for the enormous upfront costs. So I agree with the sentiment of the LTEP, but it means purchasing older, probably CANDU 6, technology for, as Mr. Hamilton notes, the next 50 years. This is not a sale that would help keep AECL feasible, and is not supply that Ontario is sure to need. 2000MW of new supply would likely compensate for 3000MW coming offline in Pickering – because the newer units have significantly higher capacity factors, but there is a question of mix, which I'll explore on a separate blog (you can't, responsibly, add 8000MW of wind AND pretend you can keep the same amount of nuclear). They should endeavor to complete as much refurbishment as possible before removing Pickering from service – with Bruce 1 and 2 done that would mean only 1500MW of reduced capacity.



For hydro, I think the point was there isn't much more to be found.

For natural gas, the point seemed to be they like the level currently procured (either in production, or coming online).

I thought the sections on what specifically was occurring with wind and solar were vague.



When I reached the end, I found out why we were getting a Long Term Energy plan instead of an Integrated Power System Plan (IPSP).

The LTEP is a document kicking off a 45 –day posting period of the also released, and perhaps more important, Proposed Supply Mix Directive

That directive is then given back to the OPA to prepare an Integrated Power System Plan, estimated in the LTEP as coming out Mid-2011, which is then submitted to the OEB for review.


The OPA itself was formed by the 2004 McGuinty government and legislated to provide an IPSP by 2007, and then revisions every 3 years. One was submitted in 2007 (also based on meeting government directives), the directives adjusted, another resubmitted in 2008, and due to the Green Energy Act, left in limbo.
The main thing the LTEP announces is, therefore, that no long term plan will serve as the basis for Ontario electricity policy until, at least, 2012.

A trip back to planning from 7 years ago puts the current document in the context - which is just more of the same wishes without a credible roadmap for economically achieving it in a manner that doesn't impoverish Ontarians. Here's where the Conservatives left off in their government's 2003 Ontario's Energy Action Plan:

• Price break
  
• Encourage renewable energy
  
• Promise that about 3000 MW of renewable would be added "over a period of eight years, commencing in 2006"
  
• Notes potential, and actual, hydro and natural gas projects
  
• "Coal-fired generating stations in Ontario will be phased out by 2015 without jeopardizing provincial electricity supplies. This was a key recommendation from the all-party Select Committee on Alternative Fuel Sources."
  
• "Our goal is to have solar systems installed on 100,000 homes in five years."
  
• NOx and Sox emissions to be reduced by 53% and 25%, respectively, by 2007

Supply Mix Impact on the Global Adjustment Mechanism

I've previously posted the graph indicating any price/MWh increase during the recession, and anemic recovery, was due to the global adjustment mechanism.

Demand decreases, so does the Hourly Ontario Energy Price (HOEP) at the system operator (IESO), but production is propped up by the guaranteed contracts at inflated rates, which are paid for by global adjustment (the difference between the contracted and market price).

Working with the IESO data, I've formatted it to show the composition of the amounts requiring the Global Adjustment Mechanism (GAM) that is included on the invoicing to Wholesale customers, and included in the retail rates for the rest of us.

Public OPG is now supplying about 60% of our electricity and is responsible for around 25% of the global adjustment.

Non Utility Generators, holding contracts with the Ontario Electricity Financial Organization, seems a niche category, but … this niche now adds as much to the GAM as OPG does. In fact, over the past 12 months, it has added more. I do not know of any data to quantify the amount of energy provided from these sources, or even a list of what the sources are (since posting this I've learned these are contracts that were held by Hydro One with external suppliers, prior to the breakup in 1998 - presumably these will all end, or be moved to be OPA contracts).

But the big unbridled growth is in the OPA contracts, which now comprise over half of the approximately $4 billion annually charged through the GAM.

Contracts with private sources are responsible for 75% of the GAM, but only 40% of supply – and 40% of that 40% is Bruce Power output which is priced around 6.4 cents/kWh. The remaining supply, which is primarily gas, with increasing amounts of solar and wind, is the big driver of both the collapse in a market price, and the increase in the combined HOEP/GA price.

Global Adjustment Dollars ($Millions)

The Economics Lab Blogs on Market Distortions

Assume I'm an economist.

I'd expect as demand dropped for a product, such as electricity, the price of that product would drop – as demand went up, so would price. Like this (HOEP is the Hourly Average Energy Price as per the IESO, which is the Independent Electricity System Operator):

 

If a province were to guarantee a rate to most of its suppliers, regardless of demand, I would expect supply wouldn't drop as significantly as demand would during an economic downturn. In Ontario the mechanism to recover the full charges paid to suppliers, from wholesale customers, is referred to as the Global Adjustment (by the IESO, which uses the shorthand GAM for the Global Adjustment). 

I assume the global adjustment, added onto the HOEP price for domestic consumption, does reflect the pricing producers receive. In other words, the GAM measures the market distortion. As it adds to the price recently, the distortion benefits suppliers.  This graph indicates just this - the market price adjusts to demand changes, but the GAM controls the actual price paid in Ontario, and production, largely with its rates insulated, refuses to adjust to reduced demand:

I suspect a mechanism to recover the higher price, such as the global adjustment mechanism (GAM), might have trade implications too, as it causes some distortion of the rates between domestic and foreign markets. For instance, in Ontario the excess production has been dumped in Michigan and New York, at the market rate for that time (aw 2010 came to an end Quebec started to take a large share of the excess). I estimated the cost of that exported electricity over what was paid by our neighbour states – this amount will be on your bill either as a portion of the global adjustment/provincial benefit, or worked into the RPP or TOU rate calculation. I took the total paid at the HOEP rate, for exports, and subtracted it from the combined total if both HEOP and GAM, combined, reflected the price paid for the same output to suppliers. This is the best method I could conceive of to try and quantify the costs of the escalating exports.

  The gap where supply did not meet demand back in 2003 was largely closed by nuclear as Bruce A units 3 and 4, and Pickering Unit 1, came back online by 2005, . That's a mixed blessing economically as nuclear runs 24X7 (or not at all).  Not guaranteed rates are coal, and a declining amount of hydro (because most of it is owned either provincially or municipally, the HOEP price crash resulted in lower than anticipated public revenues – so they are now starting to be awarded contracts from the OPA - at higher rates). These are the supplies that do get reduced as demand falls – which again isn't entirely economical.

Economic models don't dictate rejecting the cheapest product for far more expensive product from an external supplier.

Any lab knows that.

The Current and Future State of Electricity, as the OCEB comes to Ontario

Big news yesterday as the Finance Minister Duncan announced the Ontario Clean Energy Benefit (OCEB), which will bestow a credit of 10% of our bill upon us. The release by the government indicated the move to cleaner energy has been expensive, and would be so for another 5 years, so this should alleviate some of the pain being felt due to this noble endeavor; "Over the next five years, residential electricity prices are expected to rise by 46 per cent, after which price increases are expected to moderate as Ontario will have largely completed the transition to a cleaner, more reliable system."

I'm skeptical. Somebody said if you want to know where you are going, you need to know where you are, and where you've been. Seems like a good time for a big picture overview, a review of the current price drivers on the consumer side, on the industrial side, and to take stock in whether the government has any credibility in implying there is a planned destination, and a plan for arriving at it, in 5 years time.


A lot of information I've found, regarding the history of Ontario consumption, has disappeared off the web. The Conservation Bureau had some excellent information which seems to have been buried as it was swallowed up by the OPA. Similarly, one could find Hydro One's "Providing the Balance of Power" scanned in, but now I only find references to it, such as in this document prepared for Pollution Probe. The point I'd make is that by 1990 the Ontario Hydro forecasts from 1989 were well ahead of the actual demand – and demand in 2010 is far below the lowest end of the forecast range from 20 years ago.

That may have been due to some fairly poor forecasting more than any revolutionary change. Here's the figures I've found just by the 0's to compare growth over the decades:

Year	GWh	Source	Decade's Growth
1960	37157	(Stats-Can 57-202)
1970	69488	(Stats-Can 57-202)	87.0%
1980	106509	(Stats-Can 57-202)	53.3%
1990	142818	(Stats-Can 57-202)	34.1%
2000	152821	(Env. Canada 2004 GHG report)	7.0%
2010	142000	(est based on 2% growth over 2009)	-7.1%

That looks like a trend to me. Annually from 1990 onward we'll see the overall consumption trend. I've also broken up supply in terms of production of GHG's – illustrating that if the argument is we need to save the world from global warming, we've had a higher volume of emissions free electricity supply in the past.

 

The other note, about the emissions free supply, is supply has exceeded consumption each time we've ramped production of nuclear/hydro/wind/biomass to over 120 TWh. There's a reason for that I'll get to another time. In 1990 you see the most significant gap where supply failed to meet demand, but that gap in 2003 figures prominently in the current liberal narrative about the whole thing being a mess when they came to power (it's a good thing Bob Rae is a Liberal now or he might be saying something about what Peterson left him!). On the other hand, you can see the current oversupply looks very similar to the situation in 1995, which Rae left to Harris.

The earliest forecast I find from McGuinty's first term is the ISO (now the IESO) 10-year forecast in 2004 that predicted anywhere from 24702 – 26400MW for peak demand in 2010, and it was  25075MW (although that was the highest in 3 years – the previous 2 years peak summer demand was below the low growth scenario from 2004). So we are far below expectations from 20 years ago, and also below expectations from 5 years ago.

The OPA (Ontario Power Authority) was created by McGuinty, and one of its tasks was to complete an Integrated Power System Plan. The IPSP process has been a farce, primarily due to politicians meddling with directives and mood-changed induced redirection, but in their IPSP submitted to the OEB in 2008, the OPA shows (on page 7 of 34) peak demand declining through 2015. That chart shows this year's peak should have been around the 25000MW it was, and peak drops to about 24250 in 2015.

A chart to demonstrate that peak, average, and minimum demand values tend to move in tandem. You can spot the years with exceptionally hot days in the chart, but overall the trends are the same. I'll include the same figures for production, and I'll note the focus of the OPA on peak reduction isn't reducing peak as quickly as the average (or annual) consumption is changing, nor is it declining much differently than the minimum demand.

So this is where we are. Settled into a gentle downward trend in demand, whether peak or average or minimum, that dates back as a decline to around 2002, but much further as a trend (previously as a reduction in the rate of increase). Nobody seems to be predicting increased usage for 2015, and the delivery system is now handling the same volume they did 2 decades ago. And we seem to have adequate supply both in general, and for peak demand.
In fact, we have a 5-year trend of production outpacing demand now. That sounds like it should deflate the price of supply to me.

The IESO does have an Hourly Ontario Energy Price (HOEP). This was designed for a competitive market as the price that is charged to "local distribution companies (LDCs), other non-dispatchable loads and self-scheduling generators." It would also be the motivation for suppliers to crank up the supply – in a competitive market. But reviewing all this data back to 2002, one can see we started without adequate supply, and then the Eves government froze the price, and potential suppliers appear to have lost interest.
This led to contracting of supply. Today most electricity in Ontario is procured through contracts, and the IESO has a mechanism to adjust the HOEP rate, which we'll see does follow market demand conditions, to recover, or give back (unlikely, but possible) the difference between the purchase price and the market rate. This is the Global Adjustment

This graph clearly shows that since 2007 the only driver of per watt price increases in Ontario is the contracting of supply at greater expense (note the HOEP does match the demand curve quite closely).

That's the current situation explained for the large consumers of electricity in Ontario on the Wholesale rate. That rate plan, which I believe covers about 45% of consumption, had other charges totalling 1.96 cents/kWh in October 2010 – the exact same amount shown on the IESO monthly report for October 2003.

For residential and small business consumers, the case is very different. For us, we now likely pay over 17 cents/kWh once all fees and taxes are included, and that's likely double what was paid when Eves froze rates. Your cost per kWh is likely up around 50%, but your cost for the services in getting that watt transmitted to you are up 200% in that time. While popular discussion centres on wind and solar FIT rates, nuclear and gas contracts, etc., and I've demonstrated there is inflation entirely due to this government's contracting, the public utilities continue to rifle rates forward on the transmission side.

To transmit the same volume they did 20 years ago.

"Over the next five years, residential electricity prices are expected to rise by 46 per cent, after which price increases are expected to moderate as Ontario will have largely completed the transition to a cleaner, more reliable system."

Did anybody remember they've never had a plan?

Perhaps this program was to alert us the IPSP, or LTEP as it may now be called, is delayed until 2015.