No Props for Bush the 43rd?

As the world watches demonstrations erupt all over the Middle East and the north of Africa, the popular press is suffering amnesia regarding the President they loved to malign as a fundamentalist fool. A quick visit to another source maligned by the intelligensia, Wikipedia, confirms my memories with its explanation of the Bush Doctine as, “including the controversial policy of preventive war, which held that the United States should depose foreign regimes that represented a potential or perceived threat to the security of the United States, even if that threat was not immediate; a policy of spreading democracy around the world, especially in the Middle East, as a strategy for combating terrorism; and a willingness to unilaterally pursue U.S. military interests.”

Here is an excerpt from a speech given by President Bush approximately 1 month before the invasion of Iraq was launched:

The safety of the American people depends upon ending this direct and growing threat. Acting against danger will also contribute greatly to the long-term safety and stability of our world. The current Iraqi regime has shown the power of tyranny to spread discord and violence in the Middle East. A liberated Iraq can show the power of freedom to transform that vital region, by bringing hope and progress into the lives of millions. America's interests in security and America's belief in liberty both lead in the same direction: to a free and peaceful Iraq. . . .

There was a time when many said that the cultures of Japan and Germany were incapable of sustaining democratic values. Well, they were wrong. Some say the same of Iraq today. They are mistaken. The nation of Iraq--with its proud heritage, abundant resources and skilled and educated people--is fully capable of moving toward democracy and living in freedom.

The world has an interest in spreading democratic values, because stable and free nations do not breed the ideologies of murder. They encourage the peaceful pursuit of a better life. And there are hopeful signs of a desire for freedom in the Middle East. Arab intellectuals have called on Arab governments to address the "freedom gap" so their peoples can fully share in the progress of our times. Leaders in the region speak of a new Arab character that champions internal reform, greater political participation, economic openness and free trade. And from Morocco to Bahrain and beyond, nations are taking genuine steps toward political reform. A new regime in Iraq would serve as a dramatic and inspiring example of freedom for other nations in the region.

It is presumptuous and insulting to suggest that a whole region of the world--the one-fifth of humanity that is Muslim--is somehow untouched by the most basic aspirations of life. Human cultures can be vastly different. Yet the human heart desires the same good things, everywhere on Earth. In our desire to be safe from brutal and bullying oppression, human beings are the same. In our desire to care for our children and give them a better life, we are the same. For these fundamental reasons, freedom and democracy will always and everywhere have greater appeal than the slogans of hatred and tactics of terror. . . .

Much is asked of America in this year 2003. The work ahead is demanding. It will be difficult to help freedom take hold in a country that has known three decades of dictatorship, secret police, internal divisions and war. It will be difficult to cultivate liberty and peace in the Middle East, after so many generations of strife. Yet, the security of our nation and the hope of millions depend on us, and Americans do not turn away from duties because they are hard. We have met great tests in other times and we will meet the tests of our time.[13]

The sudden rise of democratic urges in the region could be completely unrelated to any of President Bush's actions. But 8 years ago, it was what he claimed to be working towards. 

Sanity Advocates Policy Shift

John Spears is out with yet another article in the red Toronto Star, quoting, extensively, the Canadian Wind Energy Association's Robert Hornung.  “Wind advocate warns against policy shifts” again notes CANwea's Hornung claiming the low cost per kWh of wind is a cost effective alternative to other new supply possibilities.  It is per MWh, but in reality it doesn't replace any need for generation capacity.  It is simply a frivolous, expensive, extra that we have no need for.

The first rhetorical question asked by Hornung it, "How much will new electricity cost compared to other forms of new electricity?"  Well, an actual environmentalist should ask why choose anything - remember the old reduce, reuse, recycle?  Briskly being moved along on McGuinty's gravy train may have led Mr. Hornung to miss the recent recession, with it's drop in demand.  While the current government of Ontario have been inept economic stewards, the electricity consumption trend is continent wide.  I’ve been examining some data from the U.S. Energy Information Administration, and the growing glut in supply is more easily demonstrated there.  The graph shows the response to the energy shortages seen around the turn of the century, and the sudden unexpected supply glut now being experienced, which in the US has led to stagnant pricing since 2008, as Ontario’s prices have skyrocketed.

In Ontario, there was a long-term planning document, “Providing The Balance of Power”, in 1989 that called for annual growth of 2.2% up until 2014, and noted that required supply capacity to grow from 23200MW to 39800MW.  That call puts demand about 60% higher than it is today, as demand is right about where we started in 1989.  But supply is claimed to be around 35000MW now, and headed to 38000MW if the currently planned madness unfolds as it should not.  A 50% growth in supply for 0% growth in demand.

The fuel cost argument made by Mr. Hornung is also silly – obviously he is nearly alone in this prognostication.  In the US, prices have moved in a relatively narrow range since 1960, and are expected to do so through 2035.

Horning notes the system operator is addressing the “technical challenge” of oversupply during wind periods – he doesn’t mention that next week they’ll be addressing it by structuring a system to pay wind suppliers not to produce electricity when it isn’t required

.

We don’t need the cool new trendy thing.

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The data I compiled for the chart, along with annual totals for capacity and generation by source fuel, I have put here.

Wind Swirling In Their Heads

Today, the Ontario government announced another round of winners in Ontario Power Authority’s FIT sweepstakes.  Next week the Independent Electricity System Operator (IESO) has meetings to develop the infrastructure to facilitate paying the FIT sweepstakes winners not to produce any output. 
The basis of the IESO’s planning is noted in their 'Integrating Renewable Resources - Design Principles' paper.

Principle 1 of the paper is understandable.  If wind and solar are to become increasingly large suppliers, it would be super nice to have centralized forecasting to know what supply can be provided.

Principle 2 is that the “real-time forecast will provide the information to allow for renewable dispatch and OPA contract settlement.”  The discussion regarding point two includes “allow for the settlement of additional contract payment clauses in OPA contracts”.  So putting principle 1 and 2 together, we need central forecasting to figure out how much supply a wind producer could provide, if we needed it, so that we can both utilize needed supply and pay the supplier as if they had produced supply when we have no need of it... this deals specifically with the OPA procuring unneeded supply, and the tools to pay suppliers not to produce.

Principle 3 is “The costs paid to the centralized forecast service providers will be treated as procured service charges and will be recovered from consumers through existing procurement market recovery mechanisms.”  Put another way, because the consumer benefits from paying suppliers not to produce power, the consumer should bear the full costs of all system required to pay for supply not needed.

Principle 9 is “Variable generators will be entitled to Congestion Management Settlement Credit (CMSC) payments.” 

Principle 10 appears to imply wind will be the first production shut off in surplus baseload generation periods (SBG) – which the IESO forecasts as occurring very frequently (1 in 7 hours from what I’ve read –it is charted on a 28 day basis and as we move out of winter’s high demand they problem quickly appears).

While it is wise to look into how to deal with the issue of too much supply that cannot be matched to demand, the first step of a meaningful approach would be to stop ordering more of the silly stuff until you’ve figured out what to do with it.   

New Records of Interest Only to CANWEA

At 7 pm on Friday February 18th, 2011, Ontario wind generators hit a new record high, with the IESO reporting 1350MW of wind output.

For the entire day, wind production was 30,492MW (also a new record).

This is enough electricity to power a gazillion homes like mine - because my home just has a ghost power supply at the moment. 


Credit to D-Link and Rogers for making equipment that works on the tiny supply even small radios, and coffee makers, are not working on.

Hydro One's smart network is proving immeasurably valuable.    Their website crashes at sign-in, but leaves you on a screen showing this:

An unexpected error has occurred that has caused the application to terminate. Press OK to return to the home page. For more information/support, please call 1-888-664-9376.

May I suggest that be started "Yet another unexpected error ..."  Pressing OK doesn't return me to the home page - it refreshes the error message.  Maybe the could put a page view counter on the error page - that could be motivational.

The phone number tells you to hang on if you have a problem, but first, "we're closed for the holidays" - in English and en Francais  About 90 seconds in it gives you a choice.

Then they told me they were closed, but ... if I was calling about a bill due on a weekend, they do give you until the next business day. 

If the call is about an emergency, hang up and call somebody who cares ("911").
Then I get to choice options, and #1 is outage.  In my opinion, that could be moved almost up to the front.  I'd begin with:
For english, say english ... pour francais, dit francais
Do you have an outage


Here's the thing.  I have a generator.  I haven't used it since getting the wood stove - I appreciate blackouts.  This phantom power allowing some clocks to work on radios that don't - the network stuff to function, lights to work dimly, but not coffee makers - this is new to me.
I just wanted to know if this was a lesser problem, than a full blackout - due to the smart system  (maybe they get some juice through and before they'd get none), if anybody knows about it for my location, or if I've got something problematic with my panel.

When I finally connected with a pleasant chap, he assured me this type of thing he thinks he's heard of happening before - because of the weather and all.

I charmed him to get myself on a list, and confirmed my phone number.
When my name comes up, they might have 911 call me.
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As I post this, the small radios work, and my MBP computer, which was on battery power, now shows as receiving power.  

Idiot Wind

I’m a Dylan fan that opposes the Ontario government’s plans for industrial wind turbines (IWT).  “Blowin’ in the wind” is not high on my list of favourite Dylan songs – I consider it his Kumbaya.  I’m weary, my Lord, of the constant references to ‘Blowin’ In The Wind” in stories in the press regarding IWT’s.   You only need two eyes to see the foolishness of that policy.  You only need two ears to hear about it.  I was glad the province quietly killed current plans for off-shore wind installations, at 19 cents/kWh, under cover provided by the news from Egypt on a Friday afternoon.  Unfortunately this news brings out the worst from the group thinkers struggling with math and analytics.   They earn a guttural, angry, response.

Someone’s got it in for me, they’re planting stories in the press

Marcus Gee was out with a headline seemingly designed to provoke me, “Windmill foes are full of hot air”, and Tyler Hamilton condescended, at his blog, with “Offshore wind decision not about health concerns, despite anti-wind noise.”  Gee puts the government decision firmly on NIMBY’s in the first sentence and reinforces the emotion in the last paragraph.  As if a total disregard for one’s immediate environment is irrelevant to the true environmentalist.  Mr. Hamilton just can’t help himself from poking opponents, even as he recognizes reasons to doubt the government’s approach.  “It may be about a lack of need for the power,” disappears quickly into “anti-wind folks want to spin it ... as part of a venom-filled effort to extend the moratorium to onshore facilities.”  While it took him a couple of sentences to get to us awful opponents of IWTs, he ends with “despite the deceptive rantings of anti-wind groups?”

Their minds are filled with big ideas, images and distorted facts

I pulled some data from the EIA into a database the other day.    A very quick preliminary check of the latest data (2009) to data from 1997 (the year the Kyoto was adopted) shows nothing definitively good about wind at all.  Most know Texas is the largest wind production state now, but there are 14 states that had above 1000MW of IWT capacity in 2009.  Since 1997 CO2 growth from electricity generation, in the US, was 0.45%, as of 2009.  In Texas it was 1.4% -- for the group of 14 states with 4digit wind capacity, it averaged 20.2%.  NOx emissions throughout the US dropped 63%, but only 37% in the biggest wind states.  Same story on SO2; 55.7% nationwide, 47% in the big wind states.  Studies out of Denmark reinforce that little of their wind production is utilized domestically and it is an extraordinarily expensive method of reducing CO2 emissions (if it does).  Germany is identifying sites for carbon storage while proceeding with plans for more efficient coal plants, capable of both generating electricity and providing central heating.  Germany has seen no growth in output for IWTs since 2007 – for Denmark there’s been little change since 2004.  Rumours of the industry’s accomplishments are unfounded, and the rumours of it's health have been greatly exaggerated.

Idiot wind, blowing like a circle around my skull

From the Grand Coulee Dam to the Capital

The Grand Coulee Dam, the great recession battling project on the Columbia River in Washington state.  The Columbia River Gorge is now known as a “wind ghetto”.  The power authority there ran into some trouble last year because they couldn’t spill water (because of bubbles), so they just asked a nuclear unit to dial down production to 18% because it was windy and it was wet.    Washington is discovering the same issues as Europe is – and hoping on the same solutions.  Increased integration of markets with grid connections, and increased integration of wind suppliers and coal and gas generators.  A NY Times blog entry notes “The cost of integrating wind into an electric system was modest until new generating capacity was needed to react quickly to the variability of wind.”  Well yeah – especially  when threatening Ontario’s system, which gets over 80% of its production and nuclear and hydro – with all the nuclear and half the hydro devalued, to the brink of not being viable, due to the nature of the contracts being gifted to the trendy IWT proponents.  Add on to that the supply we are phasing out is the seldom used supply (coal), so we need to replace the source being used for peaking twice – once with wind and once with natural gas.  

I noticed at the ceremony

Your corrupt ways had finally made you blind

Early in 2010 the government announced the long-rumoured deal with South Korean companies.  The backgrounder information provided began with “Ontario has negotiated an agreement with a consortium, comprised of Samsung C&T Corporation and the Korea Power Electric Corporation.”  This became known as the Samsung deal, because that’s the name on our consumer products.  There may be few Ontarians aware KEPCO is Korea’s national electricity giant, which produces more watts from coal than Ontario produces in total, and who stunned Areva in winning a Gen III nuclear bid during 2010.  KEPCO is a giant version of the old Ontario Hydro, and AECL, combined.  Ontario’s public generator is not entitled to benefit from the FIT program, Korea’s is paid extra to do so.  Samsung does have a heavy industry division, and they do make propellers for ships, which might be similar to the blades of IWTs;  they are the leader in LCD production, which might be similar to solar panel production.  Ontario’s deal is likely more of a KEPCO deal though.  The backgrounder ended with “...the consortium and the government have agreed to market rate lease of government lands.”

It would soon become clear why, as the Ontario Realty Corporation started tossing farmers off the land leased to them to make room for testing of solar installations.  The GEGEA has exempted some good land classifications for farming – for up to 500MW of solar generation capacity.  The Korean Consortium now held a contract to provide 500MW of solar capacity.  The reason Ontario held the farmland is interesting.  It was apparently acquired in the early 1970’s as the government grew concerned that the gridlock accompanying Toronto’s rapid growth could be alleviated by creating planned satellite cities.  Today, Toronto is noted for having amongst the highest commute times on earth, resulting in the most recent National Inventory Report (for 2008) noting: "Between 1990 and 2008, emissions increased by 14 Mt (8.1%), due primarily to the growth in the Road Transportation (12 Mt), Residential/Commercial/Institutional (6.7 Mt) and Other Transportation (3.5 Mt) sectors."  Ontario’s 190 MT Total GHG emissions included only 34 from electricity generation, in 2008.   Our ‘progress’ is to abandon thoughts of better urban planning, and instead confuse people’s knowledge by implying the smog spewing out their tailpipes, and from the leaf blowers, lawn mowers, and weed whackers, is actually coming from less and less frequently utilized coal generation plants.  And we are removing farmland from production to do it.

It’s a wonder we can even feed ourselves

Notes:  italics are quotes from Dylan’s Idiot Wind. 

Blowin’ in the Wind is not unrelated to both Ontario, and Kumbaya.

Blowin’ in the Wind is the first track from Dylan’s second album – which indicates the tune was likely taken from somewhere else.  In this case, it was from a song called “No More Auction Block” (Dylan’s version of the the song, from 1962, was later included in Biograph).  No More Auction Block was identified, by Alan Lomax, as originating in Canada as a canticle sung by former slaves.  Kumbaya turns out to be a more bizarre tale.  It is a spiritual most likely from American slaves, and probably the enunciation of “Come By Here” .  Kumbaya, as a title, seems to be a creation of marketing releases during the folk revival as the 50’s turned into the 60’s. 

In 1962, as Blowin’ in the Wind was being written, Robert Zimmerman was, literally, becoming Bob Dylan.

Idiot Wind is the amongst the most unbecoming Dylan creations.

Ontario’s Government’s Final Act in Electricity System Planning Farce

Less than one week after saying there wasn’t enough research to proceed with off-shore wind, reinstating the moratorium lifted 2 years ago, and returning to a time when there wasn’t enough research, the government issued a release today stating ”Long-Term Energy Plan Takes Another Step Forward.”    The off-shore wind is now simply planned for on-shore - most probably very near the shores of Erie, Huron, and, Pickle Lake.

The “final directive” has the same shallow thinking as the LTEP released late in 2010 (my blog entry re: the LTEP).

Most shockingly, the release states, “The province is also instructing Hydro One to move forward immediately with several priority transmission projects.”  This follows the OEB’s latest ruling on Hydro One’s rate increase applications, which specifically noted there was no business plan for many of the lines in the Green Energy Plan, and specifically stated, “the Board will not approve the overall Green Energy Plan on a conceptual, or any other basis”

The government is therefore telling the OPA they don’t plan – they are expensive boot-licking clerks .  The government is directing Hydro One to ignore the interests of consumers (easy for them after the past 4 years of orgasmic spending they’ve enjoyed) and yet again politicizing, or ignoring, the Ontario Energy Board (OEB), a board that requires independence to function.  Tom Adams was flagging this crisis with the OEB almost exactly a year ago, and just recently flagging what academics were suggesting should be done to strengthen governance of the electricity sector.

The government managed to denigrate government employees, regulators, and its citizens in one release. 

CANWEA, of course, liked it.

The Smartest Guys in the Room - NOT

The National Energy Board’s Electricity Exports and Imports Monthly Statistics for December 2009 is a document that is educational in showing the differences between Canada’s provinces and their electricity policies.

Table 2A contains, for Ontario, 37 “Sources” for exports showing totals of $518,512,069 for 14,779,854MWh, which is $35.08/MWh.  Ontario’s public generator, OPG, appears to be affiliated with slightly under 13% of the transactions.   

For Quebec, the total is $1,061,889,413 for 17,779,064 MWh – which is $59.73/MWh.  There are only 7 “Sources” indicated for Quebec’s exports, and Quebec’s public generator, Hydro-Quebec, shows as being affiliated with over 82% of all transactions.    Quebec exported 38% more electricity than Ontario did, and received 136% more money for it.

Where Quebec and Ontario Shared export markets, Quebec collected 30% more, per MW, in New York, and 55% more in New England.  New England is Quebec’s largest market, and they averaged $61.53/MWh for their product there.  Michigan is Ontario’s (slightly over half), and we averaged $31.77 for our exports there.

It appears to me that the best thing for Ontario to do would be to cut a deal with Quebec to take all our excess generation – instead of dumping it in Michigan.  They fill the reservoirs, and sell it at higher prices.

It’s not a very attractive policy, but it would get Ontarians a little better value.  That would be better than the current consideration of the Ontario consumer.

C’est rien.

A Place To Stand

Prince Edward County’s new council  called for a moratorium on Industrial Wind Turbine installations on Tuesday, February 8, 2011.  Councillor Terry Shortt said, democratically, “The public has had their voice.  It is time for the province to hear us.”  

The resolution included “BE IT RESOLVED THAT the County of the County of Prince Edward requests the Ontario Provincial Government to implement a moratorium on industrial wind turbines until independent health studies have been completed and a full environmental study be done to determine the possible impact, and all related potential costs that will be incurred by the Municipality and the effect on property values in the affected areas…”

Essentially the resolution disputes that the health, or the financial, costs are known.  I agree wholeheartedly that a moratorium should be put into place, that the health studies have not been done and that a full accounting of the impact of property values would not only show highly detrimental impacts from the new IWT neighbours, but that jurisdictions that have made IWT developers responsible for those real estate damages, such as Denmark, are unlikely to see any more IWT’s going up on their land.

Ontario had, until recently, been developing a history of both citizen involvement, and accounting for exterior costs, in electricity policy.  The Solandt report, in the 1970’s, which primarily dealt with growing concerns regarding transmission lines, noted the preference should be, “the routes that had the least disruption to the natural and social environment, taking into account cost and the preferences of the public.”  The Porter Commission, in the 80’s, also noted that public participation should be welcomed to fully involve the public in decision making.  Maurice Strong became the Chair of Ontario Hydro in 1992, and launched the organization into full-cost accounting (FCA) to account for the environmental, and health, costs, ideally at the business unit level throughout the organization.

The train carrying public participation, and attempts at FCA, jumped the rails later in the 1990’s.  The breakup of Ontario Hydro as part of an attempt to create a functional market, that would balance supply and demand as markets do, replaced central planning, until the Electricity Restructuring Act, 2004.  The act created the Ontario Power Authority (OPA) in 2004.  It has become clear in the subsequent years the practical outcome of this act has been to subvert electricity planning to the whims of the government, via directives from the Minister of Energy.    The OPA has never had the long term plan it is tasked with implementing approved.  4 years after the first IPSP was due, the ministerial directives have gone out again.   Again they call for renewable supply, excluding hydro, to go from 2% to 10-15% of annual generation in the next 7 years.   While public input is invited, it is invited on the implementation plan for the minister’s directive.

The government has not been attempting any cost accounting, let alone full cost accounting.  Now the rumours are out that FCA will be faked by inventing ‘environmental attributes’ to pretend the value of wind is above nil. 

The characteristics of Industrial Wind Turbines aren’t positive attributes.  Prince Edward County’s council is doing what, traditionally, Ontarians have done – standing on the principle that we require information with which to make environmentally, and economically, conscious decisions.   Congratulations to them, and the growing number of other councils, and their constituents, that are exemplary in doing what Ontarians are supposed to do. 

Standing.

Time-Of-Use Pricing

Time-of-Use (TOU) pricing is being implemented in Ontario.  This should provide the personal benefits of Ontario’s spending on smart meters.  More likely, it will result in the same efficiency gains we’ve seen on our bills from the rest of the smart grid initiatives (higher line loss factors added to our usage, and higher delivery charges in general).    Electricity policy encompasses issues of security, social responsibility, economics, politics, and environmental concerns.  TOU billing has implications for all of these things.   I won’t revisit the role of the OEB in protecting, or neglecting, the Ontario consumer – it’s in the smart meter column.  I will show TOU is limited in it's ability to alter Ontario's electricity supply - a supply that is being altered in a way incompatible with the intent of TOU as a demand management tool.

One approach to Demand Side Management (DSM) is the application of time-varying pricing structures – these require interval meters.  The smarter meters allow the movement away for a blended rate, which in Ontario has been practiced as the Regulated Price Plan (RPP).  Time-Of-Use (TOU) pricing is one approach to time-varying pricing.  The most significant other approaches are real-time pricing (RTP) and critical peak pricing (CPP), and then there are a number of hybrid approaches.    An overview of the reasons for DSM is available at the International Energy Agency (IEA) site for it’s DSM programme.    From that site:

Demand Side Management (DSM) was widely discussed in the 1980’s as the alternative to supply side “overspending” in energy systems. In the US DSM was carefully regulated with detailed procedures for investigating cost-effectiveness, rate-impact, programme deliveries, availability for different groups of customers. Public Utility Commissions had hearings with advocates from both sides. Outside the US the application was in most countries less formal but the basic idea was the same; that the least-cost option for the energy system performance should be chosen when more supply or less demand were compared on equal terms.

The “Negawatthour” (NWh) was made the conceptual alternative to the Megawatthour (MWh).The solutions were focusing on two issues, one was to reduce the demand for energy (conservation) and the other was to shift demand from peak periods to off-peak periods (load-management). Both measures motivated by a concern for resource optimisation. 

RPP (blended rate) plans have the advantage of not requiring the replacement of every meter in the jurisdiction, and an RPP can provide consumers some price clarity.   In Ontario this isn’t the case.  Utilities in Ontario add line loss adjustments, regulatory charges, debt retirement charges, delivery charges, and taxes onto the bill.  If you could check with the 10 smartest Ontarians you know, I doubt you’d find 3 who guess within 20% of what they paid, per consumed kWh, on their electricity bill.  All would be aware if their bills were going up, or down, though.   The TOU plan implemented in Ontario is also, essentially, blending rates – it’s simply doing so based on a far more speculative, and/or political, basis.  The Minister of Energy, Mr. DuGuid, recently mused perhaps peak rates needed to be 3 times what off-peak rates are.  If Mr. Duguid had checked the price history at the Ontario Energy Board (OEB), he would have found that is where they started (not including the 8-10 cents/kWh on the bill that are not impacted by ‘per kWh’ charges):

The ‘Low RPP’, and ‘RPP Avg’ figures on this graph are important.  The TOU average should equate to the RPP average if cost neutrality is achieved, so TOU customers should balance out at that black line.   But many small households in Ontario are billed entirely at the ‘Low RPP’ rate (it applies to the first 600kWh spring and summer, and the first 1000kWh in the fall and winter).  For a typical consumption pattern, Ontario’s switch to TOU pricing is regressive, because the customers consuming least see an increase, while the heaviest users (more that half their usage at the High RPP rate) see a decrease.  The government sent out some minions to stem the criticism in the fall, and they dutifully noted the majority of customers on TOU had lower bills in the hot summer of 2010 than they would have under the RPP.  This is why.

TOU plans, in Ontario, and from what I can see in most other jurisdictions, are regulated to be revenue neutral.  This is an interesting concept all by itself – they are supposed to be revenue neutral, and the pricing is done with the assumption that there will be no change in the consumption pattern.  The problem is, that’s a pretty good assumption.   Because they are revenue neutral most won’t notice them at all, and they’ll have no impact.  Customers have been transitioning to TOU billing for a couple of years now, and there’s been no change in usage patterns.   I’ve entered the times (not accounting for holidays) into a database and here’s the estimated breakdown:

The data, in this case annual, shows no proportional change in the consumption pattern.  This data is very preliminary, but it does show that based on the initial households, a program implemented without any specific measurements of what it should accomplish isn’t likely to accomplish what it was hoped it would.

The Abstract for one study of the PJM market, which moves similarly to the Ontario market, stated:

In PJM, 15% of electric generation capacity ran less than 96 hours, 1.1% of the time, over 2006. If retail prices reflected hourly wholesale market prices, customers would shift consumption away from peak hours and installed capacity could drop. I use PJM data to estimate consumer and producer savings from a change toward real-time pricing (RTP) or time-of-use (TOU) pricing. Surprisingly, neither RTP nor TOU has much effect on average price under plausible short-term consumer responses. Consumer plus producer surplus rises 2.8%-4.4% with RTP and 0.6%-1.0% with TOU. Peak capacity savings are seven times larger with RTP. Peak load drops by 10.4%-17.7% with RTP and only 1.1%-2.4% with TOU. Half of all possible customer savings from load shifting are obtained by shifting only 1.7% of all MWh to another time of day, indicating that only the largest customers need be responsive to get the majority of the short-run savings.

This study itself explores the price elasticity of demand.  I have always been of the opinion energy demand is inelastic, but this study, and others, imply there are large customers capable of adjusting their usage with the price – ie. there may be categories of customers that have more elastic demand.  This is important as the greater the demand elasticity, the less acute the price changes need to be to trigger the demand change, and/or, the greater the elasticity the greater the impact of an equal price change.   One conclusion of the paper;  “Because only modest aggregate price elasticities are necessary for large peak capacity savings, most of the benefits can be achieved by shifting only large, responsive customers to RTP.”

There’s a solution to Ontario’s regressive implementation indicated here – don’t put customers consuming less than 800 KWh/month of the TOU plan.  Practically speaking, that also solves the metering issues for large apartment buildings and condominiums currently lacking separate metering for each unit.

Severin Borenstein explored some of these issues in Electricity Pricing that Reflects Its Real-Time Cost.  Borenstein notes a structural issue in transitioning a from a regulated pricing scheme, which I’ve been referring to as a RPP, to a RTP mechanism.

Under regulation, the utility nearly always charges prices that are based on some notion of average cost, including the accounting amortization of long-term capital expenditures. Such an approach is targeted at cost recovery, not efficient pricing. Also, regulated utilities may be less likely to appreciate one of the main attractions of RTP, the effect it has in shaving demand peaks and reducing the need for capital investment. If regulators allow utilities to earn generous returns on investment, or if the utility management simply wants to grow the company, a pricing strategy that constrains new capital investment is unlikely to be popular with managers.

Theoretically, we should anticipate both that there are electricity market segments that have more price elasticity than others, and that the electricity supply market would provide resistance in moving to a more efficient market if their ROI’s (or ROE’s) continued to be regulated as they have in the past.  Put another way, a policy of reduced demand without any policy to reduce supply, is not a policy to allow a functional market to provide increased efficiencies.  It’s a policy of inflation and oversupply.  This is what we see with Ontario’s rapidly escalating residential prices.

I find the elasticity of demand for electricity, at peak demand periods, isn’t likely elastic at all – or, more correctly, it’s inelastic in the very short.   Following a particularly cold winter, people may switch their heat source away from electricity, insulate better – or add more heat sources.   The choice between upgrading the building’s thermal seal, or adding cooling, is the same in the summer.  This should have brought up issues both from a broader energy policy perspective, and an environmental perspective.  It is not desirable to move all homes from electric heating to natural gas heating, for both air and water, nor is it, from an energy security perspective, is it desirable to rely on natural gas to both heat our homes and, due to supply mix changes, to generate our electricity.  From a social perspective we should not have intentionally driven up the price of electricity knowing that the poorest households are not only the least likely to own their residence, and therefore the least likely to personally realize efficiency upgrades, they are also the group most likely to heat with electricity, and the group that spends the highest proportion of their incomes on energy (nearly 3 times the proportion richer households do).

The data, from the Independent Electricity System Operator (IESO), is indicative of the shortcoming of Ontario’s TOU implementation.

Since May 2002, we can see that demand has trended down – here shown by month:

I have written how this trend has little to do with price, and that we are paying the people taking credit for it.    But if it did indicate some longer-term elasticity of demand for electricity, that is simply an argument for higher prices to reduce total consumption.  No smart infrastructure is required for that.  How much higher prices need to move to achieve the government’s goals is important to note.  The 2008 Ontario budget included; “The 20-year plan begins with replacing coal-fired generation by 2014, reducing electricity demand by 6,300 megawatts (MW) or about 20 per cent of projected future peak demand.”  At an elasticity of demand of -.1 (which is amongst the most optimisticly elastic claims for residential electricity), that suggests tripling the price.  The price has doubled since 2003 for residential electricity, and another 50% - to make it triple - is only 5 years away according to the government.   The question is therefore a very cynical one – is Ontario deliberatly giving money away to the chosen few, in order to justify tripling the price, which is the actual electricity policy?

The average hourly consumption, by month, shows declining consumption, but the trend is less clear in the summer.  The most likely explanation for that undermines the environmental rationale desiring reduced electricity consumption.  That elasticity of demand is more pronounced long-term because of the option of heating the residences, and water, directly with natural gas.   It is far more difficult to find alternatives to cooling with electricity.

The TOU pricing has a tougher task – to change the consumption pattern within one day.  Over the same period, this graph shows the average daily variance (MW), between a day’s peak consumption, and the minimum, in Ontario:

There is no declining trend over the years in intra-day consumption patterns.  The record month is July 2010, at an average difference of 7271 MW over each day (some summer days will see the peak more than 10000MW above the minimum overnight consumption).  Taking steps to reduce consumption generally reduces consumption at all times – not just hourly. The summer has the greatest intraday variance because the demand is for cooling, which is most necessary in the middle of the day, and therefore coincides with commercial/industrial and MUSH sector activities.  In the winter, the coldest periods are at night, so the usage doesn’t’ vary as much over a 24 hour period.   If we abstract the peak to concentrate on, and agree it is in the summer, we see the pattern for each month's peak consumption are essentially the same as the trends for the variance between the lows, and highs, of each day:

We also see the annual summer peak averages about 2000MW above the winter peak (2004 being the last year the annual peak was in the winter).

Looking at the data as hourly averages by season, we see that the only actual ‘peak’ hours in 6 months of the shoulder seasons are the dinner hours in the fall:

Ontario has three big challenges.  Stop people from cooking supper, unless they cook it with gas – or wood, discourage air conditioning, and get people to heat with gas – or wood.

The theoretical benefit of TOU is reduced production capacity requirements.   Borenstein’s article concluded, from an RTP study in California:

The results were sobering because as exciting as the prospect of "getting prices right" may be to economists, the potential gains were likely to be only 5 percent or less of the energy bill. And energy is generally only about half of the entire electricity bill, the remainder being transmission, distribution, and customer administration costs. It still amounted to hundreds of millions of dollars in California, but it wasn't going to fundamentally change the cost of supplying electricity. The reason for this is worth highlighting: in an electric system that must always stand ready to meet all demand at the retail price, the cost of a constant-price structure is the need to hold substantial capacity that is hardly ever used. But utilities optimize by building "peaker plants" for this purpose, capacity that has low capital cost and high operating cost. The social cost of holding idle capacity of this form turns out to be not as great as one might think.

This is particularly the case in Ontario, as it acts to phase out coal, and increase wind supply, TOU fits into the puzzle only to complete the farce.  The cost of Ontario’s ‘capacity that is hardly ever used’ is particularly low – we own it already.   Last year our provincially owned coal units produced an average of 1119MW each hour, with a capacity of about 6000MW.  That is a low capacity factor.  It is not economical to build combined cycle power plants (CCPP) to run at such low capacity factors (CCPP plants average over 40% capacity factors in the USA).  The government doesn’t release the contracts for the recently procured private gas generation supply, but it is not only costing us heavily, we are likely producing more emissions because we are contracted to take production the economic decline means we don’t need.  The more economical natural gas replacement for coal would therefore by simple cycle (SCGT) – but that is minimally cleaner than coal, and it isn’t even determined it is cleaner as a continuously available peaking source awaiting the wind speed change.   I’ll treat wind as a separate topic from TOU.

But wind is extraordinarily relevant to the more efficient, in a market sense, real-time pricing (RTP) concept. The strength of the wind will increasingly impact the market price of power.

Another issue for RTP is pricing spikes can have more to do with supply issues than with demand issues.  This is actually one reason RTP is a more efficient price mechanism – it can send an escalating price signal in a sudden supply shortage.  Last week’s market price spikes in Alberta and Texas had both weather, and supply, causes.  All these RTP issues are, theoretically, part of any economic challenge.  Energy, like food, clouds our judgment into forgetting protectionism is less efficient (the only real cause of Texas’ blackout was grid connectivity with adjacent jurisdictions), as is subsidizing production and dumping exports (as Ontario has been doing for years now).  

If we want ‘real’ costs, we need a ‘real’ market.   

Environmental Attributes For Sale: Desperate Times Call For Desparate Measures

The Financial Post has a short note today on the latest whimsy at the Ontario Power Authority (OPA) - selling Environmental Attributes.

Shortly after the closing of North America's only carbon trading market, The Chicago Climate Exchange, the Financial Post cites a bulletin from Borden Ladner Gervais LLP’s (BLG) Climate Change Group, who seem perplexed as to why this would happen now - and what the 'this' is?

There shouldn't be a lot of surprise.  It's been almost 2 decades since Maurice Strong's Ontario Hydro tried to account for environment factors through implementation of a Full Cost Accounting process, and a couple of years since the OPA went from a small group of system planners to be 20-30 times larger as it became obsessed with the negawatt while writing contracts that pay private electricity suppliers about $2 billion a year more than the market would (the GA-OPA component of the Global Adjustment).

The OPA is not going to find dance partners to purchase whatever instrument they are selling, at anything other than a very depressed price.  Contrast this to Hydro Quebec's recent agreement with Vermont, in which it is specified that, "HQUS and the Vermont utilities will share any future revenues related to environmental attributes."

It's not a bad thing to have a vague notion that at some point in time there might be a monetary value placed on environmental attributes.  It is a bad thing to think Ontario can determine, either in isolation or with the Western Climate Initiative, what that value might be.  Good or bad, we know at the moment there isn't much market value to these things.

Hey Kid, can you lend me $50 million for something Smart?

An article begins with "The Canadian Province of Ontario has announced plans to launch a $50 million smart grid initiative aimed at driving investment in research, capital and demonstration projects."
They didn't do that on any Government of Ontario site I can locate.

If by announced you mean whisper it in a foreign jurisdiction through a City of Guelph employee aligned with yet another organization with yet another adorable name (Ontario Clean Technology Alliance) made up of yet another grouping of different local governments - well, maybe they did announce it.

Some things not in the announcement:

In 2010 our coal use went up 29%, our natural gas use 33%, our imports (many for US coal plants) 31% -- all to meet a 2% increase in consumption over 2009.
Since 2003 Ontario has taken out of service about 3200MW of coal capacity ... and added over 5200MW of natural gas capacity.

The most comically dishonest statement in the release is “Ontario’s Long-Term Energy Plan is on track to eliminate coal by 2014,” which is hilarious because the LTEP came out late in November 2010, 7 years after the first plan to eliminate coal by around 2014 (2015 - from the Eves government) - and it is a working paper for the minister to ignore in writing up a supply mix directive to another government organization, for them to build another plan for the same minister, or another in his spot, to ignore.
Which is exactly what happened the last time around.
And the LTEP doesn't actually doesn't contain any serious thoughts on replacing coal.

If it did we wouldn't be dropping another $50 million down another wishing well - hoping one more stupidity will yield something smart.

Another Wind Record In Ontario. Another Cost?

February 3rd, 2011, hour 20, wind output at 1288MW

A new high for Ontario.

February 3^rd, 2011, hour 24: Where did Bruce Unit 5 go?

It is pure conjecture, on my part, to assume we are paying for the nuclear unit not to produce while it is windy  -- but if that's impetus for people to read Tom Adam's submission to the IESO on the topic of Industrial Wind Turbine installations, and the Congestion Management Settlement Credit (CMSC) proposal for them, it's worth it.

January a Record Month for The Global Adjustment?

This blog has identified the Global Adjustment as a measurement of the market's dysfunction.  Distorting a market price set by transactions between willing buyers and willing sellers (the Hourly Ontario Energy Price), the Global Adjustment is a mechanism to charge Ontario consumers for whatever production, at whatever price, the government has deemed desirable to contract.

The IESO has now provided a 2^nd estimate for January’s Global Adjustment – it’s increased to $37.74/MWh (from the first estimate of $28.84) – which is shown as equating to $485.3 million dollars.  If that figure is not substantially revised downwards, it will surpass July 2009’s $466.9 million dollars – and demand in July 2009 was down almost 14% from 2008’s July, while this January demand grew over 2010’s January by about 2%, as expected.

The good news the Premier's office might provide you is Ontario received about $51 million dollars for the 1.54TWh of exports.   
The bad news is we paid suppliers over twice that to produce it.

Net exports were approximately 1.2 TWh (1.54 exports, 0.3 of imports), with an average retail price of approximately 3.3 cents/kWh.  Net exports multiplied by the $37.74/MWh global adjustment are $45.4 million – this is the figure reflecting how much more Ontario consumers would have paid for the same amount of electricity.