A Sober look at Ontario’s 2011 Electricity Figures

"He uses statistics as a drunken man uses lamp-posts...for support rather than illumination."
                                    -Andrew Lang (1844-1912) Scottish poet, novelist and literary critic

Ontario’s Independent Electricity System Operator (IESO) issued a news release on January 6th titled,“Composition of Ontario’s Electricity Supply Mix Continues to Change: Consumer Response Supports Reliability.” The introduction posits there were three trends highlighted in the data; “increasing production from renewable resources, reduced dependence on coal-fired units, and a more active role for consumers in managing their consumption.”   Not exactly the 3 trends I'd look for

• The 'customers' most active in curtailing peak demand are businesses, as Parker Gallant and I demonstrated in a recent article. Many of them pitch in by closing up altogether;
• Use of coal-fired generation is reduced because the periods we need it are down, but at peak demand we relied on coal-fired generation (I wrote on that here);
• There is no trend to increasing production from renewables in the IESO data.

There is a brief uptick. From only the data presented by the IESO, summing up hydro and wind the numbers go from 39.7 TWh in 2008 to 40.4TWh in 2009, 33.5TWh in 2010, and then we have a singular point as an uptick in 2011, to 37.2TWh. While up on a dry 2010, the total renewables figure is unimpressive against a longer trend. In the past 22 years, renewables have infrequently produced less output than in 2011.

The IESO's news release is really talking about only the output of industrial wind turbines (IWT's).  The supporting statistic they lean on is a growth in wind generation of 1.1TWh.  The second paragraph ends with, "In annual terms, wind generation represented 2.6 per cent of total output across all fuel types of 149.9 TWh."  Yet, if we trust the figures in the report, and I do, we see Ontario Demand of 141.4 TWh and exports of 12.9TWh, with imports of only 3.9TWh.  Do the math and you discover that Ontario Production was not 149.9TWh, but 150.4 (in MWh, the difference is closer to 600,000).  The difference is because the IESO is reporting the sum of all hours in the years' Hourly Generator Output and Capability reporting system, which doesn't include small scale producers including, most notably a renewable source - solar production.  The figure grew by about 400GWh in 2011 over 2010, much of which is attributable to the growth in solar capacity.  In working through quarterly reports from the Ontario Power Authority (OPA), I found an annual tripling of solar capacity which would result in a 0.25TWh growth in annual production on a total of about 368GWh (an annual average of 300MW capacity operating at a 14% capacity factor).  These figures won't change the graph of renewables much, but  they do result in a big driver of 2011's price increases.
There's another category of Ontario production that isn't included in the IESO annual summary, and that is production from Ontario's generators that is fed directly to an adjacent grid.  This refers to, primarily, the Saunders hydroelectric plant, and I illustrated a method I've used to track in, since April 1st, 2011, in an earlier post.  As the winds returned in October, more turbines in Saunders were fed, for longer periods, into Quebec's grid.  In the final 9 months of 2011, over 700,000MWh of hydro production appear to have been output directly to Quebec's grid.  I discovered this long after posting a blog entry on how the IESO curtails supply during periods of surplus - and I also developed estimates on nuclear curtailment (about 577 hours and 195.GWh), and taking non-utility generators (NUGs) offline (about 167GWh).  None of these actions is particularly expensive in itself.  $35-$40 million is probably the cost to the private generators to curtail production, and public OPG curtailment likely doesn't cost us anything - hopefully we get something from Hydro-Quebec in return.
But ...
During the hours we took action not to have 1,075 GWh of production by redirecting hydro to another grid, redirecting steam away from turbines at Bruce B or idling NUGs for a period, 811 GWh of wind output existed to replace the output on our grid.  Put a couple of other ways, about 75% of reductions in production could have been cancelled out by wind, and about 21% of all wind production bumped another source.

The IESO report notes the total cost of power was $7.16 cents/kWh, up from $6.52 in 2010.  The numbers changed slightly due to the final global adjustment figure rising minimally to 4.02 cents/kWh ($40.22/MWh). The global adjustment (GA) has now, as predicted, become a larger component of the commodity price in Ontario than the market HOEP rate.  Using estimates of contractual pricing for each source, along with actual HOEP averages received for each (the more a source can be targeted to match demand, the more it is worth in a market), I've estimated the extent to which some sources subsidize others, and the systemic costs, in Ontario's electricity system..

The price each MWh averaged in 2010 is $68.23, which is calculated by multiplying all Ontario Demand by the commodity price (HOEP + GA), multiplying exports only  by the HOEP, and dividing those total dollars by all domestic and export demand.



The data above has the notable discrepancy where the costs of all supply is about $900 million less than the recovered amounts.  A slight majority of this discrepancy is explained by the funding of OPA programs.  The OPA had budgetted $421 million for 2011 in their 2011-2013 business plan filed late in 2010, plus $1789 million for generation contracts.  The IESO figures show the OPA's share of the global adjustment ended 2011 at $2865.6 million, which is $655.6 million more than planned only 14 months ago.  Much of the remaining discrepancy is likely paying for the continued operation of OPG's coal-fired thermal plants at Nanticoke and Lambton [1], and a small amount will be payments to curtail production at generators contracted on a must-take basis
I highlighted exports in the chart to demonstrate why the commodity $/MWh in Ontario was not the $68.23 I ran these figures at, but $71.68.  Exports don't pay the global adjustment - so that is power we paid suppliers $68.23/MWh for, and resold at $30.27 - the difference drives up the Global Adjustment for Ontario customers by about $500 million

It is a frequent refrain in Ontario's IWT and solar lobbies that renewables cannot be responsible for rate increases  because there are not that many of them.  We see clearly they added about $440 million to the global adjustment directly, and I've already noted expensive wind bumps cheaper power much of the time, adding somewhere around another $40 million in paying other producers not to produce.  The big hit, however, is in the natural gas-fired generation pricing.  Throughout North America depressed natural gas prices are keeping electricity market pricing at low levels - except in Ontario where low capacity factors at private gas generators demand contracts at much higher levels.  Those capacity factors are low because the gas plants are there to supplement the grid only during the daily peaks, or when wind and/or sun are absent.  This appears sensible to many, but I don't know how people reconcile clean public hydro subsidizing private natural gas ... particularly while hydroelectric turbines are redirected away from Ontario's grid.

The majority of hydro, and nuclear, production is publicly owned by OPG.  Much of the nearly $2 billion 'net contribution' to the global adjustment mechanism from those sources is essentially a transfer of wealth from public to private hands.  Those private hands note 2 things when this is observed: the debt retirement charge shows the error of public generation, and new public projects continue to be very costly.  The debt retirement charge I've covered before, and there has only been confirmation of my arguments since that time.  The McGuinty government imposed a system to take $1 billion a year as a payment for public debt, while taking $2 billion a year from the production of public assets.  The two big hydroelectric projects currently being undertaken by OPG are the Niagara Tunnel and the Lower Mattagami projects.  It's a topic that deserves a separate column - for now I'll state I don't believe either makes sense as a standalone project.  Both seem designed to strengthen the ability of those plants to balance intermittent generation - and OPG is prohibited from building the intermittent generation it is spending recklessly to support.

The change in pricing is therefore all very predictable - we are replacing the cheapest generation (although the one the market values the highest!)- coal, and doing so by focusing all new generation projects around supporting the most expensive options (which also are the option valued lease by the market). Many would see this as the cost of addressing greenhouse gas emissions, and some discuss health impacts from burning coal.  Both of those measurements escape quick year-end review because we don't really measure those things directly.  These are very broad topics, but for today I'll apply the same figures I've been applying in past posts (.85MT/MWh CO2e for Coal, .5 for natural gas), to look at annual GHG emissions from electricity generation back to 1990.[2] 

It does look like 2011's emissions will drop below the level of 1994.  Total demand in Ontario was about 5% higher in 2011 than it was in 1994 (and 1994 was about 5% below 1989's demand level!), so the low emissions back then aren't because demand was much lower.  The gas replacing coal correlation, to emissions, is straightforward using most emissions intensity targets in use...

as is correlation with the amount of nuclear generation, which had, in 2011, it's most productive year since 1995.  Perhaps a longer trend should be noted too - when nuclear production dropped, emissions rose, and when nuclear production has been highest, emissions have been the lowest.  The main difference between 1994 and 2011, in the generation mix, is natural gas replaced coal.

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[1] Managed through the Ontario Electricity Finance Corporation (OEFC), with some information provided here and in their 2010 annual report
[2]  The specific figures change retroactively, ie. in Canada's GHG inventory reporting for 2004, 1990 emissions were 26400 (kt CO2 eq) but by .2009 the emissions for 1990 had dropped to 24400.  As far as I know there is no actual measurement, and the simplest way to reduce emissions is to change your estimating method!

My Pledge Suggestions

I subscribed to a e-mail from the Ontario Power Authority, which sent out some power saving tips for the 'festive season.'  As the owner of an old home (1907), here's a review of the their 'tips for the festive season"

• Replace old, incandescent holiday lights with LED lights. LEDs run much cooler, have lasting power and are energy efficient.
Depending on how many 10's of thousand of $s you have spent on upgrading your building envelope, be careful not to freeze to death by buying $30 lightbulbs because you don't realize the heat coming from the $1 lightbulb isn't doing much harm at all.

• Turn off outdoor holiday lighting before bed or use a timer to automatically turn them off when you go to sleep.

Put all your outdoor holiday lighting inside (see previous point)

• Hosting a holiday party? Turn down your thermostat when you have a large group of visitors in your home.
This is an important point.  Have people over in order to survive.
Monogamy is great, but survival is great too.  Huddle, huddle, huddle.
Pot lucks are an especially good way to sucker people into coming over - make sure the food is brought into the home already hot.

• When your fireplace is operating, turn down your main thermostat
Again with the thermostat!
A thermostat controls when the heating occurs.  If you are cold when you have the fireplace going, consider the possibility the open fireplace is the problem, and not the solution.  If it is 17 degrees Celsius with a fire going and you are happy, set the thermostat to 17.  If you are cold at the same temperature without a fire, find a shrink.

• Having company over for dinner? Ensure your dishwasher is full before running a cycle.
This advice may be applicable to some other situations too - like when you aren't having company over for dinner.  Ideally, find a dishwasher, fill it, and program it to come on at 7:01 pm, as daily demand is peaking and off-peak pricing has just arrived.  The next time there's a blackout across much of the continent, you won't have to credit a tree in Ohio - you'll have pitched in!

• Turn off other lights while enjoying your indoor holiday lighting.
Yeah.  Turn off the LED's and enjoy your hot outdoor lights - indoors

• Turn it off. Remember to turn off the TV, computer, stereo, DVD players and lights when you’re not using them. Install a power bar with an integrated timer to shut off your devices at the end of day.
Do not install power bars with timers until you have first mastered the concept of the thermostat.
End your day at 7 am - to avoid peak usage charges.

A couple of tips I'd suggest for next year.
Get a programmable thermostat - program it and ignore it.
If you feel cold, put on a sweater
Get heat traps for the water heater.

Anybody know where I can find heat traps for the water heater?

New Year, Same Stories, Old Professions

 Goodbye 2011.

This blog was new as 2010 turned to 2011. My firstpostof2011 noted huge exports in December of 2010, negative pricing records for January 1, 2011, and record wind production in hour 21 of January 1st. It took about a week before the first reporter picked up on the subsidized exports story, which generatedsomeinterestinthemainstreammedia(MSM). Remarkably, in hour 18 of January 1st, 2012, wind would again set a production record (1633MW).

Comparing the immediately available data for New Years' Day 2012 to the 2011 data, we see why the price disaster of 2011 was curtailed, to only intermittent periods of negative pricing, this year.

Nuclear was idled: one unit at Darlington just for this weekend (we'll see if they get it back up for tomorrow's deep freeze), and one at Pickering they seem to have decided not to bother with this season (a Bruce A unit is also offline for a fairly substantial project).

Net Imports are only up compared to last year: 1/1/2012 we were still a net exporter - of over 1000MW/hour

 It's important to note another small piece of data in this graph, which is that coal use was up somewhat, and natural gas down. It is increasingly clear, as has been claimed by many, including DonaldJonesonmyColdAirCurrentsblog, and the Ontario Power Workers' Union, that coal units are frequently a better compliment to unpredictably intermittent generation, such as wind. That's unlikely to find a champion anywhere -I mention it out of a habit of attempting to be truthful.

 The difference between New Years' Day 2011, and New Years' Day 2012, is partly the killing off of nuclear; the goal of the architects of Ontario's Green Energy Act (I wrote about them here).

A look at annual production since 1990, inclusive of net imports (negatives showing net exports, as has become commonplace in the past half decade), shows Ontario's aging nuclear fleet continues to be the dominant reason for low greenhouse gas emissions in our electricity sector - and 2011 will be neck-and-neck with 2009 and 1994 for lowest annual emissions, and lowest emissions intensity (1994 is the record year for nuclear generation).

The other very notable difference in the two January 1st, is the falling exports.

Records do get the MSM's attention, but they are far less important than trends.  In July, 2011, Parker Gallant and I would share the writing credit on an article on the export situation, "Power Dumping", as part of Parker's ongoing "Ontario's Power Trip" series in the Financial Post.  The trends, and forecasts, noted there may have had an impact as, shortly thereafter, the 12-month moving average of net exports began dropping rapidly.  Perhaps our use of the term 'dumping' helped to discourage the practice of selling power at half the price Ontarians pay.

Or, maybe not - as laterintheyearIwoulddiscoverOPG'sSaundershydroelectricplantwasincreasinglybeingredirectedtosupplyQuebec'sgrid, a move which essentially has hidden over 500GWh of exports.

My few entries on politics were notable for providing relatively accurate data-driven predictions. The articlecorrespondingtothestartofourfederalelectionnoted the likelihood of a majority (not widely viewed as a likely possibility at the time), and the article mid-August on the provincial campaign, "TimeforHudaktoStepUp, or..." also wrote the road map for a McGuinty victory - which happened.

December 2011 started encouragingly, but a flood of reports later pointed to trouble ahead. Early on the AuditorGeneralofOntarioAnnualReportsupported almost every criticism of the Green Energy Act, and this blog's early conclusions on theDebtRetirementCharge. But it became apparent reports were being buried in December under cover of the holiday.

The EnvironmentalCommissionerofOntario issued Volume 2 of his reporting on conservation issues in 2010, and he promises yet another volume. The Commissioner buries the lead late in volume2, after spending a lot of time of the bureaucratic self examination that made me, earlier in the year, write on Parkinson'sLawinconnectionwithVolume1. 56 pages into Volume 2 we get:

Natural gas and transportation fuels accounted for about 70 per cent of the total energy used. Meanwhile, electricity accounted for 20 per cent of Ontario’s overall energy demand. Propane, oil and other fuels accounted for almost 10 per cent of Ontario’s overall demand. This trend is almost identical to what was observed in 2007 ...

This informs us that the bulk of 3 volumes of bureaucratic navel gazing will be spent on electricity generation, where 20% of the production of electricity had a significant emissions component - that's 20% of the 20% of energy consumption that is electricity, or 4% of overall energy consumption.

 The Ontario Power Authority (OPA) would squeeze their reporting on their 2009 and 2010 Conservation efforts into the end of the year. Add in 2011's spending and that's about $1 billion (it's charged to Ontarians through the global adjustment mechanism), and the one snippet that should be of interest in this Decemberreportwas that energy conservation targets weren't met due to demand being depressed.

Conservation targets weren't met because demand has dropped too low.

It's hard to question the wisdom of the report - as I'm not willing to wade through the hundreds of pages on the rules for measuring programs, but it's yet another example where the bureaucracy fails to see the obscenity of their waste of public funds. Just as the Environmental Commissioner spends the bulk of his time on the tiny piece of our emissions coming from our electricity generation, so the OPA, an entity that exists to provide the long-term planning it never has, is now stealing from Ontarians to fund conservation programs that are overwhelmingly aimed at having businesses focus on electricity consumption instead of concentrating on competitively producing something (Parker and I noted how reductions are overwhelmingly in the wholesale/manufacturing sector here).

By no means were the bureaucrats the only bodies to miss the point in efforts to reduce greenhouse gas emissions, and emissions of actual pollutants. Doctors and nurses appeared stupidly throughout the year - in some instances citing soaring rates of asthma and other respiratory ailments as if that was linked to the decreasing use of coal in electricity generation, and not our increasingly dysfunctional, traffic-clogged, cities.

Perhaps most disappointingly for many of the folks who believe in rational argument and good planning, was the issuance of a draft policy from the Ontario Society of Professional Engineers on WindandtheElectricalGrid. It's not every day I, holding only a B.A. in Political Science, can condescend on Professional Engineers - publicly - but this document is exemplary of the current state of personal responsibility and professionalism in Ontario today. Tasked with integrating ever more wind power, Ontario's shrinking base of working engineers dutifully relegate nuclear energy to the role of supporting technology, and an interim solution at that. In fairness to OSPE, the role of engineers as problem solvers is important. But it is wildly irresponsible to accept the creation of a problem in the hopes introducing inefficiency will return the jobs lost to being unable to compete with jurisdictions concentrating on efficiency/productivity.

 From the World Trade Organization to NAFTA we started to see the legal issues, internationally, with a centrally planned economy characterized by professional prostration before the ruling party. As 2011 closed, the annual average for the Hourly Ontario Energy Price (HOEP) would fall below even 2009's depressed pricing. The vast majority of the commodity charge in Ontario is now the cost of publicly guaranteed, secret, contracts gifted on no defensible basis. While the 'market' rate dropped about 17% as demand stagnated in 2011 (the fourth quarter of 2011 will have lower demand than not only 2010's fourth quarter, but 2009's too), the cost of the contracts, conservation, and assorted other element captured in the global adjustment, surged almost 50%.

2011: a year the market died; a year a recovery ceased; a year where Ontario became an outlaw; and a year Ontario's professionals chose to switch to the oldest profession.

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Figures for the comparison of January 1st, 2011, and January 1st, 2012, are here

All other graphs are based on data in this Google spreadsheet