A questionable 18-month outlook from Ontario's system operator.

Ontario's Independent Electricity System Operator today released it's latest 18-Month Outlook - a document they update regularly, and I've written on regularly.

This one strikes me as less than coherent - some of the illogical content deliberate, and some irresponsibly unnecessary.
The supply advice going forward does not match the comfort level with the supply picture during the reporting period.

September 2012's report finished with:

As Ontario’s coal-fired generation is shut down over the next two years, its associated flexibility will be lost. Therefore, future capacity additions should also possess this flexibility to help facilitate the management of maintenance outages, provide effective ramp capability, supply of operating reserve and even provide regulation when necessary.

Today's finishes with

As Ontario’s coal-fired generation is shut down over the next year, its associated flexibility, such as quick ramping and operating reserve, will be lost. Therefore, future supply options, demand response programs, and storage solutions should also possess this flexibility to help facilitate the management of maintenance outages, provide effective ramp capability, supply operating reserve and even provide regulation when necessary.

From that it seems like ~3000MW of coal-fired capacity recently slated for closing at the end of 2013, halfway through the new outlook period, would be problematic.

Not so says the IESO:

Ontario will continue to have adequate generation and transmission capability to meet consumers’ needs over the next 18 months.

Or we won't ...  the same document that indicates future supply needs to have the characteristics of the coal-fired generation being removed now also notes demand is not expected to increase while a whole lot of additional intermittent capacity is anticipated coming online ... maybe.

First the demand.  The IESO notes:

Ontario continues to experience growth in both embedded generation capacity and participation in conservation initiatives. Conservation reduces end-use consumption while embedded generation simply offsets it, both leading to a reduction in the wholesale demand measured by the IESO.

Note that when the IESO says demand, they don't mean demand.  That's unfortunate as they house an enormous data repository of expensive metering data, and just renewed a rather large contract for services related to it.   If they IESO can't report demand as anything other than the sum of all the supply on it's grid, it is inept.
Contracts for solar are expensive, and solar may have a relevant capacity value during summer peaks.
These are important reasons to report on the data for that embedded generation in a meaningful manner, instead of dumbly implying some amount of supply will prevent demand from being reported for at some times.

Conservation initiatives are a hot topic in the sector, and thus the target of every confidence man in North America.  The IESO should remove the muddying influence of embedded generation in order to see the real, or reveal the false, reductions in consumption.

On coming capacity, the IESO's news release states:

By August 2014, total wind and solar generation connected to the province's transmission and distribution systems is expected to reach approximately 6,800 MW and produce approximately 14.9 terawatt-hours (TWh) of energy annually.

Table 4.2 in that actual outlook provides a somewhat different picture of things.  Of the ~3250MW of capacity that is "Considered" only 509MW is considered "firm"; of that 215MW has been operating for over a year and the IESO, or the proponents, haven't managed to get the paperwork done to indicate commercial operation status has been reached.

The table therefore shows firm additions of 294MW and the firm removal of 3000MW of coal-fired capacity.  The remaining "capacity considered" is planned; most of it is wind and most of it is unlikely to reach commercial operation by the time the feed-in tariff (FIT) contract requires commercial operation status to be achieved.  At a quick glance, Goulais, Bow Lake and White Pines all have "estimated effective dates" more than 4 years after FIT contracts were offered (originally the period was 3 years - an extension of 1 year was likely offered to all by the OPA); Dufferin and Port Dover and Nanticoke were expected in one year one year ago - they are still expected in one year.  Very few of the wind projects would receive financing if the perception was that the government would respect ratepayers by enforcing the contract periods.

Currently the government appears to be for sale and probably would dishonour the obligations to ratepayers implied in contracts while giving wind companies carte blanche, but the current government doesn't look particularly stable.

Regardless, somewhere between 215MW and 3500MW may be constructed after the IESO figures the supply is sufficient and demand is not increasing.

Why that would happen is one puzzling question.

Why we would need coal's attributes in more generation after that is a second question.

I suspect the answer is that the need for generation with coal's attributes would be desirable to compliment all the unnecessary intermittent generation also being procured; Ontario following the German path to higher expense, and emissions, that I wrote on 17 months ago in Germany's Will To Power.

He Played Everything

I do not know how to act, or what the occasion demands of me.

A few days ago a tearful son gave me the news about his friend.  I did not know the boy.  

My son plays the bass; they had sometimes played together, in the music room, at lunch.  

Lately, they have not - nobody had.

Years ago, I posted comments on the site of a national newspaper under my name; Scott Luft.  My youngest son came home from elementary school one day - which that year was a wonderful environment for him -  and said he and his excellent teacher had googled my name and my comments on that site had come up.  At the time elementary teachers were threatening job action if they, ridiculously, were not paid the same rate as high school teachers.  The government was poised to introduced full-day junior kindergarten and was, stupidly, acquiescing to make that a windfall for teachers, rather than an important step to increase the role of the physical school as an anchor of a community.  

I switched my online comments to the "Cold Air" pseudonym.

One reason I started blogging was the provincial test results for our local school - particularly for boys.  It had never occurred to me that avid readers would be unable to write, but the test results showed that to be the case.  I knew that children reading was likely in households where parents read, so I started writing - hoping that would lead to my boys writing.

I can't say the same about playing music - I generally play the stereo.  But, I've also read children are likely to read simply if there are books in the house, and in my house, there are many instruments, one of which, a bass, came from my sister - and through a combination of lessons and an uncanny ability to learn by ear, the bass is the instrument one of my sons sometimes played in the music room, at lunch.

When I started writing the blog, I did so around numbers ... and those numbers were usually regarding electricity ... and that just kept building.  I can't claim I'm disappointed, because much of what I started criticizing 28 months ago is now generally accepted as a totally dysfunctional government mismanages the sector.

But I have not addressed other relevant topics that I don't have the safety of statistics to argue with;

I have not been active in my local community;

I haven't written much on education and the role of schools;

I have not argued that the "late bus" is far more important to communities, like mine, than smaller class sizes;

I  have not called out the teachers' union on preventing willing teachers from leading extracurricular activities;

I have not written that article on the "it gets better" better campaign being applicable to far more young people than those who are gay;

I did not call out the socially blind legal systems that threw away millions of public dollars to enforce the spending of multiple times more on roads because people got hurt driving poorly - as if what people need is better roads before better community services in better schools.

Today, writing is an inadequate, but available, therapy - and speculation and introspection could never explain what has happened.

The obituary reads, in part:

"Passed away suddenly at his home... at the age of 17."
"As an expression of sympathy donations in memory of Cody may be made to Park Street Collegiate “Music Department“.

I did not know Cody; I will remember him, as I hope others may, by my son's wounded words when I dumbly asked what he played.

He played everything. 

American Tales: True stories from Electricity Data

U.S. President Barack Obama's annual State of the Union address (SOTU) provides an excuse to review the recent release of comprehensive 2011 Electric Power Annual data from the The U.S. Energy Information Administration (EIA).  I've looked at the EIA data in previous years: reviewing the data to 2009 I found little indication of unique accomplishment in reducing emissions through increased generation with renewables; and a year late another look at the same issue with 2010's data reinforced that finding.  This post will look at the national data to show the main reasons for reduced emissions is better pollution control, and increased efficiency.

A switch from coal to natural gas is generally cited as a reason for reduced emissions in America's electricity generation [1] .  The President's SOTU noted emissions of "dangerous carbon pollution" have fallen over the last four years.  The last 4 years nicely commences with an economic collapse, and features a glut in natural gas supply depressing prices.  Charting U.S. production by source, back to 1997 [2], indicates the trend of increased generation from natural gas didn't begin in 2008; total generation is up ~608TWh, and generation from natural gas is up ~534TWh.

Emissions of CO2 were slightly higher in 2011 than in 1997 (1,2%), but the reduction in more immediately "dangerous" pollutants, NOx and SO2, was over 60%.  This is quite notable as generation from coal decreased only 6% over the same period while generation from natural gas more than doubled, and generation from all fossil fuel sources increased 15%.  Fringe absolutists can cling to disparaging clean coal, but clearly there is now much cleaner coal than there was a couple of decades ago.

Engineering has accomplished the reduction of emissions of SO2 and NOx far exceeding the performance in reducing CO2 .

Engineering is also making the growth generation, from natural gas, more efficient.  While the heat rate for other energy sources (the required energy input to create electricity) has remained relatively stable, the heat rate for natural gas dropped 19% between 2001 and 2011.

Generating electricity from natural gas is not the only improvement in efficiency indicated in the EIA data.  There is a significant variance between the reported "Net Generation" from "All Energy Sources" and "Total Retail Sales" for all sectors [3].  For 2011 the figures are 3,750TWh of sales on 4,101TWh of generation (the US was also a net importer of another 37TWh).  If this variance reflects line loss, it is significant.  Tracking the history of the percentage of supply which does not end up reflected in "total retail sales" indicates an improvement of ~2%, of total generation, since 2004.

The improvements in controlling emissions of SO2 and NOx are impressive, as is the increased efficiency in generating electricity with natural gas and improving the amount of generation that ends up being purchased by a customer.  These accomplishments appear to me the result of people performing their work better.

Incremental improvement in efficiency, and reducing emissions, are not the glamorous tales the mainstream media, and powerful politicians, are trying to get people to hear, but they are important stories from the telling data.

Notes

[1] Natural gas generation continued it's ascent in 2012, and a number of claims in the media are based on preliminary 2012 figures.  The 2012 reporting is far less comprehensive than the 2011 annual data I am reviewing (released late in January 2013.
[2] I utilize the following years as important benchmarks:

• 1990 is the benchmark year for the Kyoto protocol, so a lot of reporting is as of 1990
• 1997 is the year the Kyoto protocol was negotiated (with 1990 being a negotiated base year favouring Europe), so comparing to 1997 provides a more realistic picture of changes due to the emphasis on reducing emissions 
• 2005 is the year annual consumption peaked in my province (Ontario)

[3] The figures are displayed immediately in the Table 1.1 of the formatted report. - import and export figures are table 2.13

Monthly Ontario Electricity Bills Soar and Fall with Nonsensical Global Adjustment Charge

A certain type of electricity consumer in Ontario is subject to billing based on their hourly usage at a market rate, plus a global adjustment charge.

The Global Adjustment (GA) is the difference between the total payments made to certain contracted or regulated generators/demand management projects, and market revenues. (IESO)

The 2nd estimate for January's global adjustment charge, posted January 31st, is $623.6 million, or $50.65/MWh.

Which is nonsense.

An average "Class B" consumer, if charged by the calendar month, had a November 2012 commodity charge at $80.90/MWh, the highest rate since 2002 (not accounting for inflation).
The next month, December, the charge dropped to $66.15/MWh; the lowest price in 27 months.
I estimate a preliminary figure for January of $82.84/MWh, smashing through November's elevated level (HOEP of $31.59 in addition to the $50.65 2nd estimate of the global adjustment).

There is no rational basis for this monthly roller-coaster, lottery inspired, pricing.

The component of the total market value charged to "class B" customers has been increasing due to dropping market prices pushing more of the commodity charge into the global adjustment, which export customers have always been protected from; as of 2011 Ontario's largest consumers - Class A clients - have also been able to realize deep discounts.


The graph of the average market price (all market revenues, and the global adjustment, divided by the total market consumption), shows this oscillation - calculating the 12-month average pricing shows the oscillation is due to noise, not a sustained rise or fall in pricing.


The 12-month running average remained at $66/MWh throughout 2012; the average class B rate was $73.30, with the $7/MWh difference representing the cost of discounted class A rates, and low-priced exports.

July 2012 provides a hopeful precedent for an enormous 2nd estimate of the global adjustment being steeply reduced in the final charge (from $599 to $421.7 million).  That month the Ontario Power Authority (OPA) had, apparently, moved the recently announced costs of relocating a gas-fired generation station from Mississauga to Lambton directly into the global adjustment pot, having  missed the Minister of Finance announcing the relocation fee would come out of a slush fund elsewhere; the charge was removed for the final global adjustment billings.

Why did the OPA think it appropriate to put the entire charge into a single month?

I'll speculate that it's because July is generally the peak demand month in Ontario, and there's an argument that the cost of peaking capacity should be allocated to consumers at peak demand periods.  That the debacle had gone on for years, and the cost was incurred due to saving seats with an irresponsible election promise in the fall of 2011, was deemed, somewhere, to be irrelevant compared to the need to recover all costs, and the desire that those costs be moved to peak demand periods.

January is a high demand period as well.

Perhaps the excessive global adjustment for January is related to Ontario's announcement that it would be closing it's coal-fired plants in southern Ontario one year earlier than contracted.  While Premier McGuinty's office stated the move would "save the province $95 million, the "Contingency  Support Agreement for Lambton Generating Station and Nanticoke Generating Station from 2009 to 2014" seems to indicate that is unlikely.

While January is a higher demand period, and therefore considered an excellent opportunity to inflate rates, winter in Ontario is not what it is used to be - and alternatives to electrical heating abound.  Demand in January 2013 was up only 1.4% from January 2012.
The trend in total monthly consumption, is apparent in the IESO market data (from May 2002) and preceding metered data back to 1994.  Up until 2010 total January demand would usually exceed total July demand.  While overall July demand is not far off record levels, January demand remains far below even 1997 levels.

Peak demand has a different trend. Summer has usually provided the annual peak demand period since the turn of the century - usually the summer peak is now thousands of MW greater than the winter peak.

I suggest the reason that January's global adjustment soared is the gaming of the global adjustment to allocate one-time charges to punish customers for consuming electricity during the coldest month of the year.

The IESO is currently conducting a stakeholder initiative on modifications, "to allow greater responsiveness from customers for costs that are now included in the global adjustment."  
It can only be an exercise in bureaucracy as the IESO, and the OPA, are demonstrably incapable of responsibly allocating charges on a monthly basis.

Ontario's businesses should not have uncertainty introduced by these monthly machinations.

They deserve the option of a flat rate price opportunity to opt off of the global adjustment farce.