LTEP 2013: An unfinished plan

The Wynne Government's Achieving Balance: Ontario's Long-Term Energy Plan (LTEP 2013) isn't an energy plan; it's an electricity policy statement.

LTEP 2013 is inadequate; in it's sole focus on electricity, it does not address energy security and it does not address greenhouse gas emissions.
Ontario's electricity sector emits less CO2 equivalence than each of the car, light duty truck, diesel vehicle, and other residential energy consumption (furnace, gas) sectors. [1]  

The winter of 2013-14 showed an increasing linkage, in Ontario and other markets (particulary New England) of natural gas and electricity. Cold weather strained natural gas supply, threatening blackouts and sending prices soaring.

LTEP 2013 is therefore too narrow-focused to be an energy plan, and that limitation makes it unlikely to be a thorough electricity plan.  To the extent a plan exists, it anticipates increasing emissions from electricity generation while failing to plan for sufficient production to securely meet demand in a future that is, in planning terms, too close for comfort.

What LTEP 2013 "plans" on doing is continuing the mistakes that have driven prices up in the province since 2008.

The 5 principles of LTEP 2013

The "principles" purported to be balanced in Achieving Balance: Ontario's Long-Term Energy Plan (LTEP 2013) are:

• emphasis on conservation and demand management before building new generation.
• clean energy, 
• reliability,
• cost-effectiveness,
• community engagement

Conservation/Demand Management/your a bad person for flicking that light switch...

In an earlier post I noted this has been the emphasis of every plan in Ontario back to 1980.
Efficiency is very important, but the term conservation implies energy can be conserved which, for the majority of Ontario's electricity generation, is usually untrue/uneconomic.  Ontario has been spilling hydro, diverting steam away from turbines at nuclear units, and forcing wind turbines offline at times.  That energy is not being conserved - it is being wasted.
Don't get me wrong; personally I conserve energy.
I've stored many calories.  A better idea would have been to consume more efficiently - which is also true for electricity. [2]
Generally somebody using the term efficiency is worth listening to: not so people popping of on conservation.

Clean Energy/we don't tolerate coal

"Clean" is a weasel word amongst Ontario's electricity sector.

OPA 2011 Q4 reporting, where "clean" is gas

For years the Ontario Power Authority reported wind, solar biomass/bioenergy and hydroelectric generation collectively as either "renewables" or "green" - maybe waste too ... clean was natural gas, particularly combined heat and power (CHP), and I think nuclear has also been in the clean camp.
In LTEP 2013 "clean" seems to apply to renewables, although "conservation" is, appropriately for the application of this weasel word, defined as "cleanest."

I don't think there's much hope in looking for clean if it mainly exists as nothing - better to look for dirt, which I'll do when digging into the numbers.


Reliability/ Energy Security

Reliability has a couple of meaning in LTEP 2013.
The most frequent usage of the term is made in referencing transmission and the grid.  That's certainly a consideration as the province's major city had two major blackouts in 2013 - and those blackouts may be attributable to the failure to heed reliability planning in the past (see Building Blackouts).
The other meaning of the term reliability has to do with significant generating capacity being available to meet peak demand - as in this passage:

In 2004, Ontario’s supply outlook was not sufficient to meet North American reliability standards. Today’s margins are above required levels.

I don't see margins meeting the standards by late this decade - not only because of the planned supply changes, but also changes that may come in the North American standards for what counts as reliable capacity. [3]

The winter of 2013/2014 re-introduced the need for supply diversity exactly as Ontario exited coal. [4]  Fortunately oil-fired Lennox Generating Station existed to generate at times, as natural gas stores hit historically lower levels.[5]  

The reduced diversity of Ontario's weakened supply mix was evident this past winter in higher prices, increased utilization of Lennox, and increased imports from the interties with the grid of the US states.

These are not "clean" options.

LTEP 2013 did not anticipate the supply issues experienced in the months following its December release.


Cost Effectiveness/Competitive Pricing

LTEP 2013 talks about the cost of electricity, but not in a sense that relates to pricing in competing jurisdictions.
The document forecasts cost increases as lower than under the previous LTEP.
It doesn't note the competitive need to control cost is more urgent now.  The average all-in cost of electricity in the United states escalated only 6.5% from December 2010 to December 2013.   Comparisons in Ontario are difficult as data is poor for actual delivered cost to different customer segments, but we know the commodity component (HOEP + Class B Global Adjustment) jumped 32% from 2010 to 2013.

There is an importance in rising prices within Ontario; reduced discretionary spending being one aspect of the rising cost of energy, particularly on poorer households in the province.
There is arguably a much greater importance to the competitiveness of the pricing with competing jurisdictions, and the new LTEP maintains an inefficient supply approach championed in the earlier LTEP.

Community Engagement
I don't take as meaning anything other than the current Premier would like to present herself as a communicator.
I would think communities would be engaged by concerns over security of supply, pricing, pollution and being constantly bombarded with messaging about their wasteful ways; if they aren't engaged it's because they feel disenfranchised.
Nothing in the LTEP 2013 empowers communities to do anything but acquiesce to Toronto's planning.

The Supply Mix in LTEP 2013

My previous post framed this electricity plan in the context of earlier plans: it's primarily a political document.

LTEP 2013 plan

LTEP 2013 displays 8 supply components, including coal, which doesn't exist in the mix, demand response, conservation and planned flexibility.

The Ontario Power Authority (OPA) has posted some of the figures behind the LTEP, and looking through the "Supply/Demand Balance" spreadsheet I suggest both "conservation" and "planned flexibility" aren't helpful.

Conservation is shown, in the OPA materials, as reducing resource requirements; resource requirements they show as growing quicker than conservation. Current resource requirements are far below where they were a decade ago now.  In my forecasting, I plan on demand being flat, which is close to what the LTEP does - I do so based on the declining growth trend of  the past several decades, and the LTEP does so because of conservation cancelling growth that would otherwise buck the long-term trend. [6]

"Planned Flexibility" is shown entering the supply mix in 2019 - which is a rather short time frame for an unforeseen innovation in electricity supply.
That's worrisome as "Planned Flexibility" matches, exactly, the expected shortfall in firm capacity to meet NERC's reliability standards. [3]

The cost calculations estimate "Planned Flexibility" exactly the same as natural gas generation; in fact the supply costing category is "Natural Gas and Planned Flexibility."  This grossly underestimates the cost of capacity that is anticipated to be required for a small number of peak hours each year. [7]

There is also no estimated "unit cost for generation by resource" for demand response - which is likely a valid generation source, and it's also likely an extremely expensive one. [8]

The supplementary material posted by the Ontario Power Authority reveals enough specifics to compare LTEP 2013 to the previous LTEP (2011) and the first Integrated Power System Plan (2007-08).
The LTEP 2013 supply mix isn't that different than one scenario I estimated in a post during the consultation period.: my "2025+Nuclear Refurbishment" scenario assumed, for 2025, all currently contracted supply is constructed, existing hydro and natural gas generators continue, Bruce A and B along with Darlington nuclear reactors are refurbished, and any remaining shortfall in meeting reliability standards is met with natural gas-fired generation.

View as a webpage

The differences between plans display the lobbies influencing the government. [9]

The change from 2008's IPSP to 2013's LTEP shows a big decline in planned nuclear capacity, and a lesser decline in hydro. Despite a net addition of capacity, the IPSP could meet reserve requirements, whereas LTEP 2013 can't (in 2025 the "planned flexibility", as the LTEP describes shortages, is 2,762MW).

The change from LTEP 2011 to LTEP 2013 is a reduction of nuclear (again) and a reduction in wind capacity. Those reductions are planned as being offset by increases in bioenergy and, significantly, solar. LTEP 2011, like the IPSP before it, could meet the reliability requirements LTEP 2013 can't.

My 2025 scenario of contracted supply, plus nuclear refurbishments and enough natural gas supply to meet reliability requirements, is different from LTEP 2013 primarily in the LTEP's "planned flexibility" trick (hiding that it doesn't meet reliability requirements), coupled with it's use of demand response to meet demand peaks.

LTEP 2013 is not costed properly, and it does not provide a credible plan to meet reliability standards. I reported in an earlier article that the legal planning entity is the OPA and this LTEP, like the one preceding it, should be a starting point for the development of a thorough integrated power system plan (ISSP). 

This article has discussed the planning issues, but it has not addressed the operational issues that are impediments to delivering a clean, reliable, cost effective system honouring the principles LTEP 2013 purports to be built on.

ENDNOTES

1. In 2012 Ontario's Greenhouse Gas Emissions (in  kt CO2 equivalent) included [1a]:

• 14,500 from electricity generation
• 17,800 from residential energy use (furnace, water heating, etc.)
• 15,000 from cars ("light duty gasoline vehicles")
• 15,100 from "light duty gasoline trucks"
• 18,812 from diesel vehicles (including 11,700 from Heavy Duty ones and 6,400 from "Off-Road" diesel)

1a.  These figures are pulled from the just published National Inventory Report 1990-2012 (NIR).  The NIR (zip) includes 2 volumes; the figures in this article are in volume 3 on page 25

2.  I wrote on this prior to the LTEP 2013 release: There's never been a worse time for this Conservation thing

3. The North American Electric Reliability corporation (NERC) is the entity the sets planning reserve margins.  It is closely aligned with the U.S. Federal energy Regulatory Commission (FERC) which is looking at rules for a number of things following supply scares of winter 2013/2014, including what supply options are viable options in a functional capacity market, and what capacity margins are needed.
Recent testimony of FERC Commisoner Philip D. Meiller illustrates a number of concerns.

4.  With the exception of Thunder Bay, which is anticipated to cease being fired by coal late in 2014.

5. I noted inNatural Gas hikes impact on electricity pricing in Ontario "the primarily storage hub in Ontario hit "historic" lows"

6. I wrote LTEP Backgrounder: The Con in Conservation during the LTEP 2013's consultation period.

7. For more: The Capacity Trap: Ontario's Electricity Costs Soar as Emissions Drop

8. For one estimate of the cost of a demand response program, see these comments/calculations from analyst Bruce Sharp, on how expensive the Class A/Industrial Conservation Incentive (ICI) has been.  Unsurprisingly, the expensive program is being expanded anyway.

9. The different plans have different levels of clarity on the supply mix.
The breakdown of "renewables" in the 2011 LTEP wasn't well defined - and the definition for "Conservation" surely changed (it does daily).
My assumption in 2011 was ~8000MW of the 10700MW of renewables called for would come from wind, and the vast majority of the remainder would come from solar PV.

Wynne bungles elimination of debt retirement charge

Toronto's inept Premier has bungled the simple task of eliminating a billion dollar charge concurrent with halting a billion dollar credit.

Ontario intends to take the Debt Retirement Charge (DRC) off residential electricity bills, saving the typical homeowner $5.60 per month, after Dec. 31, 2015.
...The DRC would remain on all other electricity users’ bills, including large industrial users, until the residual stranded debt is retired.     [Ministry of Energy news release]

There's a great deal of trickery here as pre-electioneering results, again, in terrible electricity policy.

The Ministry of Energy news release notes the debt retirement charge (DRC) changes will occur as the, "Ontario Clean Energy Benefit (OCEB) ... is set to expire."

Some figures to explain the machinations:

• The DRC collects just under $1 billion a year, and the OCEB costs just over $1billion a year [1]
• The debt retirement charge (DRC) is 7/10ths of a cent on each kWh consumed in Ontario.
• Using a recent estimate of 17.25 cents/kWh, the DRC is 4% of all charges
• The OCEB is 10% of all charges (delivery, regulatory, etc.), but not on all kWh consumed
• The OCEB applies to residential, farm, and small business (less than 50kW average monthly peak) [source]
• more than half of all consumption is by large consumers/businesses not receiving the OCEB.

Consequently:

• With the end of the DRC and OCEB, voters' bills will go up for 2016, about 6% more than they otherwise would
• Expenditures on the Ontario Clean Energy Benefit will be reduced near 0
• Revenues from the Debt Retirement Charge (DRC) will be reduced by less than half, with the full burden of ongoing payments placed on the province's businesses.

The burdening of business with the debt retirement charge is particularly odious if we trust the government's primitive accounting of the Residual Stranded Debt (the portion of the debt which the Debt Retirement Charge was intended to service), in which it appears that the freezing of residential rates by 2002's Progressive Conservative government of Ernie Eves is responsible for all remaining residual stranded debt.

The accounting of the residual stranded debt wasn't made for nearly a decade after it is now shown to have escalated.
It is plausible that Eves' actions throttled profitability at OPG enough to reduce anticipated revenues from the public generator and strand more debt.
It is deplorable the burden of servicing that debt is to fall on businesses instead of the residential voters.

The Ministry of Energy has scheduled an event, at a Giant Tiger; Making Electricity More Affordable for Businesses.  The announcement is likely to expand a program allowing business to evade global adjustment charges by curtailing usage during the 5 highest daily peak demand hours.  The success of that program, in transferring costs to the consumer classes for whom the DRC is being eliminated, requires market pricing to recover far less than the actual contracted costs of supply.

I guess the goal is to transfer the equivalent value of the annual $500+ million in debt retirment charges, or more, to customers just exempted from paying debt retirement charges.

This is what passes as planning in, and for, an environment of institutionalized incompetence.

Endnotes

1. OCEB figures from Table 2.25 of 2013 Ontario Budget; DRC figures from table 2.23.

Zombie Docs: Environment Defence's latest offence

This was first posted March 20th on my Wordpress site. My hope was the report being debunked would be generally ignored and this post would not have continued relevance. 

Unfortunately it's been a useful reference too often; as such, it belongs on Cold Air.

___

Environmental Defence issued what they consider a study, and it was treated as news (Globe, Star).
It shouldn't have been.

Your Home Electricity Bill: A Study on the Costs in Ontario includes some pedestrian costing estimation by a consultant, and regurgitates the spin from past reports that we had felt slain multiple times.

The costing breaks down a bill for $137 which it claims is "based on 800kWh/Month" - which I calculate as working out to 17.25 cents/kWh. The report also cites a Hydro Quebec study to demonstrate how Toronto and Ottawa, collectively known as Ontario (prices are actually higher in the rest of Ontario than these cities). One problem is the HQ data being graphed is in base units, with Montreal set to 100, as the base:  Montreal's $68.66/month (1000kWh residential demand) is the index, making Toronto's $124.75 182 on the index (because it's 82% higher).

This E.D. publication has Toronto rates at both 12.465 cents/kWh and 17.25 cents/kWh.

Awful.

Believable graphic from unbelievable Environmental Defence report

The 17.25 cent/kWh calculation seems believable - which is from Power Advisory.  Their generation costing doesn't seem much different than I estimated for 2013 - but their methodology is immature, probably by intent.    A simple exercise is percentage of total cost (I'll use the figures in the graphic, less conservation) and percentage of total generation (I'll use 2013 totals from the IESO adding 0.5TWh for solar - an estimate which is from the OPA's planning docs for the LTEP).  So percentage of cost first, and then percentage of generation:

• Nuclear:     49%, 59%
• Hydro        17%,  23%
• Wind,           7%,     3%
• Solar,            7%,     0.3%
• Bioenergy,    3%,    0.8%
• Fossil Fuel  17%, 13%

A higher share of cost than generation means the supply is more expensive - obviously.

Less obviously, because solar and wind in Ontario have little capacity value (expectation of being producing when required), they serve only to make firm generation (usually natural gas) more expensive.  Put in terms of the $77 shown for supply on the catchy graphic in ED's report, fossil fuels would still account for around 17% of total cost if wind and solar equalled 0%.

That's only one reason people, sentient ones, claim costs rise with renewable supply.  As my more thorough estimates indicate, there's also a cost to Ontario residential consumers of selling electricity to export markets, and large industrial customers, at prices far below the full cost of that supply. Intermittency is a contributing factor to that behaviour.

Another ED shortcoming is claiming the cost of purchasing the supply is the full cost of adding the supply - whereas some expenses are incurred to add the supply in additional transmission and distribution infrastructure.

ED's report later disposes of any pretense of numeracy and goes into the safe confines of misdirection with 2003's blackout, and attributing today's much cleaner air to the amount of renewable energy they just claimed was negligible in arguing it wasn't spiking bill prices.
It gets stupider again in starting a paragraph, "As to what energy should replace polluting coal..."

Coal is replaced.

The rest of the report is either scenarios based on the OPA's scenarios (which few have much faith in), and/or  typical E.D. bullshit referencing the same tired old anti-nuke kook nonsense they always do.

The zombies referenced by ED, and rebuttals:

1. Power Advisory Report (2014): Components of an Ontario Residential Electricity Bill. -  it's a PowerPoint presentation, from a consultant, with forecast and calculations"based on Ontario’s 2013 Long-Term Energy Plan (LTEP)" - which the consultant isn't confidant is feasible (see Summary and Commentary on Ontario's Long-Term Energy Plan)
2. Ontario Clean Air Alliance. (2010). Ontario’s Stranded Nuclear Debt: A Cautionary Tale - a gas lobby's demented interpretation of debt treatment in Ontario.  If you find it credible in the least read Stranded Debt - Abandoned Responsibility and/or Power at what cost and/or Duncan's Grow-Op is Stealing Hydro
3. DSS Management Consultants Inc. and RWDI Air Inc. (2005). Cost Benefit Analysis: Replacing Ontario’s Coal-fired Electricity Generation. - disputed in 2005, there'd be a more current report if it had been vindicated (see also Ross McKitrick in the Financial Post in 2011 and my The Lies of March
4. Ontario Ministry of Energy. (2013). 2013 LTEP Consolidated Figures and Data Tables - noted above the concerns of Power Advisory, but writing my own commentary remains a "to do" list item
5. Hydro Quebec: Comparison of Electricity Prices in Major North American Cities - the graphic shown by E.D. is labelled wrong, which is somewhat understandable as HQ's numbers for Toronto's small consumers seem too low to believe
6. Ontario Clean Air Alliance. (2013). A Seven Point Energy Plan for Premier Wynne - the gas lobby again, with something I hadn't read before.   Conserve + pay attention to gas (except the price) + to hell with nuclear.  Yawn
7. Ontario Power Authority. (2014). Detailed LTEP Information Breakdown. Module 4: Cost of Electricity Service, slide 48 - which is the costing of the LTEP that may or may not be well-considered.
8. Greenpeace Canada and the Pembina Institute. (2013): Renewable is Doable: Affordable and flexible options for Ontario’s Long-term Energy Plan - which I criticized, particularly as it will increase emissions, in NENGO's target nuclear at expense of the environment
9. Ontario Power Authority. (2014). Detailed LTEP Information Breakdown. Module 4: Cost of Electricity Service, slide 40 this time (2nd reference) - with the OPA showing how much you'll save with "efficiency" - it's great they're getting away from the term "conservation", but the OPA doesn't have a history of accounting intelligently for conservation (see the Con in Conservation, There's never been a worse time for this conservation thing, and my costing of CDM supply in estimates during the LTEP consultation period)
10.  Ontario Ministry of the Environment. (2014) Ontario Smog Advisories: 2003-2014 - this seems like good data, but adds nothing to The Fog Around emissions From Electricity Generation

Ontario Rates headed higher again - due to renewables

The Ontario Energy Board (OEB) has announced that electricity bills will be going up at least 2.4% a day from April 30-May 1st.

Fortunately it's only twice a year the OEB sets the Regulated Price Plan (RPP) rates for retail consumers in Ontario, so the annual increase isn't over 700%, but it isn't 2.4 either.
There's a couple of RPP plans; an old "tier" plan which charges less for the first tier of consumption, and the now more common time-of-use (TOU) scheme. Both RPP versions have rates set to average the the same amount; the calculations for that amount are communicated in a Regulated Price Plan Report.

Rates are set to average $92.50/MWh (9.25 cents/kWh) as of May 1, 2014; last year rates moved to average $83.95/MWh on May 1st.

Here's how the OEB's press release describes that annual 10.2% increase:

The price for consumers is increasing by approximately $2.83 per month on the “Electricity” line, or about 2.4% on the total bill, for a household with a typical consumption pattern of 800 kWh per month.

Ontario's rates are up near 10% a year since 2008
US rates are not [1]

So, the average cost of a kWh is going up 4% that day. Other portions of ratepayers' bills have been rising too, at times more rapidly than the charge per unit of consumption.

The rise in RPP rates has been a feature for over half a decade in Ontario. From 2008-2013 RPP rates increased an average of about 8.5% a year: US rates, over the same period, about 0%.

The OEB disguises the reason for the current hike in its news release:

The market price of natural gas has risen during the long winter...
The forecast for higher costs includes more generation in the next 12 months from sources including renewables. 

Let's dismiss the natural gas pricing story (again); the rate increase on May is tempered by a $1.87/MWh credit to clear the variance account built by recovering more than anticipated during the prior rate plan period.  There's a neat story in how soaring gas prices didn't lead to higher than expected electricity increases, but it's not relevant to the current rate increases.

The variance account figure is one variable in the equation used to establish the total cost the RPP should recover (CRPP in the equation - where H is the variance account amount).
The equation may look intimidating but it simply communicates that the total cost for RPP plan customers will be:

• the value of the electricity they use at the market price (ie. HOEP), plus,
• their share of the global adjustment (calculated by variables within []), plus
• whatever deficit is in the variance account.

The variables A, C, E and G are the costs of contracted/regulated supply; whatever isn't recovered by the market price (B,D and F) comprises the global adjustment, but that's irrelevant to the RPP rate.  This is what variable A, C, E, and G are in the current RPP document, and the one a year ago, and what has changed to increase rates over 10%:

This is not complicated at all: one variable increased, and it represents, "the amount paid to the OPA with respect to its payments under certain contracts with renewable generators."

This is an increase in excess of 10% that would have been greater if not for planning spending on all other supply to be down. [2]
Perhaps "planning" is the wrong word.  Ontario Power Generation (OPG) not only has a very significant rate increase application into the OEB, for July 1st, that rate increase indicates a directive to move a lot more hydro into the "prescribed"/regulated hydro.  Were the OEB to allow an OPG rate increase it would be the first since the RPP rate inflation kicked in after 2008.

OPG's prescribed rates have not changed in a period where US pricing remained flat and Ontario's RPP rates went up 48%.

Stick OPG rate request ignored on a press release, along with notification the annual inflation for the portion of the bill being increased is over 10%, and that is due entirely to the contracting of renewable energy.




ENDNOTES

1. The Ontario rates are for only the electricity/commodity, and don't include transmission, distribution, regulatory, stranded debt and tax charges; the U.S. Energy Information Administration (EIA) reports all costs, so the closest comparison to Ontario's commodity rate is the industrial rate: the average for all US sectors has risen only 3.5% from 2008-2013 (from just under to just over 10 cents/kWh)

2. While the variance account does lower the RPP for the next rate period, it does not reduce it as much as the variance account reduced the RPP rates one year earlier.  The hike due to renewable does look to be higher than 10%, but not significantly higher.

3.  Spreadsheet with the figures and the graphs in this post can be viewed on the web

4. My previous post contained a table showing the combination of wind, solar and natural gas generation comprising 48% of the global adjustment.  The OEB RPP report shows them adding to 49%.
Must be a rounding thing.

The Global Adjustment, and a tale of a soaring wind and solar subsidy

It's been nearly 2 years since Greenpeace posted:

Nuclear has been responsible for 45% of recent increases on your electricity bill. Meanwhile, the impact of renewables on your electricity bill has been minor – about 6%.

I responded at the time as the statement, and the misunderstanding of Ontario's convoluted pricing that lead to it, were nonsensical.  However, I thought I'd pull some quick figures to bludgeon truth in demonstrating how much cheaper nuclear has become, while the costs of renewables, and their friend natural gas, have skyrocketed.
And then I'll try to add a more accurate perspective.

I estimate figures on an ongoing basis and, according to my calculations, nuclear generation is responsible for ~38.7% of the global adjustment mechanism (GAM) charges over the most recent 12-month period.  That statistic is well down from the 45% Greenpeace sited.

What is escalating during this decline in nuclear's share?

Solar and wind generation is now up to 21.5% of the GAM, from the 6% cited less than 2 years ago.

Share of the GAM pot just doesn't seem meaningful without the share of supply being provided - so I've shown that too, as a second doughnut.

Nuclear provided 57% of all supply during the12-month period, but was responsible for less than 39% of the GAM pool.

Wind produced 4% of supply, but the estimate is it's responsible for 10% of the global adjustment charge; solar generated only 1% of supply which caused 11% of the GAM.

My estimates may seem outlandish in terms of the narrative one gets from the promoters of renewables, but they are perfectly in line with figures shown in the last document behind regulated pricing plans in the province, which showed wind and solar each expected to comprise 11% of the global adjustment. (table 2, page 20).

There's silliness in interpretting this approach as indicating "subsidy" level.

I chose to write this post, and pull the figures for it, because the Hourly Ontario Energy Price (HOEP) was as high in each of the past 3 months as it had been since 2005;  higher than the contracted price of nuclear, but lower than the contracted price of wind and, of course, solar.

In reality little has changed; the share of the global adjustment is as influenced by the funds recovered by sales at the market rate as it is by the contracted cost of supply: it's just the difference between the two.

Chart from this spreadsheet

Nothing unexpected has happened in the past 2 years.

Added variable Renewable Energy Sources (vRES= wind and solar), which lack capacity value, will either bump nuclear or hydro generation, get exported at cheap rates, or displace production from the natural gas generators that are paid regardless of production.  The final of these scenarios is desirable, in that burning carbon is avoided - but it does have a cost impact that shows as a higher per unit cost of generation from natural gas generators.  If we group production and costs to calculate the total for the combination of wind and solar and natural gas, the production is 14.6% of supply and the cost 31.9% (over this period that results in an estimated 48% of GAM charges).

There are ways the size of the GAM charges inflate consumer pricing in Ontario.  The very high HOEP over the first 3 months of 2014 appears to have tempered the rise in the commodity price (comprised on HOEP and class B GAM); that rate increased by 17% in 2013, but only 6% in the first quarter of 2014.  This is due to more of the cost of supply being paid by export customers (excluded from paying any GAM costs) and class A customers (who can save most of the GAM costs).

LTEP 2013: The Liberals' Temporary Electricity Ploy

Ontario's short-term government announced a Long-Term Energy Plan (LTEP) in December, which they dubbed "Achieving Balance."  The well-written document has some promising language regarding cost control and flexibility, but is vague on how all demand situations will have supply to match.

The events of the past winter made it clear supply shortfalls are, in planning terms, imminent.  The LTEP is a flawed document in electricity planning, but it's a much worse if view as an "energy" plan.  It is a political document that doesn't foresee a comprehensive planning role for the Ontario Power Authority, tasked in the Electricity Act with producing an Integrated Power System Plan (IPSP) - presumably free from the glare of the political spotlight.
 "Achieving Balance" is a political document which ignores opportunities to leverage the low-emissions character of Ontario's electricity sector into positives beyond its borders, and could well harm the province's nuclear industry internationally.

The history of the planning of planning the electricity section is instructive for understanding the political placement of LTEP 2013, and the outcomes the last time planning structures were similarly ignored.

History of plans

The Ministry of Energy will work with its agencies to ensure they put conservation first in their planning, approval and procurement processes.

-Achieving Balance: Ontario’s Long-Term Energy Plan (Dec. 2013)

... future planning philosophy should be reoriented to emphasize demand management increasingly rather than maintain the focus on supply expansion, as is traditional.

-Report of the Royal Commission on Electric Power Planning: 1980 (Chaiman: Arthur Porter)

A 1970's commission (under Dr. Omond Solandt), followed the implementation of today's grid form, was initiated due to concerns with transmission lines:

Public concern with issues related to and raised by power system planning in Ontario first arose from the siting of a new series of 500 kV transmission lines around Toronto. They were required to accommodate the additions of power from the nuclear stations and the large fossil fuel fired stations, Nanticoke, on Lake Erie south of Hamilton, and Lennox, near Kingston on Lake Ontario.

Current planning foresees far more transmission lines - for no more supply.  The Wynne government has been clear that it's major supply choice is no supply/conservation/efficiency - whatever it's called, it's the same claim made for over 3 decades.  The current gas plant scandal involves, in part, relocating local Toronto area generation with generation at the distant Lennox site noted in the Solandt report, and the equally distant Lambton site.

The Porter Commission, in 1980, called for conservation and demand managemen.  It was followed by a period of oversupply, which included delaying mega projects (Darlington) as anticipated demand growth failed to materialize. The period of oversupply ended with the mothballing of 7 nuclear reactors late in the 1990's [1]

June 2001 saw the formation of The Select Select Committee on Alternative Fuel Sources.  This all-party committee of the Ontario Legislature reported one year later; their report recommended, among many other things,"the Ontario government shall mandate the closure of all remaining coal or oil-fired generating stations by 2015."
In the election of 2003, two of the parties involved in that committee made the 2015 phase-out a part of their platform - the 3rd, which promised to move up the date to 2007, won the election.
The Electricity Conservation and Supply Task Force was formed prior to 2003's election, but reported after the change of government.  It's report advocated for a, "Minister of Energy role in providing clear and consistent policy direction," along with a, "broader role for the IMO[2] in planning and ensuring resource adequacy."

The Electricity Act was modified, to introduce (as of 2005) the Ontario Power Authority (OPA), in part, "to conduct independent planning for electricity generation, demand management, conservation and transmission and develop integrated power system plans for Ontario."  

The OPA, working within the parameters of directives from the Minister of Energy, delivered a draft IPSP in 2007, which was revised for 2008.  That plan died with the introduction, in 2008, of the Green Energy and Economy Act (GEA). The Premier had appointed "furious" George Smitherman,  his Deputy Premier, as Minister of Energy early in 2008, and it was the lightly educated Smitherman that pushed through the GEA legislation significantly written by lobbyists.

The movement away from professional planning of the sector may have been influenced by the entrenched bureaucracy's inability, and effective refusal, to fulfill the Premier's campaing promise to phase-out coal by 2007.
By 2005 the System Operator (IESO) was noting phase-out plans "beginning in 2007 and ending in 2009."
By June 2006 it was stating the, "government’s coal replacement schedule will require significant delays."
Shortly after the IESO released that outlook the Minister of Energy issued the OPA "direction for the preparation of the "Integrated Power System Plan," which included the vague; "Plan for coal-fired generation in Ontario to be replaced by cleaner sources in the earliest practical time frame..."

If Premier McGuinty was paying attention in 2008 he could have noticed 23 TWh of coal-fired generation and a record 22.2 TWh of exports.  Perhaps the discrepancy between generating with coal for export and the political directive, from the legitimately elected government, to move off coal incented the Premier to go outside of the bureaucracy for the Green Energy Act - which masqueraded as a plan. Regardless, The Green Energy Act was introduced by Minister of Energy Smitherman, who was claiming "about 1% per year of additional rate increase associated with the bill’s implementation over the next 15 years." 
It would become apparent that was untrue.

In November 2010 a new Minister of Energy, Brad Duguid, introduced a "Long-Term Energy Plan" (LTEP - 2010). The document noted, more realistically, that over the next 5 years, "residential electricity prices are expected to rise by about 7.9 per cent annually."

LTEP 2010 kicked off a new round of planning by the bureaucracy.  A supply mix was developed and issued to the OPA as part of a directive to produce a new Integrated Power System Plan (IPSP II).

The OPA worked on IPSP II and reportedly delivered a draft the Minister of Energy prior to the fall election in 2011.  The work was never released publicly.

Following 2011's fall election, a bill was introduced that would have eliminated the OPA and the IESO with a single Ontario Electricity System Operator (OESO).  That bill died when Premier McGuinty prorogued the legislature, and resigned, in the fall of 2012.

When the government of McGuinty's successor, Kathleen Wynne, announced a new Long Term Energy Plan (LTEP 2013), IPSP II appeared to be eliminated from memory and the failure of the OESO bill ignored.

It was unclear to me, at the time, whether the profession institution legally tasked with developing an Integrated Power System Plan would vet LTEP 2013 as they had the previous LTEP.  The passage of months makes clear it will not.

The government of Kathleen Wynne is big on "conversation" but small on process - and possibly indifferent to laws.

In future posts I'll explore further shortcomings of "Achieving Balance: Ontario's Long-Term Energy Plan." There are significant concerns with the document itself, but the greatest shortcoming may be government's disposal of the processes designed to put some distance between long-term planners and the politics of the day.


Endnotes
1.   The period of undersupply ended as 4 of those reactors had returned to service (6 of the 7 reactors mohtballed in the 1990's are currently operating).
2.  Independent Market Operator, which essentially became the IESO(Independent Electricity System Operator) with the changes to the Electricity Act that created the Ontario Power Authority.

This post is an update - initially a rough draft was inadvertently posted.

Stories tell numbers: Macleans silly Aglukkaq attack

John Geddes, sorta, has an article in Macleans: Aglukkaq touts emissions cuts, numbers tell another story.
Sorta, because the article is basically a longer version of claims made by economist Andrew Leach, a frequent contributor to Macleans, on Twitter.

According to Leach, "This answer from Min Aglukkak grossly misrepresents what the business as usual case in GHG modeling is":

Mr. Speaker, our government is committed to protecting the environment while keeping Canada economically strongly. Thanks to our actions, carbon emissions will go down by close to 130 megatonnes from what they would have been under the Liberals.

I described Leach's description of the Minister's answer as "a silly statement about a meaningless statement."
The Macleans articled subsequently calls the "130 megatonnes from what they would have been" a "meaningless comparison."

If life is a search for "meaningless", Macleans has done better than I: Minister Aglukkaq may have communicated that the government has the economy in mind as well as the environment, and that "carbon emissions will go down... from what they would have been under the Liberals."
Which would be a good political message in ~40 words.

In their ~900 word rebuttal, Leach/Geddes get obseesed with the numbers Aglukkaq cited. The numbers are not only sedondary, and their main use in defining a narrative comes from them being relatively meaningless.
But offensive?
I don't think so.

I found the concluding paragraph of the Macleans article offensive in that it begins:

When the Harper government signed the so-called Copenhagen Accord in late 2009, it pledged to reduce Canada’s greenhouse gas emissions to 607 megatonnes in 2020, or 17 per cent below 2005 levels...

Numbers few in the electorate care about; many aren't able to evaluate the veracity of figures, and some, like me, will realize the veracity is irrelevant.

Here's the few words of that January 29th, 2010 commitment:

17%, to be aligned with the final economy-wide emissions target of the United States in enacted legislation.

"in enacted legislation"

A brief history of Canadian and U.S. emission reduction commitments on the global stage is required to understand this cheeky commitment, and why it is highly unlikely to end up being a firm commitment to do anything at all.

The Kyoto Protocol was signed in December 1997, with signatories including Canada and the United States.  The signing was anticipated by 1995's "Berlin Mandate".  In the interim period the U.S. Senate, including the poorly chosen current Secretary of State, John Kerry, had unanimously passed the Byrd-Hagel Resolution, which stated the U.S. should not sign anything that committed them to emissions reductions without similar reductions being committed to by developing nations, or harm to the economy of the United States. [1]

The Kyoto Protocol never was ratified by the Americans "in enacted legislation,"leaving Canada in an agreement it negotiated poorly and did little to honour. The same Canadian government that negotiated in Copenhagen pulled Canada out of the Kyoto agreement.
The concept that it's unacceptable to have obligations trading partners are exempt from is behind America's non-ratification of Kyoto, Canada's withdrawal from Kyoto, and Canada's feigned commitment under Copenhagen.[2]

The American commitments under Copenhagen resemble those under Kyoto in that the prospects of legislation passing the Senate were already known to be poor.  The proposed 17% reduction by 2020 was in the American Clean Energy and Security Act that had passed in the U.S. House of Representatives in the months leading up to Copenhagen.

The bill never got passed in the Senate, and there is no indication that any subsequent bill will pass in the near future. President Obama is now, in the absence of legislation, operating around Congress, primarily using the Environmental Protection Agency (EPA) to work on reducing emissions.

Good luck to him - and his planet - but Canada's Copenhagen commitment doesn't really exist without U.S. legislation.

Notes

1. From the Byrd-Hagel Resolution:

Now, therefore, be it
Resolved, That it is the sense of the Senate that--
(1) the United States should not be a signatory to any protocol to, or other agreement regarding, the United Nations Framework Convention on Climate Change of 1992, at negotiations in Kyoto in December 1997, or thereafter, which would--
(A) mandate new commitments to limit or reduce greenhouse gas emissions for the Annex I Parties, unless the protocol or other agreement also mandates new specific scheduled commitments to limit or reduce greenhouse gas emissions for Developing Country Parties within the same compliance period, or
(B) would result in serious harm to the economy of the United States; and
(2) any such protocol or other agreement which would require the advice and consent of the Senate to ratification should be accompanied by a detailed explanation of any legislation or regulatory actions that may be required to implement the protocol or other agreement and should also be accompanied by an analysis of the detailed financial costs and other impacts on the economy of the United States which would be incurred by the implementation of the protocol or other agreement.

2.  The Copenhagen consensus occurred in 2009. America's commitments borrowed from Germany's victorious strategy in 1997's Kyoto protocol - meaning the selection of a base year that resulted in them already have achieved significant reductions in emissions prior to signing.  In Germany's case in 1997, over half of their commitment to reduce emissions by 2020 compared to a base year of 2020 had been made by the time of the commitment; in the U.S. case, 2009's emissions were almost exactly half of the promised 2020 reduction against a base year of 2005.

Arbitrary pricing: The idiocy in the Ontario Power Authority's annual report

It's Figure 3, in browsing the Ontario Power Authority (OPA) 2013 annual report, that initially angered me.

You should know why, because it demonstrates why any business submitting to hourly, and/or monthly global adjustment mechanism pricing, is being charged arbitrarily, introducing unpredictable variability to their cost that cannot be justified and serves no purpose.

The problem is, appropriately enough, obscured in a bland taupe.  I have written a number of times criticizing the government's conservation/efficiency policies, which seem designed by well-paid people whose largest draw of electricity is their central air conditioning for well-paid people to benefit from programs centred on central air (as peak saver has been) - but I never imagined the allocation of "conservation" cost would exclude any allocation in July.



From June to July, the average Hourly Ontario Energy Price (HOEP) rose ~$10/MWh, but the total wholesale price was dropped $10/MWh because the OPA dropped the Global Adjustment Mechanism $20/MWh.  This is ridiculous, and it's due to two shortcomings at the OPA; the distribution of conservation charges we are just now seeing, and the distribution of capacity changes that pay Net Revenue Requirement (NRR) guaranteed to, primarily, gas-fired generators.

The distribution of NRR charges don't appear to be weighted to peak months, although those are the months the capacity is contracted to meet demand for.  It's hard to tell as the global adjustment figures are now totally unpredictable for month to month (the only known is that the 1st and 2nd estimates are usually poor indicators of the final monthly charge - which is problematic as ratepayers may be charged at each of the 3 prices).

The OPA's Figure 3 graphic caught my attention, but one of the reasons I opened the document was to pull some figures to update a spreadsheet I've created from previous OPA annual reports.  The figures in Table 3 continue a trend in which the OPA displays a lesser and lesser share of the global adjustment charge[1].

The OPA's annual report shows "Conservation" and "Generation" program expenses along with operating expenses.[2].

An uninitiated observer might think the spending would equate to the Global Adjustment Mechanism (GAM) charges, but that hasn't been true since 2012's annual report (which also revised the generation program figures downward for 2011).

This changes the breakdown of spending quite significant: there is ~$600 million of OPA attributed global adjustment charge in 2012 that isn't explained, and that grows to over $1.1 billion for 2013.

Thanks for the annual report on competency and transparency at the OPA - if nothing else.



Notes:

1: The total amount of the global adjustment attributed to the OPA is shown in note 8 of the section on the actual financials (DR2 + DR3 + OPA Contracts), and essentially the same figure is shown on the IESO site).

2.  This is even more confusing as operating expenses aren't paid through global adjusmtent revenue but, the report appears to indicate, through a separate charge to ratepayers of $0.551/MWh).

Fools' Day: Ontario's electricity sector gets more ridiculous

Oy vey

Ontario's electrcity system operator, the IESO, posted a 2nd "estimate" for March's global adjustment charge yesterday, along with an initial estimate for April's.

OPA tweet yesterday, featuring the IESO's
Bruce Campbell (with the glasses) and, on his
left side, the OPA's Colin Andersen

Both are bad - but the pricing of the last 3 months does provide some insight into Ontario's electricity sector worth pursuing.

The 2nd estimate is a credit of $8/MWh - based on a total global adjustment pool of $67.7 million. The final global adjustment has not been a credit since June 2008.
A credit would mean the market sales exceeded the contracted cost of supply, which might appear to be possible, as it did in February, when the weighted average Hourly Ontario Energy Price (HOEP) was $81.83; only slightly higher than March's $80.41.  Applying the arbitrary global adjustment charge to make March $21/MWh cheaper than February looks to ridiculous.

Were you wrong in February, or or are you wrong now?
This is not a question likely to get a response from the OPA/IESO global adjustment team. There is a near-total lack of transparency on the composition of the global adjustment which facilitates it being recklessly calculated and arbitrarily applied.

The estimate for April is a credit of $9.65/MWh, but that won't be anywhere near correct.  The HOEP fell back below $60 after the earliest part of March, and is likely to fall further as we enter warmer weather, lower demand, and frequent periods of surplus baseload generation (SBG).  It's important to remember that billing is done on the global adjustment "estimates" (see the Global Adjustment/Ontario Roulette story); portions of April consumption billed in April will have a credit, but use in April billed in May will probably be at least $40/MWh more.

Generally the final global adjustment numbers come to make sense over a period of time - if March is low, April, May, etc. will be high.  While March's numbers are so bad they'll distort the entire quarter, there's some important messages that come through regardless.

Higher market prices don't, by themselves, lead to higher pricing for the vast majority of ratepayers.  In fact, higher market prices ease the cost burden of supporting cheap exports, and providing cheaper supply to the province's few very large consumers of electricity (class A).

I wrote in a previous post; "Residential and small business consumers are not likely to see rates rising substantially quicker than they have been due to natural gas pricing."   We've passed the high winter pricing for that fuel now, and, conversely, consumers will likely start to see rapid rate increases - as they did last summer.


Notes:
I have updated the supply costs and Preliminary Monthly Report pages on my data site.