Ontario Loses Big On Electricity Exports in January 2015

Here's a post by Parker Gallant about Ontario losing money on exports of electricity:

"In January Ontario exported 2,043,768 megawatts (MWh) and for an average price of $29.55 per/MWh while Ontario electricity customers picked up the additional costs of the Global Adjustment pot of $50.68 per MWh.

The sale of that surplus (enough to supply about 2.5 million Ontario homes with power for the whole month) represented 15.6% of Ontario’s total demand. It resulted $58.5 million in revenue but cost Ontario electricity ratepayers $164 million."

Generally January is usually a low Global Adjustment month for Ontario, as electricity demand is usually high (space heaters and the like I would assume due to the cold) and more closely matches supply (especially wind, although solar production is also very weak in January). I haven't been checking the Global Adjustment numbers lately, but I should start again. A month like March with high average wind and low demand could be especially bad.

Cambridge Firm Pays Massive Global Adjustment Charge For Electricity

This article in Cambridge Now about Integrated Packaging Film's massive monthly electricity bill is quite interesting, especially since they included the actual bill. The actual electricity charges are 12K, which when everything is included (including HST) becomes 62.5K, including a global adjustment charge of 30.5K and a debt retirement charge just over $2,700. The debt retirement charge may disappear in 2016 (my prediction don't bet on it), but the high global adjustment charges are here to stay.

Has any economist done any research trying to estimate how many Ontario manufacturing jobs have been cost by high electricity prices? Because someone should. Ideally it would be interesting to compare to Quebec (which has an even larger manufacturing sector) since the recession as Quebec prices have stayed relatively low in comparison.

Ontario Electricity: February 2014 Final Global Adjustment, March Initial Estimate

Ontario has continued its string of low global adjustment charges for electricity this winter. February's final global adjustment came in at a rather low of 1.33 cents per kilowatt hour. That was lower than the initial estimate of 2.23 cents, but slightly higher than January's 1.26 cents per kilowatt hour. That's a considerable decrease from last year's 4.81 cents.

Why so low? Probably because as in January it was really cold and people used more electricity, especially at night for supplemental heating (when the wind is blowing and wind turbine production is high). That combined with seasonally low production from expensive wind and solar producers produces a low global adjustment. It is a little strange that the February rate is so low compared to last year, however it has been significantly colder.

March's estimate is again really low in historical terms at 1.1 cents, especially compared to last year's 4.93 cents. Again March has been a lot colder than last year, so energy consumption should be up. April should be interesting as hopefully it will be considerably warmer with lower consumption and more production from solar should lead to a considerable increase in the global adjustment. Last April's was 5.86 cents.

January Ontario Electricity Global Adjustment Finalized, February Estimate Out

The actual global adjustment for January is out on the IESO website and it is really low, both overall and compared to the first estimate. The first estimate was 3.63 cents per kilowatt hour versus the final value of 1.26 cents per kilowatt hour. Likely the reason was high overall power use from people using supplemental electrical heating during the unusually cold January combined with low green energy production (solar is going to be weak in dark January). Interestingly, that's a big difference from the overall record global adjustment for November of 8.47 cents per kilowatt hour and last year's value of 5.00 cents per kilowatt hour.

The February first estimate is out and it is rather low as well at 2.23 cents per kilowatt hour compared to 4.81 in 2013. No doubt that's due to the fact February was quite cold. March looks like it will be starting off cold as well so expect that month's global adjustment to be lower than 2013's value of 4.93. 

First Estimate of January Ontario Electricity Global Adjustment

From the IESO web site, the first estimate of the electricity global adjustment for January and it is rather low at 3.63 cents per kilowatt hour. This is lower than the final 5.00 last year, however the first estimate in 2013 for January was similar at 3.77.

Since the global adjustment is in some sense a relationship between the amount of total power used and the amount of expensive green energy (sun and solar) produced, January isn't often a high month for the global adjustment. It is dark and cold, so electricity is higher from light and space heaters and the like, with not a lot of solar produced and the wind produced is smaller compared to the total power consumed compared to some other months.

November 2013 was the highest month ever for the global adjustment at 8.47 cents per kilowatt hour. Last year the mean January temperature in Hamilton (which isn't a bad proxy for the populous Southern Ontario area) was -3 Celsius versus the usual -6C and since this January has been much colder than last year, I wouldn't be surprised for the final January global adjustment number to stay around the first estimate.

Article on New York Trying to Poach Ontario Businesses with Cheap Electricity

With Ontario's electricity prices continuing their upward much far more than inflation, this article from the Watertown Daily Times about New York State trying to lure Ontario businesses was inevitable. Not the article itself, but the poaching.

“In all of our inquiries with potential firms, power is an issue,” IDA Executive Director Patrick J. Kelly said. “If we bring that message to them, hopefully it becomes an item of interest.”

The potential of low-cost power opens the door to other discussions about opportunities in the county, Mr. Kelly said.

The IDA sent out mailers this month to various Ontario businesses encouraging them to expand across the border. The brochure pushes low-cost economic development power available through the New York Power Authority’s Preservation Power Program and low-cost power through the St. Lawrence River Valley Redevelopment Agency.

The IDA’s marketing strategy has not been lost in Ontario, where a recent article in the Brockville Recorder on the energy crisis noted that St. Lawrence County is contacting Canadian firms to promote electricity rates that are 50 percent less than those in Ontario, which are the highest in North America. 

Highest in North America (I'm not sure if Hawaii is included here) and 50% less? For any company where electricity isn't trivial this is going to be an ongoing problem. Especially since in Ontario electricity prices are supposed to continue to rise far faster than inflation over the next five years. Ontario manufacturing was hit hard by the recession, but high electricity prices aren't helping.

First Estimate of Ontario Electricity Global Adjustment: High

The first estimate for the global adjustment for Ontario electricity rates for December is out at the www.ieso.ca website. The value is 7.61 cents per KWh, down from the 8.47 cents per KWh in November, which set a record for the highest monthly global adjustment ever. The estimate is up massively compared to the final value of 4.06 cents per KWh in December of last year.

In general more demand lowers the global adjustment as the amount paid to high cost producer wind and solar producers is divided by more power consumed. December is usually a high demand month as more power is used for electric heating and also for lighting as December is the darkest month.

Less solar and wind production also leads to a lower global adjustment. Again, sunlight is at its lowest in December so solar producers won't have much electricity production. December is relatively windy so wind producers should have good production. Wind production can be high in the middle of the night when demand is relatively low compared to other parts of the day, and can cause problems if excess power has to be exported at low or negative costs to the US, however for December with the extra heating requirements at night that's less likely to be a problem. December thus far has also been relatively cold, so more electric heating has probably been used at night.

Mainstream Media Wakes Up to Record Ontario Hydro Global Adjustment Fees

I made a blog post a little while ago (December 4th), about how the electricity surcharge, i.e. the global adjustment that gets added to Ontario electricity bills to cover Green Energy initiatives reached a record high in November.

Here's an article from the Toronto Star (December 13th) where they too mention the record high for November. So they're catching up to Surly Hamiltonian. Some good info:

"It’s a lot of money. In November, the total global adjustment payment came to $847 million. Of that, $192 million went to OPG, and the remainder to private power companies."

$847 million in one month? That's a colossal amount of money for Ontario considering the population is just shy of 13 million. That's a lot of money to be taking from the residents of Ontario and can't be helping consumption and further, for poor people is especially damaging.

How high will the global adjustment fee be in 2014? More wind is coming online and the big problem is when the wind blows strongly overnight when demand is low. That power has to be paid for and has been dumped to the Americans in the past for negative rates (i.e. the province pays the Americans to take our excess power). If overall Ontario power demand stays low, the global adjustment could go higher.

Ontario Electricity Global Adjustment for November 2013: Really High

The second estimate for the global adjustment for Ontario's electricity bills for November is out and it isn't good. The second estimate is usually quite close to the final value and for November it was 8.49 cents per kilowatt hour. That's significantly more than the 5.75 cents for the previous November and interestingly a big increase from October's final number of 6.34 cents. More wind power that gets a much higher than market price has come on stream in 2013 and Ontario has to buy it all, driving up the global adjustment.

If the final November number is anywhere close to the second estimate (and it usually is), the 8.49 cents is highest for any month in 2012 and 2013 (and maybe ever). The previous high was June 2013 at 7.04 cents.

Increasing from October is a little strange, as a high number usually comes from high output from solar and wind and low demand. November is usually significantly colder than October so there is usually more demand for electrical heat. However this year November wasn't that cold, but there were some windy days, including some that were uncharacteristically warm. In every month since April, this global adjustment number has been higher in 2013 than 2012. The first estimate for December is 7.61 cents which is considerably higher than the 4.63 cents in 2012. When the final estimates are in for 2013 I'll calculate the average for the year. For reference the average monthly rate for 2012 was 4.97 cents per KWh

Latest Global Adjustment Numbers for Ontario Electricity Rates

Surly Hamiltonian focuses a lot on Ontario's hydro prices especially the Global Adjustment (the extra fee that gets charged to Ontarians to pay for the high rates of green energy and the extra power sold to Americans at a loss). The latest final numbers are out at this site for May and it is 6.76 cents per kWh. That's higher than the 5.65 number last year. This is likely due to a rainy and relatively cold May. Sunny summer months often mean high consumption which lowers the Global Adjustment. The green energy producers have to be paid regardless of consumption, so a lot of consumption spreads the hit.

The crappy weather has continued and that means the Global Adjustment is also high historically for June and July. The number for June 2012 was 5.26 and for July 2012 was 3.36. This year however the estimates are 7.91 for June (second estimate) and 7.38 for July (first estimate). That's a huge change year over year and interestingly if the July holds, the highest for all 2012 and 2013. So basically, crappy summer weather means higher hydro rates. However the weather is also colder so that probably lowers how much hydro one is consuming for AC.

This site has a lot of the data for 2012 and 2013 in tabular form.

Ontario Electricity Global Adjustment Update

It has been a while since Surly Hamiltonian has looked at the 2013 monthly Global Adjustment stats available here:

Here's the actual values from 2013 so far with the 2012 numbers in parenthesis:

January 5.00 (4.25)
February 4.81 (5.06)
March 4.93 (6.23)
April 5.86 (6.07)

Interestingly the values for this year are lower, except for January. The biggest difference was March, however the April numbers are relatively close. March wasn't a particularly great month weather wise, so increased consumption for heat and low solar output (and possibly wind too) meant that the global adjustment wasn't too remarkable for that time of year. Remember low overall power consumption combined with high wind and solar generation is the recipe for a high Global Adjustment for a month. Historically May and June can be high Global Adjustment months, compared with July and August which are usually quite low due to high power consumption for air conditioning combined with low wind production.

Still overall, a lower average Global Adjustment than last year.

Ontario Electricity Global Adjustment Watch: March 2013 Estimate

The global adjustment estimate for March 2013 is out on the IESO website. Curiously they're only predicting a value of 4.37 cents per kilowatt hour. That's strange because last year, the value for March was 6.23 and the highest for 2012. Also interesting is the estimate for January was 3.77 but the actual value ended up significantly higher at 5 cents.

Perhaps March is predicted as colder than usual so electricity demand from heating will be up and perhaps less windy and less sunny so expensive wind and solar production is down. March is usually a windy month, so it will be interesting to see if the IESO is right or colossally wrong.

Star Article on Surplus Wind Power, March Global Adjustment Watch

Surly Hamiltonian is always interested in the Ontario price of power, especially the Global Adjustment added to bills to pay for solar and wind projects. Here's a good Star article on how surplus wind power costs Ontario. Some excerpts:

"Coping with surplus wind power will cost Ontario electricity ratepayers up to $200 million a year if market rules don’t change, says the power system operator."

 "The dispute comes as more and more renewable power is about to flow onto the province’s power grid.
About 2,700 megawatts of wind and solar power are currently feeding electricity into Ontario’s system, three-quarters of it wind. That amount is set to more than triple by January, 2016.
Solar power generally flows into the system when it’s most needed, when demand for power is high."

"When there’s more power than the system can handle, the IESO sells it to neighbouring provinces and states — sometimes at a loss, and sometimes actually paying them to take it.
Those losses are absorbed by ratepayers, and added to the electricity bill as the “global adjustment,” which now often exceeds the price of energy by a wide margin.
So far this month, for example, the market price for power has averaged 2.96 cents a kilowatt hour. The global adjustment has been 5.73 cents a kwh. Consumers pay delivery and debt."

We're anxious to find out what the global adjustment will be for March, often the highest of the year. Lower heating demands than the winter (and obviously not air conditioning demand) combined with a lot of wind power is a recipe for a high global adjustment. Will it break the all time record for a month?

Ontario Hydro / Electricity Global Adjustment for January

The final global adjustment for Ontario's electricity market is now out for January (data from this site). The first estimate was 3.77, however the final value was estimated up to 5.00. That's in cents per kilowatt hour and is added to the regular cost of electricity.

In simplified terms, the global adjustment covers the much higher costs Ontario is contractually obliged to pay to wind and solar providers with fixed contracts. Generally more wind and solar production combined with less overall electricity consumption leads to higher global adjustment values.

Interesting that the final value went up from the initial estimate. My guess is temperatures. I remember reading that Hamilton's mean January temp this year was -3C versus the historical -6C. I'm guessing that this was similar for the heavily populated Southern Ontario region. Warmer winter temperatures means less electricity consumption for heat and less electricity consumption overall. So a given payout for solar and wind producers divided by less than expected kilowatt hours means a higher global adjustment.

Another factor is how much wind and solar was produced. January is never a great month for solar, however higher than average sunny days versus cloudy can help solar production. January is probably a good month for wind, at least compared to the dead hot days of summer.

Last year's January number was 4.25. The highest value from last year was March at 6.23. A windy, sunny and warm March could see us break that record. More wind and solar probably has come on-line since March of last year, so that can make a difference too if overall consumption is flat.

February, whose estimated value is 5.73, has had some pretty cold days, so I could see the final value lower than 5.73. Which is pretty high.

Global Adjustment Update for Ontario Electricity Prices

I made a post about the global adjustment monthly values here. Sadly, the last data I had was from September. The data can be found on this site, but unfortunately they've updated it so only 2013 data is shown. Bastards. Right now the January estimate is 3.77 versus 5.73 for February. Since the global adjustment depends on how much renewable solar and wind are produced versus how much overall power consumption there is in Ontario (that's simplifying it), January is a very low solar month, with good wind and good consumption because of the time of the year (electric heating) thus it is relatively low. February is probably higher, because of a bit more solar plus maybe less consumption because it is somewhat warmer. Last year's actual values were 4.25 for January and 5.06 for February. So less for January and more for February.

They do have the December 2012 value on the site and it is 4.94. Here's the numbers I do have from last year:

January 4.25
Febuary 5.06
March 6.23
April 6.07
May 5.65
June 5.26
July 3.36
August 4.18
September 4.16

alue oI'll try and find out the global adjustment numbers for October and November so that I can keep track and compare to last year. From last year, March is usually the highest. Probably due to high wind production, and relatively low overall consumption (less needed for heat, no power needed for air conditioning).

Latest Global Adjustment Rates for Ontario Electricity

The Global Adjustment is an extra fee that Ontario electricity consumers pay that basically makes up the difference for the high rates that must be paid to wind farm power providers under contract and the wholesale price of power. That's a simplification, but there's more information here.

One of the interesting effects of the Global Adjustment is that it will be highest when the wind blows the most and demand is the least. The wind producers have to get paid and there is less cheaper power being used to lower the price. Here's the rates for the last nine months from the above site as of today:

January 4.25
Febuary 5.06
March 6.23
April 6.07
May 5.65
June 5.26
July 3.36
August 4.18
September 4.16

That's in cents per kilowatt hour. Note the March rate, a windy month without a lot of heat or air conditioning demand is close to double the July amount. So try to conserve power in March as you will end up paying more, even though perversely demand is low. HST is also applied to the Global Adjustment.

Also published at the above link is estimates for recent months. For October the estimate is 5.34 and 4.77 cents per kilowatt hour.

As more renewable solar and wind power comes online with guaranteed high rates per kilowatt hour, will the Global Adjustment go up? Good question. If overall demand trends down, then definitely, as less regularly priced power will be consumed and the renewable contracts still have to get paid. Another recession would be especially problematic with its concomitant reduction in power consumed. I'll watch for the January 2013 number of comparison

Oakville Power Plant Cancellation $40 Million

So the Oakville power plant cancellation is only going to cost $40 million, way less than the Mississauga cancellation and will be located near Bath. In case you are wondering where Bath is, it is close to Kingston, near Millhaven Maximum Security. So much for Dalton McGuinty's earlier promises to ignore NIMBYism.

Here's an article from the National Post about the cancellations and at the end, mentions the problems of Ontario producing too much power, but guaranteeing prices to renewables:

The Independent Electricity System Operator said two weeks ago that “more than 3,000 megawatts (MW) of capacity will be added to the grid” over the next 18 months. Half of that will be renewables, which by early 2014 will bring the total of wind and solar capacity in the system to 4,800 MW. But the IESO also said that total energy consumption is “forecast to remain flat in 2012 before shrinking slightly in 2013,” due to a weaker provincial economy, conservation initiatives and other factors.

he province pays $135 per megawatt of wind energy, as mandated by the Green Energy Act.

The combination of increased supply and reduced demand means that Ontario will export more electricity, which would be a fine development if the province was recouping its investment. But it is not and it’s not close. On Monday, a breezy day in which wind energy accounted for a relatively robust 1,456 MW of capacity at 6 p.m., Ontario was exporting more than 1,700 MW, at market prices, at the exact same time. The province pays $135 per megawatt of wind energy, as mandated by the Green Energy Act. The market price of electricity at 6 p.m. on Monday: $16.50 per MW. This isn’t an anomaly, either. In July, for example, Ontario was exporting an hourly average of more than 1,300 MW. The average market price for July was about $33 per MW.

Watch for high global adjustment charges on your hydro bill in the fall.