Ontario Keeps Hydro Prices Frozen

A little surprisingly, Ontario has kept electricity prices frozen for the on peak, mid peak and off peak rates for the new period starting November 1st. Ontario sets prices on May 1st and November 1st every year.

This past May prices went up 0.5 cents to 18 cents for on peak, off-peak went up to 8.7 cents. Mid-peak went up to 13.2 cents per kilowatt hour.

2016 was an exceptionally hot summer, so demand was high. Somewhat paradoxically, that's better for rates as Ontario often has a surplus of power and expensive solar and wind have to be paid no matter what the demand is. More solar and wind supply is still slated to come online for some time, so a mild winter with a lot of wind could cause some problems. The rate increase for May 2017 should be interesting.

Update:
Also I forgot that the provincial carbon scheme kicks in in January which will also result in some increasing pressure on electricity prices. Since nuclear, hydro, solar and wind isn't really affected, the only real source that will be affected is natural gas which is relatively minor. I haven't seen an estimate of how much higher electricity prices will be.

Ontario Peak Electricity Prices Rise 8.7% November 1st 2015, 25% Year on Year, 29.6% in 18 Months

This Global News article reports on the price rises in electricity that occur at the start of November:

"Under the new rules, off-peak hours will increase 0.3 cents to 8.3 cents per kWh, mid-peak hours will increase 0.6 cents to 12.8 cents per kWh and on-peak hours will increase 1.4 cents to 17.5 cents per kWh."

Curiously they can't be bothered to say what the percentage increases are. Peak time prices are actually rising 8.7%, which is quite massive considering that Ontario's inflation is between 1% and 2% and that the price increase follows the one in May, thus it is a 8.7% increase in only six months. Mid-peak prices increased by 4.9% and off-peak prices increased by 3.75%.

Perhaps more curiously the article couldn't be bother to figure out what the year on year increases were. I enumerated the recent price increases in electricity in Ontario in this post. The year on year increase in peak pricing in Ontario for November 1st will be  3.5 cents from 14 to 17.5 cents. That's a 25% year on year increase which obviously is way above inflation. For mid-peak, the increase is 1.4 cents, from 11.4 cents to 12.8 cents, a 12.2% increase. For off-peak pricing, the increase  is 0.6 cents from 7.7 to 8.3 cents, a 7.8% increase year over year. 

So it would seem the Liberal government of Kathleen Wynne is trying to increase prices of peak electricity relative to off-peak, trying to shift consumption to off peak periods (between 7 pm and 7 am during the November to April time period). 

However that's not all. What about the increase over 18 months? On peak pricing increased from 13.5 cents to 17.5 cents, a 4 cent increase or a 29.6% increase over 18 months. Mid-peak prices increased 1.2 cents from 11.2 cents to 12.8 cents or a 14.3% over 18 months. Off-peak pricing increased from 7.5 cents to 8.3 cents, a 0.8 cents increase over 18 months, or 9.4% in percentage terms.

Why the media can't be bothered to go back and look at the increases beyond just the most immediate is somewhat surprising to me. I'm not sure if the reporters are lazy or they are complicit with government and just don't want people to be aware. Probably lazy. One of these days I'll go back and look farther back at electricity price increases in Ontario over the past five years as I'm sure the chart would be interesting.  

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.

Germany's Green Energy Failure

The FT has a good article on how Germany's Energiewende (literally energy change) that had feed-tariffs paid to solar and wind producers has been an utter failure, both from a climate change perspective and for poor people having to pay higher energy prices.:

"Last month, the government said that 6.9m households live in energy poverty, defined as spending more than 10 per cent of their income on energy."

Ontario's feed-in tariff program used Germany as a model and it too is an abject failure at this point. It would be interesting to know how many Ontario households pay more than 10% of their income for energy now as compared to before the Liberals started their program.

http://www.ft.com/intl/cms/s/0/9d6ba56a-a633-11e3-8a2a-00144feab7de.html?siteedition=intl#axzz2woZ1hrrk

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.

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

Glut of Ontario Solar Panels Versus Ontario's Solar Subsidies

Here's a good New York Times article on the massive glut of solar panels being produced by various Chinese companies and how some companies are likely to go bankrupt. From an Ontario perspective, the fact that Premier Dalton McGuinty has tried to create a solar manufacturing industry with massive subsidies to individuals and companies installing solar here in the province is not looking smart.

Some interesting facts from the article including the price of coal versus solar power in China: "The average cost of electricity from solar panels in China works out to 19 cents per kilowatt-hour, said Mr. Li. That is three times the cost of coal-fired power. But it is a marked improvement from 63 cents per kilowatt-hour for solar power four years ago." That's actually quite impressive for solar. However for Ontario the sad fact is that we never needed to subsidize solar power to up to 80 cents a kilowatt-hour, as the price would have came down anyway from Chinese production, nor is there going to be any solar industry to speak of in Ontario save for installation as solar panel firms here can't compete with Chinese prices.

So we have the worst of all worlds, no solar industry, combined with massive electricity prices, especially compared to US states where power prices have been going down due to cheap natural gas prices (and not cancelling natural gas plants willy nilly). Also a related negative is that high rates are guaranteed to those rich enough to install solar installations in Ontario, while the price goes up for everyone, including the poor. Obviously that's not great for inequality, especially since this is just rent seeking.

Solar Panel Manufacturing, Ontario versus China

Ontario Premier Dalton McGuinty has been touting so called green jobs, especially solar, produced in Ontario due to high feed in tariffs and made in Ontario requirements. Here's a Star article with McGuinty on the campaign trail at a solar panel manufacturing plant.

With three US solar firms declaring bankruptcy recently, here's a good Guardian article on how China is basically taking over the solar industry, in part due to cheap government loans. My prediction for the solar manufacturing companies operating in Ontario? The vast majority gone in five years. Solar panel manufacturing is becoming a commodity where cheap labour is the ultimate cost driver. Subsidizing this industry in Ontario is a pointless social engineering endeavor.

For laughs, here's a complaint about where a neighbour placed their solar panels.

Evergreen Solar Declares Bankruptcy

The company Evergreen Solar declared bankruptcy recently. Why does this blog care? Mainly because the Massachusetts state government gave the company some large incentives to manufacture solar wafers in the state and the company ended up closing the American plants and moving production to China. And going bankrupt.

Interestingly, I heard the news while watching CNBC and the anchor commented that it's too bad the state couldn't find a way to force the use of American made components for solar, like the recent Buy American stimulus packages. Seems like something odd to say for a CNBC anchor to say, but there you go.

Of course Dalton McGuinty has tried to get a solar industry going in Ontario by tying ridiculous feed-in tariff rates for solar (over 80 cents a kwH for small installations) to having a certain percentage of made in Ontario components. Unsurprisingly, various foreign governments are now suing under unfair trade rules. I have to think the Ontario government knew this would happen or at least received advice that it was a strong possibility. But what is probably more annoying is the fact that McGuinty thought that he could create a solar industry here in Ontario by government fiat. It doesn't take a genius to see that countries like China are going to be able to manufacture solar panels for far cheaper than Ontario. So Ontario is trying to prop up it's local industry, which can only compete in Ontario with massive incentives and will wither and die when they end.

People like the concept of green energy and have a weird fixation that it will produce a lot of jobs locally. Unfortunately for Ontario and it's hydro rate payers, the panels are going to be made in low wage companies, no matter how much McGuinty gives away your money.