IESO Finishes Blind Side Hit on Consumers

At the urging of wind power developers and operators in Ontario, the Independent Electricity System Operator today finalized an ugly rule change that transfers the cost of bidding wind power into the Ontario electricity system from wind producers and instead transfers the cost directly onto consumers. The overall impact of the cost shift is relatively small — only about $500K per year — but clearly demonstrates the value to the wind industry of lobbying complex technical details to find new ways to screw consumers. Ominously, the rule change marks a change in philosophy about cost responsibility that fundamentally contradicts the basic design of Ontario’s original power market. Historically, generators were responsible for the cost of bidding in their own power to the electricity system. In addition, generators were required to comply with the IESO’s orders for power based on any offers accepted and to provide notice when their output would fall outside of the IESO’s dispatch instructions. When the wind power industry found that it could not comply with the market rules applied to all other forms of generation, the IESO developed a centralized forecasting methodology to mitigate some of the harm to the power system that was resulting from the failure of the growing wind industry to comply with the market’s rules. The decision today relieves the wind industry of the need to bear the cost of bidding their power and hits consumers with the charge instead.

The market rule change is posted here.

Post Script May 2013: My submission to the IESO rule change process for this decision can be found here.

3 Comments

  1. Appalling.
    I’m contrasting this with BPA approach in the Washington state area:
    “Wind energy producers may lose tax credits and other revenues when their wind turbines do not actively generate power. However, BPA will not reimburse wind energy producers for lost tax credits or other revenues because that would shift costs to Northwest ratepayers who do not receive the wind power.

    “We’re fortunate in the Northwest to have extraordinary renewable hydropower and wind energy resources, but occasionally we have to adjust when nature gives us too much,” Wright said. “Wind remains an important part of our clean energy future and is growing quickly. This is an interim step, which appears unavoidable at this point to keep the power grid in balance while the region develops long-term solutions.”

    http://www.bpa.gov/corporate/BPANews/ArticleTemplate.cfm?ArticleId=article-20110517-01

    Which leads to wind companies trying to find long-term solutions:
    http://www.bpa.gov/corporate/BPANews/ArticleTemplate.cfm?ArticleId=article-20110614-01

    In that case, they found a coal plant to provide the reserves, but …

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