Background Notes on Electricity Developments in Ontario

During the first half of 2009, OPG experienced an increase in operating costs of 4.4% over the same period last year, while production was lower by 16%. The Niagara tunnel project is now forecast to be 62% more costly than OPG announced when the project started and take about 68% longer. (ref:

For the seven month period from January to July, Ontario’s weather corrected energy demand was 7% below lowest point since 2002 and 10% below the all-time peak, which occurred in 2005. (ref: IESO 18-Month Outlook: Interim Update Released: August 7, 2009)

From November 2008 to April 2009, the Market Surveillance Panel noted 200 hours of surplus baseload generation. This represents a dramatic increase over previous experience and also relative to the forecasts of the IESO and the OPA. (ref: Market Surveillance Panel Monitoring Report on the IESO-Administered Electricity Markets for the period from Nov 2008 to Apr 2009) In addition, between May 1st and August 18th, prices in the Ontario wholesale electricity market were zero or negative 90 hours, mostly in June.

In the first half of 2009, OPG was paid $180 million by OEFC for reducing production from coal generators, $141 million in Q2.

In late 2007, OPG forecast nuclear running costs for ’08 and ’09 at $43/MWh and $46/MWh respectively (OEB file EB-2007-0905 Ex. A1/T4/S3 Chart 2). For all of 2008, the result was $44.31/MWh. For the first 6 months of ’09, the result is $51.35/MWh.  The Darlington full station outage in May must be creating a chunk of this problem and maybe the numbers will improve before year end, but there does appear to be cause for concern.