The McGuinty government is currently signing contracts to buy new power supplies at prices that start at 10.3 cents/kWh and run up into completely silly figures — 13.5 cents, 15 cents, 19 cents, 40 cents, 80 cents. Meanwhile, Ontario is now spilling massive amounts of power at dams and nuclear stations, although the total volumes of spilled production are very difficult to independently estimate. I have been pleading with the IESO for years to track the spilled energy, but there is only anecdotal information available to my knowledge.
McGuinty has committed ratepayers to pay many generators, including Bruce Power and the producers who will be operating under the Feed-In Tariffs introduced under the Green Energy Act, for some types of spilled generation.
In 2008 and 2009, Ontario was an enormous net exporter of power, with net exports in both years equal to more than 7% of the power consumed in the province.
Neighboring utilities and industries are cashing in on Ontario’s surplus ““ often buying at negative prices. Considering the hourly value of power and the hourly net import/export flows, the prices consumers recovered for the exported power (OPG is doing most of the exporting) was approximately 4.6 cents/kWh in 2008 and 2.9 cents/kWh in 2009.
The volume of surplus power is forecast to rise, driven in part by rising nuclear and green energy generation, both under juicy government contracts. The collapse of load is another factor. Demand has declined since 2005, well before the recession, but it tanked hard in 2009 with year over year demand down by 6.1%.
Many of the new facilities being contracted are short lead time technologies such as wind power. If we need news power supplies some day in the future (and we will due to asset retirements) then it would be rational to be buying the needed power at that time when it is needed. The passage of time would improve the quality of the technologies ultimately installed and would provide additional learning time for Ontario to gain from the experience of other jurisdictions installing various generation options.
The consumer rate impact from the current surplus has been incurred in a fashion that is utterly imprudent and reveals the fundamental irrationality that has taken root at the core of our power system.
Well said! What irks me is that there are so few people who understand the principles of power generation willing to stand up and call out this nonsense. It has been apparent for some time that the actions of Dalton McGuinty and his ‘advisors’ would have dire consequences for the province, and yet so few individuals were willing to speak truth to power. You are to be commended, Tom, for being one of the people to do so.
Texas and northern Germany are experiencing similar power spills, in their cases with wind power as major contributors. Ontario will soon be repeating their experience.
I have seen some renewables advocates on line claiming that these negative pricing events benefit consumers. This claim could only be true in the long run if taxpayers were picking up the costs.