Here is a podcast of a CBC interview from December 5th where I attempt to sort out the controversy over whether Ontario’s electricity exports make costs go up or down.
The bottom line is that without exports, consumers would be much worse off. The fact that Ontario is buying at high prices from local generators and selling vast amounts of power to neighbouring utilities at rock bottom prices is another indicator that Ontario’s power system is being irresponsibly managed.
Hey Tom, good job with the interview. It still boggles my mind that the government is bringing this to everyone’s attention by trying to claim that revenues frome exports is an positive indicator and reflection of good electricity policy.
Concerning your comment above “without exports, consumers would be much worse off”, I offer two perspectives.
Looking at it very narrowly, i.e. from the perspective of not getting some “salvage value” for excess electricity by dispatching off a generator and still paying the full shot for deemed output, I’d venture the semantics-oriented (to-may-to/to-maw-to) comment that we would be just “worse off”, not “much worse off”. Let’s consider exports at an average price of 3.5 cents/kWh and two sources of excess electricity. For onshore wind at 13.5 cents/kWh, a salvage value of zero would increase the net added cost from 10 cents/kWh to 13.5 cents/kWh, i.e. consumers would be worse off by an additional 35%. For big solar at 44.3 cents/kWh, a salvage value of zero would increase the net added cost from 40.8 cents/kWh to 44.3 cents/kWh, i.e. consumers would be worse off by an additional 9%.
Looking at it very broadly, i.e. if we had NO interconnections and not ability to export or import, we probably be much worse off, but for many more complex reasons far beyond the “buy high and sell low or dispatch off and still pay” scenarios.
Hello Tom,
I started to write a response, but ended up with illustrations and tangents … it’s on my blog at http://coldaircurrents.blogspot.com/2011/12/is-ontario-losing-money-exporting-its.html
I do feel we are using exports to justify excess production – so it’s a chicken-and-egg argument, isn’t it?
Without the ability to export, I doubt we’d be managing this poorly.