The Future of Electricity

The cost of electricity is “lightening rod” for public anger and frustration in Ontario. It has become a political hot potato with political parties vying to promise lower electricity bills. Yet, regardless of any political promises, the electricity market is going to be dramatically changed in coming decades by evolving technological innovations and economics.

Ontario doesn’t have an abundance of cheap hydro-electric power like Quebec or Labrador. (Or cheap – and dirty – coal power like some US states) It’s questionable whether we would want to flood significant natural areas to create hydro power anyway. Renewable sources (wind, solar and water) make up 36% of Ontario’s total generating capacity. We have put our money on nuclear power as a carbon-free form of energy although it has significant environmental and financial risks as well.

Electricity prices are relatively high because Ontario has ended up with a substantial over capacity of generating resources. The average electricity demand is about half of total generating capacity – that still has to be paid for. Although nuclear generation is about 35% of total capacity, it supplies 65% of our electric demand. Wind and solar make up 13% of capacity but supply less than 7% of demand. And overall demand in Ontario dropped 4% in 2017.

About half, or more, of a typical residential bill consists of an added “Global Adjustment”. This is described as “a total dollar amount for each month based on the difference between market revenues and [a list of] components” (IESO website). The largest of those ‘components’ is related to nuclear power:

  • Nuclear (non-OPG) and natural gas
  • OPG regulated nuclear and hydro

Continue reading

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Our Energy Future is Renewable

It’s not a matter of “if”, but “when”. The world is moving steadily and dramatically toward a renewable energy future dominated by clean electricity. As I mentioned before, the countries with the highest solar incidence are the ones making the most progress. Last year, Costa Rica supplied electric energy for 300 days solely from renewable sources. Some of the largest solar projects are being built in countries like India and China. Renewable energy in the UK increased by 27% in 2017.

Lappeenranta University of Technology (LUT) and the Energy Watch Group (EWG) conducted a study that “simulates a global electricity system based entirely on renewable energy on an hourly basis throughout a whole year. Its results prove that the existing renewable energy potential and technologies, including storage, are able to generate sufficient and secure power supply worldwide by 2050. Under favourable political conditions, a full decarbonisation and nuclear phase out of the global electricity system can succeed even earlier than that.” (my emphasis added)

According to the study, “A 100% renewable global electricity system is also way more efficient. It can reduce global greenhouse gas emissions in electricity sector from about 11 GtCO2 equivalent in 2015 to ZERO emissions by 2050. The total losses in a fully renewable electricity system are significantly lower than in the current system. And, the global transition to a 100% renewable electricity system will create 36 million jobs by 2050 in comparison to 19 million jobs in 2015… The study shows that there is no reason to invest any single dollar in fossil fuel or nuclear power production. It also proves that energy transition is no longer a question of technical feasibility or economic viability, but of political will.” (my emphasis added)

This study comes at an important time as Ontario residents are preparing for an election this summer. With the price of electricity, the future of Ontario Hydro, and the ongoing refurbishment of nuclear generators at issue, determining the political will of our provincial parties is paramount. Unfortunately, one party seems to be entirely in denial about climate change and is paralyzed by its own political dogma. Its political will to form meaningful policy on this topic appears non-existent.

Where is Ontario now? Corporations successfully fought against feed-in tariffs and blamed renewable energy for higher electric rates; billions of dollars have been committed to nuclear refurbishment; the nuclear industry is hyping ‘micro-reactors’ to be scattered across northern remote communities; the bulk of Hydro One has been sold off and has made trans-national investments in pursuit of higher profits; revenue from carbon-pricing is being used to subsidize scattered voluntary conservation programs. We can do better but only if we have the political will.

According to the researchers, “policy makers should adopt favourable political frameworks and instruments, promoting fast and steady growth of renewables on the one hand and phasing out all subsidies to fossil fuel and nuclear power generation on the other hand.” (my emphasis added) This summer’s election may be a ‘watershed’ moment for Ontario, either seizing the leadership opportunity or slipping further behind the global trend.

100% renewable electricity worldwide is a new cost-effective reality, Hans-Josef Fell & Prof. Dr. Christian Breyer, (The Beam, Feb 1, 2018)

Councillor Seeks InnPower Sale

UPDATE: One councillor, Richard Simpson, supported Mr. Daurio’s motion (below). Deputy Mayor Dollin suggested he was making the motion for ‘his friends’ at Alectra – an accusation Mr. Daurio attributes to the fact that he relied on financial figures provided by Alectra. Dollin also suggested that a $25 million charge was made to Barrie when joining Alectra – something Mr. Daurio describes as “an opportunity for Barrie to invest in the purchase of Brampton hydro and earn an additional $5m annually in interest and dividends forever!”. Daurio contends that “Alectra had promised a 14% rate reduction, and interest and dividends and other savings of $4m annually, while InnPower promised a rate increase and little/no dividends for  the next 6 years — a loss to Innisfil of $8m annually, and $48m over the next 6 years.” Under existing procedural rules, the subject will not be revisited at Council for a year.

This Wednesday, June 7, Councillor Stan Daurio is moving a motion at Innisfil Council “that the Board of InnPower be requested to explore options to sell or partner with Alectra and/or other utilities…”.

The saga of missteps at InnPower is already well known: an ill-fated attempt at joint ownership with Edmonton-owned Epcor Utilities Inc.; an overly ambitious investment in new facilities based on the assumption of leasing space to Epcor; an urgent need for alternative InnPower financing when the deal collapsed; a six year suspension of dividend payments to Innisfil; loans from the Town and Simcoe County plus an application for a rate increase to cover the cost of mandated expansion of service to newly designated urban areas.

In light of the current popular uproar over electricity rates, Councillor Daurio argues it would be more beneficial to sell our local utility to Alectra, which was formed from the merger of municipally-owned Enersource, Horizon Utilities and Powerstream plus the acquisition of Hydro One Brampton as of February of this year. Headquartered in Mississauga, Alectra’s service area encompasses 1,800 square kilometres and serves nearly a million customers in 15 communities from Alliston to St. Catharines and Hamilton to Vaughan. Alectra is now “the second largest municipally-owned electric utility by customer base in North America”.

Councillor Daurio puts the minimum value of InnPower at $40 million (2015 estimate) and expects a dividend return of 4.4 to 4.5% or $1.8 million annually. Additionally, the former Powerstream told Council in 2015 that a merger would lower electric bills in Innisfil by $23/month. This would be equivalent to savings of $4.4 million annually for 16,000 Innisfil households.  Continue reading

The Price of Power

Bruce Laurie caused a stir with his article, “No one can make electricity cheap again”. I tend to agree with him, if only for his observation that the Darlington nuclear plant was built:

“10 years late and almost $12 billion over budget. No one could afford to pay the real cost of Darlington, so Ontarians carried that debt for the next three decades.”

With billions more committed by the Ontario government to refurbishment of our nuclear plants, there is no likely escape from this scenario in the near future.

Some critics blame Mr. Laurie for his role in higher prices as a “former director of the Ontario Power Authority (OPA) and Ontario’s Independent Electricity Systems Operator (IESO). He served as a member of the Electricity Transition Committee under the Harris government.”

So how high is ‘high’ for electricity prices? Hydro Quebec and Financial Post published comparative figures for 1,000 kWh of electricity from suppliers across North America (U.S.  figures were converted to Canadian dollars). InnPower came in at $182.09, which is not that different from Toronto Hydro at $181.95. ‘Low density’ rural Ontario had an average bill of $229. In Ontario our power relies on nuclear (60%) and hydro (24%).

Looking further afield, Montreal was $100, Winnipeg was $117, Ottawa $224, Halifax $220 and Vancouver $148. If we look across the US border, 1000 kWh averaged $409 in New York, $383 in Boston, $161 in Miami, $156 in Houston, $118 in Indiana.

How can we account for these variations?  Continue reading

The Buckhorn Challenge

A grandmother from Buckhorn made national headlines by confronting the Prime Minister about her financial struggle with electric energy costs and objected to Ontario’s carbon pricing as an additional burden. She pointed to a $45 charge added to a bill for propane fuel.

She didn’t understand that electric energy policy and carbon pricing are both Ontario initiatives and that the federal government hasn’t yet imposed a national carbon price. But we have to sympathize with her plight. It puts a human face on a dilemma many of us are facing. Her candid revelation of household expenses offered an interesting insight into a common situation. The electric bill was reported to be $1,085, possibly for a month.

The woman “claimed her hydro bill has reached as high as $1,085. She did not state if that figure represented a monthly total or several months, but said she’s in “energy poverty”.” (Huffington Post, Jan. 13, 2017)

According to a comparative data published by the National Post, the cost of electricity from Peterborough Distribution Inc. is $164.78/1,000 kWh. (This a median-range cost compared to Innisfil, which is reported to be the fifth highest rate in the province at $182.09/1,000 kWh.) Based on this cost and stated billing, her household consumption of electricity may be more than 6 times higher than the normal average. This is a staggering anomaly but, if so, probably seasonal. It can likely be attributed to the use of electric baseboard heaters during winter months, which operate at 150 watts or more per foot. It wouldn’t be hard to run up a winter bill of $1,000 with 6 feet worth of baseboard heating in almost every room.

Doing nothing isn’t an option, so what strategy should this homeowner adopt?   Continue reading

Our Electric Future – Renewable

It should be pretty clear by now that every aspect of life will be increasingly electrically driven in the near future. We’re not just talking about automobiles (there are something like 52 different models of electric and hybrid vehicles offered now). We might be plugging in toilets like the Propelair system (www.propelair.com) now being sold in Britain that uses water and compressed air for a 1.5 L flush. Computers and 3D printing are making huge advances in manufacturing: “In the next five years we will see what was seemingly science fiction-type research quickly make its way into mainstream processes in almost every industry.” (The Great Disruption, R Smith, D Free, 2016) So it is equally important that our electric resources be as affordable as possible.

Various missteps have led us to the situation where the delivery of electricity is more expensive than the power itself. While public outrage has grown over the cost of electricity in Ontario, there are conflicting ideas about how to correct the situation. The Ontario government is reconsidering how it buys electricity by becoming “technology agnostic”, i.e. not favouring any particular technology. It also has doubts about time-of-use pricing. Ontario’s Energy Minister went on to say:

People should have the flexibility to sign up for electricity plans that better suit their needs just like they can shop around for different telephone and Internet service plans”.

Wait! What? The people who brought us the useless basic ‘skinny’ cable TV packages and the world’s most expensive mobile phone rates are the model for future electric supply? Mobile phone and internet packages are like a corn field maze – it may look like a lot of choice, but in the end there is only one way out! That’s because these plans are not consumer driven but profit driven. ‘Bundled’ services show the price of everything, but not the price of anything. More reason for us to worry about the ongoing sale of Hydro One into more private ownership.  Continue reading