The attached essay is the first of a series on the factors underlying the dramatic increase in power rates about to arrive on bills of Ontario electricity consumers.
Access PDF: electric-rate-shock-oeb.
Ontario Power Dealing Needs Transparency
January 24th, 2010In what appears to be a rich power contract with the Ontario Power Authority, the existing Ontario hydro-electric operations of the international investment giant Brookfield have effectively been converted into a public utility earning guaranteed rates. The attached essay argues for a public airing of the contract terms.
The Brookfield deal appears to be signed, but progress in power dealing transparency remains urgent. The OPA is currently develop a large portfolio of new contracts with existing generators. Bruce B refurbishment is one example, with contract negotiations planned for 2010 and signing in 2011. Of the total capacity of 1700 MW of non-utility generation contracts entered into by Ontario Hydro primarily in the period 1989-1993, 600 MW will expire before 2015. The first to expire is contract a for 103 MW cogeneration facility in 2010.
Samsung Deal with McGuinty Resurfaces
January 21st, 2010On Jan 19th, Canadian Press broke the story that the long-mooted green energy deal between the Ontario government and a consortium of South Korean companies led by Samsung was expected to be announced by Premier Dalton McGuinty this week (Jan. 20-22/2010).
The Toronto Star’s coverage Jan 21st continued to self-congratulate for breaking the original Samsung story, three days after it was posted here September 24th.
Keith Leslie at Canadian Press deserves special mention for getting the January McGuinty announcement story early and thoroughly.
In interviews with CFRB, 570News on Jan 21 and several print outlets, my main points were that consumers and competitors have suffered a blow but more importantly our standards of public administration have been damaged. Secret negotiations for multi-billion dollar twenty year government contracts invite corruption.
The names Samsung and Korea Electric Power Corporation still don’t show up on the Ontario Lobbiest Registry. What’s up with that? This absence is particularly difficult to understand since it appears that these foreign firms were able to get the Ontario government to issue a directive to the OPA to ensure preferred access to scarce transmission capacity. See: Directive to OPA to reserve transmission capacity
The National Post’s news report Jan. 22 quotes me as describing the deal as “ugly, ugly”. See: “Samsung has the power to impress”
Please send your comments, updates and analysis.
Lower Churchill Power Development in Labrador
January 14th, 2010The Globe and Mail has reported (January 13, 2010) on initiatives of the government of Newfoundland and Labrador’s energy conglomerate Nalcor to gain transmission access through Quebec for power capacity it hopes to develop on the lower reaches of the Churchill River. See: Hydro transmission tiff heats up
Nalcor is arguing that Hydro Quebec is flouting open access rules and making it difficult to gain access to transmission service through the province. Given HQ’s practice of allocating the costs of transmission lines providing dedicated service for remote generators to the network pool of transmission costs rather than to the cost of generation, Newfoundland would appear to have a powerful argument. However, it is ironic and hardly complimentary to Nalcor that it is litigating its case in the pages of the Globe and Mail rather than respecting the process of the Regie de l’energie.
A friend has suggested that with New England Renewable Energy Certificates (REC), currently at approximately $8/MWh, and the NEISO Forward Capacity Market, currently $4500/MW-Month, and wholesale power in New England priced based on natural gas over the long term creates substantial opportunities, particular for vendors with transmission rights. I see the REC value to be vulnerable to politics and forward power prices in New England to be highly volatile. On transmission, I note that when New Brunswick was auctioning space on its new international power line a few years ago, Nalcor did not participate.
The best market for Nalcor may be Ontario. With Ontario, Nalcor would face no currency risk. There is a much better demand outlook in Ontario vs. New England due to more nuclear replacement requirements in Ontario. The Ontario government has a high willingness to pay for renewables. Ontario’s existing interties with Hydro Quebec have significant spare capacity.
Newfoundland faces credibility challenges in negotiating with Ontario and Quebec, particularly due to the caprious way Newfoundland treated participants in its 2005 “Expression of Interests (EOI) and Proposals” process related to Churchill development. For the announcement canceling the EOI process see: NL cancels EOI
The federal government, with its constitutional authorities with respect to interprovincial trade, could play a positive role in promoting a negotiated settlement for transmission access, although the federal government would be well advised to continue declining persistent requests and proposals for federal funding for transmission development. Specific consumers, not general taxpayers, should be responsible for paying for their own energy usage.
Ontario Wind Farm Productivity and Variability by In-service Year
January 6th, 2010This post provides data current to January 5, 2010 on the productivity and variability of output of Ontario’s wind farms. The tendency of more productive wind farms to produce power with greater annual variability of output is observed.
During 2009, the average capacity factor for all the large wind farms in Ontario with in-service dates in 2008 or earlier was 27.3%, below the long run average.
Kruger Energy’s wind farm near Port Alma completed its first year of service with an average capacity factor of 37.2%, the best annual result seen so far in Ontario.
Prince Farm, located near the eastern outlet of Lake Superior and owned by Brookfield, performed very poorly in its most recent full year of production with output of only 20.5%. Annual production results were dragged down by particularly poor results during the summer of 2009 when the average capacity factor of that farm was only 14.6%.
PDF link: ontario-wind-farm-productivity-and-variability-by-inservice-year
Debating the “Nuclear Renaissance”
December 16th, 2009In Canada, following the shocking numbers coming out this summer on the cost of building an Advanced Candu Reactor (ACR) in Ontario many key nuclear industry players are now advocating against the ACR that AECL has been touting. Recently, technicians at Chalk River have tried to distance themselves from ACR, as has the influential Power Workers Union in Ontario. So far this year alone, the federal government has poured $633.274 million into AECL with no end in sight. Alberta just said OK to nuclear but no provincial money. Given conditions in Alberta’s competitive power market, it hard to argue that nuclear has any future there. Nuclear refurbishments in Ontario and New Brunswick are going horribly with delays and cost overruns.
Internationally, notwithstanding liquidation of its profitable transmission and development businesses, Areva is still sucking cash from shareholders. The main reason is problems with the two reactors it is building, one in Finland and the other in France. The brightest spot for nuclear world wide is China but how can we trust the claimed results.
New shale gas technology now flooding energy markets, falling power demand, and the flood of new renewables technologies getting installed (albeit heavily subsidized like nuclear) all indicate less need for nukes. Indeed in Ontario, there are increasing constraints for nuclear generators trying to find room on the grid, with some Bruce reactors going off-line for significant periods due to surplus power.
Here is a televised debate addressing these issues presented on Business News Network, December 16, 2009 on the show “Midday Markets”.
Tom Adams debating nuclear’s future with Neil Alexander of the Organization of Candu Industries
Analysis of Hydro Quebec’s NB Power Buyout
December 2nd, 2009The following essay, “Get past the bombast”, coauthored with Brian Lee Crowley, appeared in the New Brunswick Telegraph Journal newspaper December 5, 2009. Attached to this document are comments from December 5th replying to criticisms of the essay posted to the TJ discussion site.
essay-with-crowley-in-tj-dec-5
The following comments were posted to the same site December 6th-8th.
comments-from-tom-adams-posted-december-6th
The following essay, coauthored with Brian Lee Crowley, appeared in the Globe and Mail November 28th.
charged-with-hydro-hyperbole-gm-november-28-2009
The following link to the Globe and Mail site contains comments on the essay: G&M Comments site
The CBC presented a summary of some of my comments from one of the radio interviews I did on December 1st, and also comments, here: Summary of interview Dec. 1 re. NB Power Sale
Here are some of my posted comments and one from an anonymous commentator firing back at opponents of the sale of NB Power to Hydro Quebec responding to the CBC news article “Longtime NB Power critic plugs deal” Dec. 1, 2009. responses-to-critics-of-nb-power-sale1
Tom Adams Correction re. NB Power Operational Data Disclosure
December 2nd, 2009On the radio show “The Afternoon News With Tom Young” on News 88.9 CHNI Saint John, News 91.9 CKNI Moncton, News 95.7 CJNI Halifax, I made a remark that NB Power has not provided updated updated sales data for Fiscal 2008/09. This statement is incorrect. Whereas historically NB Power’s practice was to append the data to its annual report, the data is now appended to NB Power’s Sustainability Report and can be found at NB Power Sustainability Report. I regret the error.
Samsung Secret Deal with McGuinty Government: News Update
November 7th, 2009Renewable energy developers who have been playing by the Ontario government’s irrational but at least codified Green Energy Act Feed-In Tariff rules have reacted vigorously to information first published on this web site about a secret deal initiated on the government side by Smitherman that would allow the international electronics giant Samsung rights of primus noctis. The revolt against Smitherman appears to be lead by Dwight Duncan and Sandra Pupatello. Smitherman was expected to appear at the prominent APPRO conference (November 17/18) but has withdrawn. The best case for the government is for Samsung to withdraw. Although the list of wind industry lobbyists is very long on the Ontario government’s Lobbyists Registration Act web site, there is still no trace of Samsung’s name on the list. Watch for this news showing up in the Toronto Star in the middle of next week.
NB Power deal: good news, not bad (NFLD Premier Williams Should Reconsider Attacks)
November 3rd, 2009The attached commentary series was co-authored by Brian Lee Crowley and myself.
NB Power deal: good news, not bad (St. John\’s Telegram)
It’s Good News, Not Bad (New Brunswick Telegraph Journal)
It is a particular pleasure for me to again work with Dr. Crowley, one of the most thoughtful and influential independent public policy analysts in Canada. His bio can be found here. His new book, Fearful Symmetry: The Fall and Rise of Canada’s Founding Values, has been getting some cautious and some rave reviews from many of the country’s leading public affairs journalists and experts. Perhaps the most thorough review came from Neil Reynolds in the Globe and Mail September 9th and 11th. In the mid 1990’s, when Dr. Crowley was setting up the Atlantic Institute for Market Studies, he took the risk of commissioning me to review NB Power and to propose solutions for its commercial and rates challenges. At the time, Neil Reynolds was stacking up journalism awards for his paper, the Telegraph Journal, and made the paper central to the NB Power debate.