In the comments for this article, I posted the following note:

Almost all of the costs for power in Ontario for the next several years are already locked in by government contracts. Ontario consumers are paying full price for giant amounts of power deliberately spilled or sold below cost to neighbouring utilities while the government signs more long term supply deals for wind, solar and nuclear at insane prices. Total electricity sales are dropping and will keep dropping as rates rise. Conservation is doing little to cut the overall spending of Ontario consumers for electricity, although it is changing who pays what share.

The claim that roof top solar helps consumers is like claiming that government-organized agricultural cartels help consumers because some consumers happen to own chicken, egg, or milk quotas. The price the OPA is paying for roof top solar is more than 10 times the commodity price consumers currently pay. Although a few consumers will have subsidized solar investments, most do not yet all consumers will pay substantially more for electricity to fund solar subsidies.

Although a declining handful of U.S. states still have residential power rates higher than Ontario, Ontario’s average prices not including the HST now exceed the U.S. average price by 14.7%. This calculation is based on weighted average prices using data from the OEB current to July 2010 not including the HST, the U.S. Department of Energy’s Energy Information Administration data for the 50 contiguous U.S. states for the period Jan-May 2010, and using the currency exchange rate at the end of July. Residential power rates in the U.S. peaked in 2009 and have declined 1.3% on a year to date basis while Ontario’s prices have increased.

(Post script: IBM appears to be the sponsor of the above noted article. IBM’s business in Ontario includes a contract worth over $40 million to develop and operate smart meter data systems.)

Energy, the Environment and Natural Resources

Issue 7 - Evidence - June 1, 2010

OTTAWA, Tuesday, June 1, 2010
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:10 p.m. to study the current state and future of Canada’s energy sector (including alternative energy).
Senator W. David Angus (Chair) in the chair.

Testimony of Duncan Hawthorne CEO of Bruce Power, questioned by Senator Mitchell, follows.

Background: Bruce Power is AECL’s largest customer, with AECL operating under a $4 billion contract for Bruce A refurbishment. The project now behind schedule and over budget. From federal government budget allocations, it is clear that Bruce Power is obtaining AECL’s services at significantly less than cost. The Ontario new nuclear bid process referred to in the following exchange required the bidders to assume the risk of cost overruns, similar to the way renewable developers are responsible for cost overruns.

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Senator Mitchell: That is excellent.
You have made an impassioned plea on behalf of CANDU reactor technology, and it makes a great deal of sense. There is some suggestion that the new ARC-1000 reactor technology has certain problems and may not be accepted in Ontario. Can you comment on that?

Mr. Hawthorne: Yes. I will explain that in two points. First, I was part of the bid process in Ontario because I was on the steering committee. Every one of the bids was ugly. They were all significantly higher than anyone expected, but they were also all significantly higher than any bid anyone has seen anywhere in the world for a new nuclear plant to date. We had to ask what type of questions we had asked. I think we asked the bidders to price in many risks that they would not normally take, and they added a significant premium, so we ended up with very high bids from all the bidders.

On the ACR-1000, the only compliant bid we received came from AECL, but it was still far too high. The reality is that the design for the advanced CANDU reactor is not complete. There is a question mark as to how much it will cost to complete and, when it is completed, what the market will be for it. As we talked about earlier, an attractive feature of the current CANDU design is that it does not use enriched fuel. The ACR-1000 does. We have now perhaps lost one of our attributes in order to get into another market.

I personally do not think that is the right strategy. We do not have to compete head to head with people we cannot beat. My personal feeling is that we have to offer a product that they do not have.

Ontario government officials and agencies, together with the interest groups feeding off the Green Energy Act subsidies rarely miss an opportunity to declare the program a “success”. For Ontario consumers, success equals failure. As solar generation is added to the system, the rate impact will be great enough to choke off an equal or greater amount of load than the solar generators will actually serve applying conventional price elasticity estimates for electricity. This effect on load will drive rates even higher to cover the now largely fixed costs of the power system.

The interest groups feeding off the Green Energy Act subsidies are now ramping up a massive lobbying campaign to keep the subsidy spigot open a little longer. See for example the Facebook “Save the Micro-FIT Solar program in Ontario” and also this energy company: Green and Clean

A note from September 2009 anticipating a huge solar gold rush was posted here:

http://tomadamsenergy.com/?p=168

Interestingly, no journalists have been tracking AECL’s comparable problems going on at Bruce Power.

PDF link: ontario-wind-farm-productivity-and-variability-by-inservice-year