Parker Gallant Uncovers the Hidden Costs of Ontario’s Insane Wind Power Policy
Ever tried to imagine hell on earth?
Ever imagined a nightmare turned to reality?
Then you’ve probably landed in Ontario.
Ontario is the place where the most bizarre energy policy in the world has seen thousands of giant fans speared into the backyards of homes – in the most agriculturally productive part of Canada. When we say “bizarre” we mean completely bonkers.
Canada has one of the “cleanest” power generation mixes on the planet, with the vast bulk of its electricity coming from zero emissions sources such as nuclear and hydro.
As Professor Ross McKitrick explains in this post, Ontario has built a policy that sees wind power (when the wind is blowing) “displace” emissions free hydro at enormous cost to power consumers and taxpayers.
And then there’s the colossal human impact of plonking thousands of turbines as close as 550m from hundreds of homes (see our posts hereand here).
Adding to the lunacy is the fact that wind power outfits are guaranteed to reap fat profits despite market conditions.
Where the wholesale market price for power in Ontario is between $30-50 per MWh, wind power generators pocket a fixed price of $135 MWh – even if there is absolutely no market for it and the Province literally has to pay neighbouring US States to take it.
Parker Gallant – a former banker – is out to ensure that Ontario’s power consumers and taxpayers are aware of just how ludicrous its energy policy has become.
Parker has been busy letting everyone know about the the hidden financial costs of Ontario’s wind farm fever.
Late last year the Ontario Energy Minister said that the cancelling a gas plant would cost the people of Ontario no more than the price of a cup of “Timmies”: coffee brewed up by Canada’s favourite coffee franchise, Tim Horton’s.
A few weeks back, during a windy weekend, Ontario was “blessed” with an abundance of wind power – which – on the first pass – cost it $135 per MWh in guaranteed payments to wind power outfits. But – because what was produced was excess to requirements – Ontario’s taxpayers were stung a second time for the cost of paying New York and Michigan and Quebec to take it.
The total cost was hardly small change – whether measured in cups of coffee or hard cold cash. Here’s Parker doing the sums.
Another expensive weekend, thanks to Ontario wind farms
Parker Gallant
7 October 2014
On the weekend just past, October 4 and 5, wind turbines in Ontario once again proved they can produce lots of electricity—when demand for power is low. At the same time, they drove down the hourly Ontario electricity price (HOEP) and played a role in generating lots of power that was then exported to our neighbours at a substantial cost to Ontario’s ratepayers.
Total demand for electricity on October 4 was 393,816 MWh (megawatt hours); 18.1% (71,328 MWh) of it was exported. In the process of exporting the HOEP generated a negative “weighted average price” of minus 32 cents a MWh. Ontario paid our neighbours to snap up our excess power which presumably included all of wind’s production of 32,958 MWh. Ontario’s ratepayers picked up the tab which for wind power alone ($135.00/MWh + .32 cents = $135.32 MWh) was $4,459,877.
Sunday, October 5 wasn’t much better: total demand was 379,656 MWh and 66,408 MWh (17.5%) was exported at a negative “weighted average price” of minus $2.64 a MWh. Wind production for that day was 30,359 MWh and we must assume it again played a role in driving down the HOEP. So, those wind exports alone cost Ontario’s ratepayers $4,181,649 ($135/MWh + $2.64 = $137.24 MWh).
Ontario ratepayers picked up the tab of approximately $8.6 million for those two days. That $8.6 million would be equivalent, to paraphrase our Energy Minister Bob Chiarelli, the price of a “Timmies” coffee for Ontario’s 4.6 million ratepayers.
If one also includes the $7 million or so that the other 75,000 MWh exported cost it becomes two “Timmies”! Add in the price of the steamed off power from Bruce Nuclear, payments to the gas plants for idling, to OPG for the Atikokan biomass plant and their spilled hydro, to the NUG (non utility generators) contracted parties, the weekend probably hit the ratepayers with total costs well over $20 million.
If that happened every weekend the cost would be equivalent to the cost of moving a couple of gas plants! Lots and lots of Timmies.
When will Ontario’s Energy Minister, Bob Chiarelli wake up and smell the coffee?
This story was also picked up Sun News – aptly describing Ontario’s wind turbines as a money pit. Here’s an interview between journalist Jerry Agar and Parker Gallant, that was aired on October 8. The transcript follows…
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Jerry Agar: So over the weekend, this one just past it was proven in Ontario, that by golly those big wind turbines can pump out some power so Parker Gallant is here. So this is all good news?
Parker Gallant: Well not really Jerry, no because when they were pumping….
Jerry Agar: Are you going to be grumpy about this?
Parker Gallant: I am, that’s my usual ploy isn’t it?
Jerry Agar: I see.
Parker Gallant: Yes they were pumping out out the power, but we didn’t need it so that meant we had to export it. As a result of that it drove down the wholesale price so we were paying New York and Michigan and Quebec to take our excess power.
Jerry Agar: I see, so when we export power – we don’t sell it, we pay people to take it from us.
Parker Gallant: You’ve got it.
Jerry Agar: Are we making it up in volume – I mean – how exactly does that make any sense?
Parker Gallant: It doesn’t make any sense and that’s certainly been my efforts is to make the Ministry of energy aware of that. We shouldn’t be handing out any more wind turbine contracts because we don’t need the excess power.
Jerry Agar:: Well what was the point of even producing power then?
Parker Gallant: Well, there was a lot, believe it or not, there was a lot of wind turbine developers in that same weekend, that were paid for not producing power. That’s on top of those that were paid for producing the power.
Jerry Agar: Just a minute, I want to add this up. We were paying people not to produce power then we were producing power and we were paying people to take that power.
Parker Gallant: You’ve got it.
Jerry Agar: All right. This from the government that spent $1 billion not building a power plant.
Parker Gallant: That’s right, or moving a power plant.
Jerry Agar: Yes, yes. Now the government got re-elected.
Parker Gallant: I know. Its unfortunate but.
Jerry Agar: We live in a world we could never have imagined.
Parker Gallant: No we can’t.
Jerry Agar: So then what’s the addiction to these wind turbines if in fact they were pumping out power, and they were reducing our cost because hey they turn around and around for free apparently with wind power, it would all be great.
Parker Gallant: it would be yeah, but we don’t offer, we don’t get competitive contracts. We just simply say we are going to pay you $135 a MWh four 13 1/2 cents per kilowatt hour
if you throw up a wind farm. You know that makes…
Jerry Agar: So for the producers it’s a no lose situation.
Parker Gallant: It’s a no lose situation. Exactly. They get paid whether they produce power or they don’t produce power as long as that wind turbine up, and they don’t actually produce power,
they still get paid.
Jerry Agar: But we don’t need the power. So what are we building them for?
Parker Gallant: Well, I don’t know. Perhaps to green the province, to save the planet from climate change. I mean that seems to be the objective.
Jerry Agar: Its ideological?
Parker Gallant: Yes it’s very ideological.
Jerry Agar: Because it’s certainly not economical.
Parker Gallant: No it doesn’t make any economic sense and of course they never did a cost benefit analysis.
Jerry Agar: There is another issue here. Do you give credence to those people who actually say that living next to them is damaging?
Parker Gallant: Oh definitely. I’ve met people that have lived next to them and are forced to move out of their homes. There is a percentage of the population – there was a study just came out of the UK I believe that says that a certain percentage of the population will be affected by the infrasound, the noise that we can’t hear, that’s emanating from these wind turbines throughout the province.
Jerry Agar: It doesn’t bother everybody?
Parker Gallant: No it doesn’t bother – its like (sea sickness) …
Jerry Agar: So I’d go and it would bother me but it wouldn’t bother you.
Parker Gallant: That’s correct. Yes. There’s a percentage of the population, so 5 to 15% that will be affected. Autistic children are very much at risk when they live near a wind turbine.
Jerry Agar: Really?
Parker Gallant: Yes.
Jerry Agar: Okay but there’s never any consideration. This government has, I would use the word foisted these things on communities. They haven’t even asked the community. They haven’t even had the deference to go to the Mayor – much less the local citizens.
Parker Gallant: No. That’s true. The Green Energy Act gave the provincial government all the powers to be able to put these wind turbines up no matter where, just as long as they meet the setback requirements and you know the minimum standards that they set under the Green Energy Act.
Jerry Agar: There are more being built. Construction of a giant wind turbine project in Huron County will go on. The judge denied the work stoppage proposed by local residents.
Parker Gallant: The judge did not grant the stay that the citizens had brought to stay motion before the courts to basically stop the construction. But there is still an appearance that will be coming up in the Superior Court of Ontario. So that means that if the citizens win in the Superior Court, the developers will have to remove and decommission those wind turbines. So why they’re taking the chance is beyond me, except maybe they get them in before the cold weather season hits.
Jerry Agar: You know, this is one of those situations I believe where the mass of the population in urban areas here in Toronto, where you and I are right now, love these things, because they love that greenie idea, but they don’t live next to them.
Parker Gallant: No they don’t. Well a lot of people in the green movement will say “Oh we live next to one” because there is one at Exhibition Place.
Jerry Agar: The thing barely turns.
Parker Gallant: It barely turns and it doesn’t provide any power. And it’s mostly all…
Jerry Agar: Not hooked up? A show thing?
Parker Gallant: It’s sort of hooked up. It really is a show thing. If you go back …
Jerry Agar: And nobody lives there anyway.
Parker Gallant: Yes, no, right.
Jerry Agar: All right. But if they went and stuck one right next to one of the condo buildings, although I don’t know if you will be able to fit one in now in down town Toronto. They will feel differently about it.
Parker Gallant: Yeah, I thought they should mandate putting 49 metre blades on top of the buildings that they’re allowing to be built here. The condo buildings. And maybe we could generate some power because they would be way up there in the higher atmosphere and….
Jerry Agar: And then your condo could just jiggle you to sleep. That would be nice. All right, thanks very much.
Parker Gallant: Well thank you Jerry.
Jerry Agar: I don’t know if you made us feel better but thanks for the information.
Sun News
Parker then knocked up this spreadsheet itemising the total cost of paying neighbours to take Ontario’s excess wind power.
Ontario’s expensive electricity week: what could $44M have bought?
Ontario Wind Concerns
13 October 2014
Blowing Ontario’s ratepayer dollars Money lost in just one week could have paid for 580 nurses
So far this October, Ontario’s electricity sector has been blowing our money away at an awesome pace.
Scott Luft, whom I admire for his ability to assimilate comprehensible data, posted on Tumblr some disturbing information about the first 10 days of electricity production (and curtailed production) in Ontario. Because the fall means low demand for electricity, our current surplus energy supply (principally, wind, solar and gas) was curtailed to the extent that it cost ratepayers $20 million, while the HOEP (hourly Ontario energy price) generated only $8.2 million. That $20 million of curtailment cost will find its way to the Global Adjustment (GA) pot and onto ratepayers’ bills.
I took a different route and looked at the cost of Ontario’s exports for the week of October 3rd to October 9th —those numbers are also disturbing. During those seven days, Ontario exported 399,048 MWh (megawatt hours) which was 15.7% of total Ontario demand. Wind turbines generated and delivered 184,204 MWh, which was surplus to our needs and probably exported. The money generated via the HOEP from all of the export sales was $56,300 or 14 cents a MWh. Wind turbines produced just $15,164 and we sold that production for just 8 cents a MWh.
To put this in perspective, the exported production’s cost all-in (contract value per MWh + regulatory + transmission + debt retirement charge) averaged $110/MWh, according to the latest monthly IESO Market Summary August 2014 report’s findings. Using $110/MWh the 399,000 MWh exported in those seven days hit Ontario’s ratepayers with about $44 million (less the $56,300) via allocation to the GA—that will show up on the electricity line on our bills.
Wind generation alone at the contracted rate of $135/MWh cost ratepayers $24,900,000 plus another $5 to $6 million for their curtailed production, according to Scott Luft. That $30 to $31 million plus the cost of steaming off Bruce Nuclear, paying idling gas plants, etc., and the additional cost of solar generation, would confirm the $44 million is a reasonable estimate.
What has Ontario missed out on by having ratepayers subsidizing those exports by $44 million for those seven days?
- the annual salary of 293 family physicians, or
580 nurse practitioners, or - repairing all the Toronto District School Board’s school roofs, or
- one and a half days of interest on Ontario’s public debt, or
- all of Ontario’s 301 MPP salaries for a full year, or
- 40 MRI machines, or
- 100 months of mortgage payments on the empty MaRS Phase 2 building, or
- increasing funding for autistic children by 30% over current levels.
Just a few examples of how the wasted subsidy money that cost each Ontario ratepayer $10 for just one week could have been used!
Parker Gallant
Britain will struggle to “keep the lights on” unless the Government changes its green energy policies, the former environment secretary will warn this week. Owen Paterson will say that the Government’s plan to slash carbon emissions and rely more heavily on wind farms and other renewable energy sources is fatally flawed. He will argue that the 2008 Climate Change Act, which ties Britain into stringent targets to reduce the use of fossil fuels, should be suspended until other countries agree to take similar measures. If they refuse, the legislation should be scrapped altogether, he will say. Mr Paterson will deliver the lecture at the Global Warming Policy Foundation, a think tank set up by Lord Lawson of Blaby, a climate-change sceptic and former chancellor in Margaret Thatcher’s Cabinet. –Christopher Hope, 
"Mothers Against Wind Turbines™" Phoenix Rising... 
One of the world’s largest wind turbine manufacturers let loose a bit of truth and self-admission to the Financial Times: We still need help, and that help must come from taxpayers.
The wind production tax credit, a generous $23 per-megawatt-hour tax credit the producer receives for 10 years, expired last year. At that rate, taxpayers are effectively covering half the wholesale price of electricity and, in some areas of the country, the entire wholesale price. The PTC expired at the end of 2013, but several policymakers are pushing for an extension.
Lisa Davis, who leads the global energy business at Siemens, told the Financial Times the wind industry was close to grid parity with conventional sources of electricity such as coal and natural gas, but “we’re not there yet.”
“We’ve not yet got to the point where it’s truly self-sustaining,” she said. “We’ve got to focus on cost competitiveness.”
So the way to become self-sustaining and cost-competitive is to plead for extended reliance on the taxpayer? That is exactly why Congress needs to cut the cord on wind energy subsidies from the federal government. The wind industry cannot focus on lowering costs while it is so heavily subsidized because subsidies enable them to ignore costs. So, rather than trying to achieve the true price point necessary for cost-competitiveness, the wind industry concentrates on securing more subsidies. Eliminating the PTC for good will allow wind producers to become self-sustaining if the technology truly can compete with other sources of energy.
If wind cannot compete, then it doesn’t belong in our energy mix. America has a robust and diverse supply of electricity generation where our energy demands are met through coal, natural gas, nuclear, hydropower and other renewable sources. We don’t need the federal government to create artificial diversity that wastes taxpayer dollars and promotes stagnation. This holds true for all energy sources.
The reality is startups and new ideas and technologies succeed and fail all of the time. Failure should not be a signal for the federal government to come to the rescue; it’s a signal those resources can be put to more productive use in the economy. But the wind industry is no start-up. It’s been more than 22 years since Matthew Wald of the New York Times wrote, “Because of striking improvements in technology, the commercial use of these windmills, or wind turbines as the builders call them, has shown that in addition to being pollution free, they can now compete with fossil fuels in the cost of producing electricity.”
There is no justification for propping up established companies, either. If Chi Chi’s pleaded for handouts to stay competitive with the likes of Applebees, or Microsoft told America it needed support from the taxpayer to sell more Zunes, policymakers rightfully would scoff. Those companies didn’t fail because they weren’t cost competitive; they simply offered a product consumers didn’t want to buy.
Rather than creating a sustainable industry, the PTC artificially propped up an industry, advanced special interests and allocated labor and capital away from more competitive uses in the marketplace. Extending the credit would only exacerbate those problems and complicate opportunities for real tax reform. Congress should hold its ground and keep the sun set on the wind PTC.