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Parker Gallant tears apart the global adjustment figures used by wind proponents

A BIG thanks to Wind Concerns Ontario for this one!!

Parker Gallant — September 6, 2012

Environmental Defence & Pembina Institute’s Sleight of Hand

When the Auditor General, Jim McCarter released his report on the Renewable Energy Initiatives it hit the environmental non-government organizations (ENGOs) hard. It reflected media attention on the mess that the electricity sector in Ontario was in, due in large part; to the Green Energy Act. As a result the ENGOs struggled to defend their “end of the world” climate change scenario in the face of the damning evidence that tumbled from the AG’s report. Presumably in an effort to find higher ground Environmental Defence teamed up with the Pembina Institute to commission the Bridgepoint Group to do a critique of the AG’s report.

Now I would be remiss if I failed to point out that both Environmental Defence and the Pembina Institute crank out their own reports on a regular basis and hand them off to the media in an effort to continue their scare mongering. A past article noted that Pembina reported they earned $2.3 million in “fees for services” in their 2010 annual report to prepare reports/studies and Environmental Defence also issues reports on a variety of subjects usually with other partners like Pembina, Ontario Sustainable Energy Association (OSEA) and others. Why did they have to go to someone else to generate the critique? Perhaps it was recognition that the AG’s FCA (Fellow of the Institute of Chartered Accountants of Ontario) designation trumped their PhD’s in zoology when it came to completing a cost/benefit analysis.Mr. McCarter ironically also holds an MBA (Master of Business Administration) from York University where 7 (not including Asst. Professor Jose Etcheverry) of the 14 most influential “environmentalists” instrumental in the creation of the Green Energy Act such as; Deborah Doncaster, Brent Kopperson, Kristopher Stevens, etc were cranked out by the Faculty of Environmental Studies. Two others (Marion Fraser and Brian Iler) on the list attended York in other study areas.

While the Bridgepoint “critique” spends some time trying to dispel the numbers in the AG’s report it relies to a great extent on trying to use only one side of the argument and they even titled the June 2012 report as: “Ontarians Have a Good Deal”. The critique and its supporting documents bounces all over the place going back decades to the mid sixties presumably in an effort to find something to criticize. Interestingly enough they cite a Pembina Institute study as a reference 10 times. Now that sounds unbiased! 

The other interesting fact about the Bridgepoint critique is that it examined the IESO’s April 24, 2012 Market Surveillance Report for the period May 2011 to October 2011 and found some interesting facts that they jumped on. One of those was the following:

“As per the 2012 OEB Market Surveillance Panel report, 45% of the global adjustment portion of the Ontario electricity bills from 2006-11 has risen due to nuclear and only 6% due to renewables.”

The ENGOs have used that one on many occasions when they are engaged by the media including the Toronto Star’s John Spears.

The IESO Market Surveillance Report included that particular information but it also highlighted other issues that are important to put that 6% in context. Here are just a couple:

“Low demand and considerable baseload generation meant that the IESO was operating under surplus baseload generation (SBG) conditions. These conditions necessitated that the IESO ramp down or shut off four nuclear units between HE 23 and HE 2 to balance supply and demand in the province.” and…

“6 percent is attributable to renewable assets, primarily wind and solar resources. The share associated with renewables has been increasing significantly and is expected to continue to do so.”

Because wind and solar are granted “first to the grid rights” they drive down the hourly Ontario electricity price or HOEP (particularly at night and in the shoulder months) often generating unneeded electricity when its not needed, This causes IESO to dispatch off nuclear (Bruce nuclear have that capability) and to spill hydro (OPG). The former are paid for the power they would/could have produced (this is allocated to the Global Adjustment or GA pot) and the latter are paid nothing which reduces OPG’s revenue and slows repayment of the “Stranded Debt”.

Now let’s have a hard look at the above Bridgepoint statement that the ENGOs are using as their favourite soundbite-the one about only 6% of the GA being caused by renewables.

Reviewing the IESO report for Ontario’s 2011 consumption discloses; nuclear produced 85.3 terawatts (TWh) and wind 3.9 TWh. That is 56.9% and 2.6% respectively of total consumption of 141.5 TWh. The Global Adjustment for 2011 was $5.3 Billion or $40.10 per MWh or 4.01 cents per kWh.

In respect to nuclear 45% of the GA is a $2,385 million cost which works out to approximately $27.9 million per TWh or 2.8 cents per kWh. If we look at the renewables cost to the GA the 6% works out to $82.5 million per TWh or 8.25 cents per kWh.

What the foregoing shows is that in 2011 for each kWh of wind generated, Ontario’s ratepayers had to pay triple the Global Adjustment price that a kWh of nuclear cost!

To spin the IESO information in this fashion smacks of “verbal virtuosity combined with statistical sleight of hand”. Now Mark Twain is credited with the phrase; “Figures don’t lie, but liars figure,” but the first phrase comes from an article by Peter Lilley a UK MP that just appeared in the Financial Post. Lilley was critiquing the infamous “Stern” review which was the guiding hand behind the UK’s push for renewable energy. His phrase sounded relevant for the “sleight of hand” that the ENGOs in Ontario and elsewhere, are using on a continuing basis to convince politicians and the media that wind and solar energy are competitive in delivered price to the price of nuclear energy. It appears to not be the case!

Sometimes you must look behind the numbers to find the truth and the Auditor General did just that in his report.

Parker Gallant,
September 6, 2012

Link to original posting at WCO

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