Ontario paid more not to produce electricity than it’s market paid for the power generated

IESO spends more curtailing electricity than it’s market collects selling it

It’s Thanksgiving weekend in Ontario which means lots of welcome time with family, but I’ve stolen a little time to write on one statistic I ended up with after checking some numbers yesterday.

Quick background: Ontario’s electricity prices are really set simply by the contracting and regulating of supply, but we pretend there is a market pricing component (HOEP), plus a true-up to recover additional costs of supply (the global adjustment). Viewed differently, the full recovery of the cost of supply usually has a market recovery bundle (estimated by sales at the HOEP) and a global adjustment portion.

My estimates, which are neither complex nor controversial in this instance, indicate that over the first 10 days of October, the market value for all electricity sold in Ontario (for export or domestic consumption) will have resulted in about $8.2 million in revenue.

However, during that period Ontario has paid to curtail supply. I estimate curtailment of 60.7 gigawatt-hours (GWh) from industrial wind turbines and 207.5 GWh of curtailment from Bruce Power’s 8 nuclear units. Pricing those curtailments at $125/MWh for wind and $60/MWh for nuclear, Ontario incurred $20 million in additional supply costs.

I hope to write on the slaughter of the should season electricity market on my cold air blog in the near future, but this message I couldn’t hold off stating:

Cold Airings, Oct 12 2014

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