Ontarians just signed up for more expensive, unreliable electricity they don’t need – by Tom Adams and Scott Luft (Financial Post – March 17, 2016)

http://business.financialpost.com/

The costs may be high and the need questionable, but Ontarians signed up to buy a lot more renewable power last week when Ontario’s Independent Power System Operator (IESO) announced the results of the province’s latest procurement. The new deal brings “low prices” for new wind and solar generation, says Ontario Energy Minister Bob Chiarelli.

No, not “low” like Ontario’s dysfunctional market price for electricity, which was less than two cents/kilowatt-hour (kWh) over half of all hours in 2015. And not “low” like the average 1.2 cents/kWh rate that electricity bound for New York and Michigan has sold for this year.

When the Ontario government says “low,” it means seven to fourteen times as much as that, with the IESO reporting the weighted-average price of the new wind power at 8.6 cents/kWh and new solar at 15.7 cents/kWh.

But the effective cost to consumers for the new power, taking into account the portion of the total output that Ontario consumers will actually use, will be much higher than the costs the government quotes in its press releases.

The system operator’s announcement relies on the fallacy of relative privation. In other words: “this unreliable power is not as costly as some other unreliable power you’ve been stuck with.” For instance, the operator’s press release proclaims, “For context, these prices are lower than the Feed-in Tariff (FIT) rates…”

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