From hamilton Spec 21 March 2011
An electricity nightmare
Paid your electricity bill lately? Then you’ve already done a good bit of teeth grinding. Before you read on, you might want to get your hands on one of those overnight teeth protection devices the dentists prescribe for overnight grinders. You’re going to need it.
In its latest report, the Ontario electricity watchdog panel delivers some startling – some would say maddening – revelations. Such as: Since the province’s energy market was opened to competition in 2002, some electricity generators have been paid millions – not for producing power, but for not producing power. At least one other has figured out how to make millions in extra revenue by repeatedly switching its system off and on. And traders, who make their money by importing and exporting electricity, have been paid millions of dollars for not importing power.
Got that mouth guard handy? The watchdog says some generators, especially in the northwestern part of the province, are working by the system by offering to sell power at an appealing price, but during times when they know transmission lines are going to be operating at capacity, meaning they can’t move the power. They don’t sell the power, but do make money from what’s called a “constrained off” payment, just for making the original bid to sell.
Then there’s that generator (at least one) that has figured out it can make extra money by shutting down and starting up again, for no other reason than profit. Fossil fuel generators qualify for guaranteed payments that recognize costs are incurred when a shut-down unit is started up again. The panel says that by staying online for a two-hour period the generator can earn $10,000. But if it shuts down and starts up again, it can actually earn $50,000, so of course, in the name of optimal profitability, it does so. How about power importers who improve profits by as much as three times because they anticipate times when transmission will be congested, and are paid a premium because they cannot import power they have ordered during those times?
Entrepreneurial behaviour is laudable in the right setting. But in this case, the people who are getting rich are being paid by Ontario electricity consumers, already feeling the pinch and watching their utility bills skyrocket. The natural tendency here is to blame the current government for this. And indeed, the McGuinty government has many sins on the electricity front. Although it has some worthy objectives — notably modernization and development of less environmentally damaging methods of power generation — the execution of those aspirations has been poor.
Add the introduction of HST to the mess, and it spells bad news for the Liberals in the upcoming election. No problem. We’ll just elect a Conservative government to fix the problem, right? But the Conservatives under Mike Harris, with Tim Hudak at his elbow, created this mess by mishandling deregulation and failing to ensure adequate safeguards and regulations were in place to prevent abuse – just the sort of abuse the watchdog describes in its report.
There is lots of blame to go around here. The only question is who pays — aside from Ontario consumers, that is.
Didn't California have a similar scam with mass brown outs during peaks useage times.