Gord Miller betting on 200,000.00% increase on carbon credits

Gord Miller, Environmental Commissioner of Ontario:   Speech to Ontario Energy Network Luncheon on November 9, 2010 entitled “Speaking Truth to Power Pricing”    The Chicago Climate Exchange  is showing carbon trading at 5 cents/ton.

19 thoughts on “Gord Miller betting on 200,000.00% increase on carbon credits

  1. I agree with the author.

    I would much rather EXCEPT the inevitability of a carbon price of $100 a ton than ACCEPT it any day.

    Where do we get the people that write these presentations?

    We are not all illiterate you know…

    We do put stock in a thoughtfull well written presentation.

    Why would we consider paying a Carbon Tax when there is no independent proofs of any harm due to CO2 — just a thought.

    http://www.co2science.org/index.php

    Happy reading!

  2. “If you were somehow able to use 1000 kwh
    of electricity during the peak time over
    present rates it would cost you less than $1
    a day – at the off peak rate you would save
    about $0.50 per day”

    My math skills are not very good, so is he saying the difference between off-peak [which we were paying all day not that long ago] and on peak for 1000 kwh is about $1.50 a day? or $45.00 a month plus HST

  3. Well the VIEW FROM HERE is that Gord Miller can’t do math any better than the rest of the government. Besides not being able to speak English….

    Whatever he was trying to say the with the off-peak, mid-peak, and on-peak graph the next slide says nothing but that his Time Of Use math is wrong.

    And a whole roomful of OEN people just sat there oblivious! Were they too busy at the luncheon trough I wonder?

  4. Ha ha ha…I caught that too David.
    Doesn’t it seem that if you’re not too bright, yet have a knack for fooling the public you have a better chance at “succeeding” in life?

    Yet, deep down inside, these types must hold a lot of baggage…a sort of emptiness sort of speak.

    Then there’s types like us, the ones that actually give a damn about our fellow countrymen and children, with the passion to right what’s done wrong, who feel much more alive and probably more fulfilled than any of these types ever will.

    Anyway…

  5. BD:

    I just went through this with the financial person here. We believe this to be part of the “Sussex Strategy” — pure misinformation.

    The claim is that your electricity is costing you $1 a day — excepting all the other charges. However, the other charges are mostly based on the hourly draw as well, so any calculation that ignores them is meaningless.

    When we do draw about 1000KWH a month we are paying about $180. That would mean that he is off by a factor of 6 — or 600%. Even in grade school errors of the magnitude were not forgiven easily. One is grateful that our EC does not design bridges…

    As to contribution to the GAM — if he is right that Gas — not wind and solar are the major contributors then we should be able to determine something quite easily… In late winter/early spring there was a remarkable upswing in the GAM at the same time that the HOEP dropped precipitously. Assuming the our EC was correct then it must have been coincident with the introduction of many gas fired generators coming on-stream simultaneously. Was this indeed the case? Is a simpler explanation (look at the black all-in price) that the price of electricity that “someone” wished to charge was to remain relatively constant — and that the GAM was simply the convenient method to use to keep the price of electricity artificially high? If this latter reason is the case, then the GAM has nothing to do with Wind, Solar or Gas. It is simply a mechanism to extract the desired price.

    I would say that his “discussion point” about TOU is one the few “truths” in the document.

    “TOU is a tax which will penalize the old,
    the shift worker, the poor …”

    And as for this point…

    “We have to be frank and honest about
    the cost of a kilowatt of new generation”

    EXCELLENT — when will this frankness and honesty begin?

  6. That was late winter early spring of 2009 that the prices altered rapidly. This was coincident with the stock market crash…

  7. Why would the Environmental Commissioner be talking about pricing of electricity? The ECO website indicates that the ECO is tasked with monitoring and reporting on compliance with the Environmental Bill of Rights, and the government’s success in reducing greenhouse gas emissions and in achieving greater energy conservation in Ontario.

  8. Gordo must have gotten his job back with a few conditions attached. It seems stuff is being thrown out so fast no one proofs it. Not much thought put into it either. How much is this guy making on our dime? He should read his job spec and get back on topic. Nothing environmental about energy pricing, of which he seems to know little as taken from the comments. After the first slide displayed I can’t bring myself to read the rest – ever.

  9. I saw this “individual” on The Agenda with Steve Paikin. According to this “well informed” environmental commissioner, we don’t pay a dime for wind energy until the turbines produce power.

    Apparently all the “accessory” capital costs like road upgrades, new grid infrastructure, connections, massive tax breaks, etc are borne by the wind developer.

    When did this happen?

    Also apparently, we are paying 15 cents per KWH for gas generation making it more expensive then wind.

    David, as you have your finger on the pulse of generation assets in Ontario, can you confirm this?

    B.W.

  10. From 2003 — Windpower financing. Some things have changed — but it gives you the phrases to search…

    http://www.cielap.org/pdf/windpower.pdf

    What makes the document so interesting is that so much bad information was crammed into so few pages…

    ***************************

    Wind Power Production Incentive (WPPI)
    Announced in the December 2001 budget, WPPI provides an incentive for the first 10
    years of approved wind projects. The incentive amount depends on the commissioning
    date of the project:
    o April 1, 2002 to March 31, 2003 inclusive – 1.2c/kWh
    o After March 31, 2003 and on or before March 31, 2006 – 1.0c/kWh
    o After March 31, 2006 and on or before March 31, 2007 – 0.8c/kWh
    This could provide some financial incentive for a private-sector partner in a municipal
    renewable energy project. To get this incentive, the electricity produced from a wind
    farms has to be for sale in Canada and tied to the electrical grid. The incentive would not
    apply to electricity used for own consumption, for example, self-generation for a
    municipality. However, a private sector partner could build a windfarm, connected to the
    grid, enter into a power purchase agreement with a municipality, and be eligible for
    WPPI.
    • Objective – $260M incentive to encourage 1000 MW of wind power by 2007 by
    covering half of the premium cost of wind energy
    • Eligibility – business, institution or organization such as an independent power
    producer, provincial crown corporation or energy cooperative; contribution
    agreement required with NRCAN
    • Limitations:
    • in Canada capacity of wind farm must be at least 500 km, except for wind
    farms north of 60 degrees and in remote locations not tied to electrical grid
    where the capacity must be at least 20 kW
    • triggers federal EA
    • cannot have both WPPI and CRCE on same turbine; commonly have CRCE
    on test turbines, WPPI on production ones
    • encourages 1000 MW of new capacity; level of interest from developers is
    currently at 3500 MW of capacity2
    • need similar incentives for other forms of renewable energy
    • Business Case Impact – 1.2c/kWh or approximately 0.67c/kWh after tax3
    • in Ontario where retail electricity prices for many electricity consumers4 are
    capped at the artificially low price of 4.3c/kWh, this incentive does not come
    close to its objective of covering half the price of the premium cost of wind.
    Depending on the wind regime, developers need to get approximately 9-
    10c/kWh to make a reasonable return on investment
    • this incentive has been criticized as being insufficient to be on par with U.S.5
    (the U.S. provides a larger tax credit for businesses with taxable income) –
    original intent was that provinces or customers would contribute an equal
    amount
    • Although the WPPI is taxable some small developers will not have to pay
    taxes on it because they will not have taxable income.
    See canren.gc.ca/wppi for more detail.

    Canadian Renewable and Conservation Expenses (CRCE)

    CRCE is legislated by the Federal Department of Finance and administered by the
    Canada Customs and Revenue Agency (CCRA). The Department of Finance drafts
    changes to the Income Tax Regulations but it is only the Parliament of Canada that can
    legislate such changes. CRCE is part of the Income Tax Regulations. It was introduced in
    the 1996 budget to allow investors to fully write off intangible costs like feasibility and
    resource assessment studies in the year they are incurred or to carry them forward
    indefinitely to deduct in later years.
    Following the proposed changes to CRCE announced the 1997 budget, the CRCE
    regulations were amended to allow the costs of the first wind turbine installed at the site
    of a planned wind farm for the purpose of testing the wind regime at the site to be written
    off as CRCE. These write-offs can also be transferred to investors via flow-through share
    financing arrangements. This could be an important financial incentive for a privatesector
    partner in a municipal renewable energy project.

    To qualify as CRCE, expenses
    must be incurred by a taxpayer with respect to a planned project where it is reasonable to
    expect that at least 50% of the equipment used in the project would qualify for Class
    43.1. A private sector business must own equipment and sell energy to qualify for CRCE
    and Class 43.1.

    Prior to CRCE, most intangible costs associated with renewable energy projects would
    have been expensed, some may have been capitalized and written off at the relevant rate.
    The main benefits of CRCE are that: it allows losses to be carried forward indefinitely
    (normally if there is no income, the taxpayer incurs a loss which can only be carried
    forward 7 yrs); it makes projects more attractive to investors since tax write-offs can be
    passed on to them through Flow-Through Share financing; it allows test turbine costs to
    be fully written off in the year they occur.

    *********************************

    Nope — don’t pay till we get the power…

    Remember that power? The power that Richard Wakefield showed was being shipped south?

    I would never use a word like LIAR, others might, but let us say instead that some people are economical with the truth.

  11. Generation Procurement Cost Disclosure

    http://www.powerauthority.on.ca/Page.asp?PageID=122&ContentID=6670&SiteNodeID=120&BL_ExpandID=

    This document provides a fundamental overview of generation cost considerations. As of March 2009, the Ontario Power Authority (OPA) manages 46 signed electricity generation supply contracts representing more than 10,579 MW of generation capacity. Additionally, there are more than 439 Renewable Energy Standard Offer Program (RESOP) contracts with a contracted capacity of more than 1,411 MW.

  12. My apologies (sort of)

    I went back and re-read one of David’s posts.
    The link provided details the price paid for generation under the CESOP plan, generators are indeed paid 15 cents per kwh (14.89 actually).

    However, this applies to generators with a max generation output of only 10mw nameplate cap.

    What we don’t yet know is what we are paying for generation from plants well exceeding 10MW nameplate cap which constitutes the majority of nat gas generation in Ontario.

    What a SCAM!

    B.W.

  13. Breaking Wind, I know the answer, but I can’t find the supporting documentation anymore – and we aren’t entitled to see any contracts we have with the private suppliers, so it has to be reverse engineered.

    There was a document on the OPA site by a consultant that set the initial TOU rates which included the figures. I believe the gas producers received around 9-11 cents, but they also receive a couple of more during peak hours (as a supplier that can meet peak).
    So I figured around 11.

    I’ve also broken it down removing Bruce and OPG figures from annual reports to figure out the cost of what is left.
    And it left around 10 cents/kWh for everything else (there’s a little private hydro that might keep this figure a little lower than gas really is) – so gas and wind are about the same price.

    Considering wind is providing about 1/6th the output of natural gas, Mr. Miller would be correct that natural gas is a much bigger driver of the GAM.
    ———-
    David,
    Recently I found this page at the ieso site: http://www.ieso.ca/imoweb/b100/b100_GA.asp

    That bottom line, GA-OPS, probably contains Bruce, but it would be largely wind and gas.

    October was the second highest GA total, and the third lowest consumption month, since the ieso tracked data.

  14. I don’t know about contract prices… but here is one generator that will be use d in York Centre for example…

    http://www.energy.siemens.com/mx/pool/hq/energy-topics/pdfs/en/gas-turbines-power-plants/9_SGT65000F.pdf

    Note that it has an efficiency of 38% (nominal) in Simple Cycle operation — the planned mode. In combined cycle it is 54% efficient…

    *********************

    INTRODUCTION
    The 60 Hz SGT6-5000F (formally W501F) heavy-duty gas turbine was designed for both simple cycle and combined cycle (CC) power generation in utility and industrial service (see Reference 1 and Figure 1). It is an advanced, highly efficient, low emission, high power density gas turbine able to operate on conventional fuels as well as coal-derived low BTU gas. Since its introduction in 1991, its performance, emissions, reliability and operational flexibility have been improved by enhancements, upgrades and technology cross flow from other Siemens’ advanced gas turbines (see Reference 2). In simple cycle applications its output power and efficiency are now greater than 200 MW and 38%, respectively. In one on one CC operation the output power is about 300 MW and efficiency exceeds 57%.

    *********************

    Once you know the efficiencies, you can estimate fuel cost. Then you can estimate the running costs. Generally construction costs are publicized, so that information with efficiency and gas prices will tell you what you have to bid. Profit Margins in most industries are “public secrets”. Often you can find a public project with enough detail to provide some answers.

    I am used to doing this kind of estimating/prediction but I don’t have a “bid” model built for this scenario — and won’t bother building one as we already have a guestimate.

  15. And for those who really want to know…

    http://www.pristinepower.ca/documents/investor/financials/PPX-2009-Q3.pdf

    See page 5 — NOTE: These are figures from BC I believe… but note that they are accepting the following…

    ******************
    REVENUE

    Revenue consists of sales from power generation, management fees earned from developing projects and interest earned
    on cash invested in short-term investments held during the year. In the third quarter of 2009, revenue from power generation totalled $224,000 or $76.11 per MWh on net production of 2,943 MWh. On a year-to-date basis, revenue from
    power generation totalled $1,196,000 or $79.05 per MWh on net production of 15,130 MWh. Comparatively, revenue from power generation for both the three and nine months ended September 30, 2008 was $73,000 or $88.92 per MWh on net production of 821 MWh. The lower power production in 2008 reflects that only one of two the EnPower plants was commercially operational in the third quarter of 2008 with commencement of commercial operations of the Savona facility in late August 2008.

    ************************

    So I guess that you don’t need $150 / MWh to make money…

    So why does Ontario pay more?

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