Record Low Hourly Ontario Energy Prices Causing Record Export Subsidies

Record Low Hourly Ontario Energy Prices Causing Record Export Subsidies
by Scott Luft – Cold Air

The past 5 weeks comprise 5 of the 10 lowest weeks for the average Hourly Ontario Energy Price (HOEP) rates since the IESO data starts 10 years ago. I’ve noted the decline while updating my weekly shadow reports, and this post will put the trends within the context of broader markets, and longer trends (including those Parker Gallant and I wrote about, in the Financial Post, last July).

The price of electricity on wholesale markets is very low. While negative prices catch attention, there is only a very slight difference, in the cost to Ontario ratepayers, of -$1 and +$1. The last time I worked out an estimate, the average price paid to Ontario’s suppliers, due to contracts and regulated rates, was $68.23/MWh. With the HOEP averaging around $13.50 over the past 35 days, that means a big revenue shortfall.

Weekly average HOEP and Exports

The wholesale market price, or HOEP, in Ontario is artificially low because of the over-commitments to supply, but in most North American markets the price will be very low as natural gas fired generation generally sets the market price, and natural gas prices are at 10 year lows. Adjacent markets have been paying rates slightly above the HOEP rates, but not by much. The market structure in Ontario can be seen as containing a pot that pays all the suppliers once a month; revenue from the HOEP sales fills the pot, and if it isn’t full enough to pay the commitments, then the difference is gathered from Ontario ratepayers via the Global Adjustment mechanism (GA). March’s estimated $62.23/MWh was nearly 25% above the previous high of $50.62/MWh, and the estimate for April, $74.68, adds 20% to March’s high.

Read the whole article here

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About lsarc

LSarc is grassroots protection of Lake Superior through citizen science and volunteerism.  If you are interested in preserving intact ecosystems and restoring biological integrity of the Lake Superior watershed using the scientific method to test hypotheses and research, then you are LSarc LSarc is proud to be a member of the John Muir Trust and the 60th member organization of Wind Concerns Ontario
This entry was posted in Electricity exports, HOEP, Junk Science, Ontario Electricity Sector, Ontario Green Energy Act, Renewable Energy, Subsidies, Wind Power and tagged , . Bookmark the permalink.

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