Thursday, January 23, 2014

Record export revenue day for Ontario is a gas, gas, gas

Data posted by the system operator indicates revenue on exports yesterday should have yielded approximately $10.83 million dollars and averaged about $163/MWh.
It's shaping up as a very interesting month for electricity markets.

Yesterday I wrote on demands in neighbouring jurisdictions setting the higher pricing, and prior to that I posted an article co-written with Parker Gallant, on the market activity for January 7th.

The IESO's main data (.csv) files are distorted, compared to January 7th, because much more generation was fed directly to Quebec's grid yesterday; I estimate 588MW average throughout the day (compared to 11MW on the 7th ).  Imports show only as average 600MW, so the 22nd is a rare day where the export number is more representative of actual trade than net exports. [see note at end]

Other points of interest:
  • The 22nd's average Hourly Ontario Energy price, $178.83/MWh, is the highest since August 9th, 2005, and second highest since 2002
  • Hourly "gas" generation set it's 5 highest generation records from hours 17-21, and the top 16 hours where all set in the past 2 days 
  • Hourly "gas" generation averaged 6,452MW throughout the day, whereas prior to January 21, 2014 there were only 2 hours when gas generation exceeded 6,452MW
Most of the profits at natural gas-fired facilities should flow back to Ontario's ratepayers, according to a press release from the initial awards of "net revenue requirement" contracts, which stated:
When market revenues exceed these fixed-cost requirements, the contracts stipulate that 95 per cent of the surplus will flow back to ratepayers.
As with the intertie situation with Quebec, there is no transparency on the actual contracts or accounting, so Ontario's ratepayers will have to hope that January 2014's higher market rates lead to lower prices (which should happen if export losses are sharply reduced - and some days exports are even profitable).

Notes: I wrote on the feeding directly to Quebec back in 2011, when it appeared to be a method of curtailing surplus supply, in Secret Deals between Public Power in Ontario and Quebec.   This month's activity is probably entirely positive, with baseload fed directly to Quebec's HVDC grid and imports from Quebec balancing Ontario's grid.
screen capture from
Unfortunately, there's essentially no transparency on whatever financial transactions my be occurring, and a portion of Ontario's hydro production, particularly from Saunders, is unreported.

The daily closing price for natural gas from the Dawn Hub was around $10/MMBtu, which would make the fuel cost of producing $70-$95/MWh depending on a number of assumptions.  It looks like the gas pricing may have set the HOEP early,and very late, on the 22nd, but much of the day the HOEP was much higher and it is likely that was dictated by exports.


  1. Ontario's wind output has been in the dumps through most of this cold snap and associated demand spike with productivity falling below 8% in some hours. It isn't unusual for wind to fail to deliver when we need it most, but it still seems worth noting.

  2. I hope to have something sort of related, on wind, in the near future. I thought it was appropriate not to mention here as this is about the supply that does meet demand.
    The figure I've been looking at for wind (which Richard Wakefield notified me of years ago) is capacity value.
    For winter, it's no better than summer which is, if a system wants to keep power on, near 0.
    I could just have fairly labelled the chart's right vertical axis "wind and solar". Over 3000 MW of that supply is counted on for nothing during winter peaks (and we are adding another 3000MW in the next year and a half).
    The other missing topic is coal - which, despite its negatives, did have that nice feature where the fuel inventory was stored on site.
    Perhaps Lennox was running (at over 1500MW) on oil last night. Oil is certainly a big part of the New England ISO story this January.