I recently received this question: “ Do you know what OPG is paid to spill water?“

I had a pretty good idea, and knew where to look for more information.

The price paid to Ontario Power Generation (OPG) for “foregone” production due to excess supply is around 3 cents per kilowall-hour (kWh), although I’d suggest that’s not a great metric to evaluate the cost to consumers of curtailment. It’s not a comprehensive number for all hydro(electric) supply in Ontario -and even at 3 cents/kWh, from 2013-2017 the cost of curtailed hydro at OPG approached half a billion dollars.

The most accessible source of information on curtailed hydro is from OPG’s financial reporting - such as this from OPG’s 2017 Financial Results:

Power that is surplus to the Ontario market is managed by the IESO, mainly through generation reductions at hydroelectric and certain nuclear stations and other grid-connected renewable resources. Baseload generation supply surplus [SBG] in Ontario was more prevalent in 2017 than in 2016, mainly due to higher water flows and reduced electricity demand in the province during 2017. During 2017 and 2016, OPG lost 5.9 TWh and 4.7 TWh of hydroelectric generation due to SBG conditions, respectively. The gross margin impact of production forgone at OPG’s regulated hydroelectric stations due to SBG conditions in 2017 and 2016 was offset by the impact of a regulatory variance account authorized by the OEB…

Digging through a regulatory finding uncovered the request to recover lost revenue, due to SBG, in riders added on to future rates (in this case our present rates):





Of note, the “Actual Foregone Production Due to SBG Conditions” in the rate application is less than the “OPG lost… due to SBG conditions” in the financial reporting - but 2017′s financial reporting explained this discrepancy.

Production forgone at OPG’s regulated hydroelectric stations due to SBG conditions was 5.2 TWh in 2017 and 4.3 TWh in 2016.

So… where else did OPG “forego” production. I expect it was at sites co-owned by OPG and contracted by the IESO (system operator) at rates far higher than those provided to OPG’s regulated sites. It’s unclear to me why the IESO has not reported some curtailment of hydro in its year-end data summaries that do report curtailment of wind and nuclear generators.

Unfortunately it’s difficult to work through data from each year, from application to approved rate rider. Here’s a view mixing OEB rate rider approval figures (2013-2015), OPG rate applications (2016-17), and using OPG’s total reported foregone/curtailed supply due to SBG (although the variance only got recovered for about 90% of that total OPG figure).





Adding up the dollars for the five years shown produces an estimated cost of $473 million - which is only a little more than 2.5 cents/kWh, although in the more recent years it’s closer to 3.

It’s important to remember that curtailing supply at 3 cents/kWh isn’t as good a deal as it sounds - because we are curtailing it due to an excess of ‘baseload” supply contracted at much higher prices: some of this low-cost power was curtailed while Ontario bought the output of solar generators for 48 cents/kWh (on average - and as high as 82!); a lot of it while Ontario bought output from industrial wind turbines at an average of somewhere around 13 cents/kWh, and at all times there was nuclear producing for about 6.5 cents/kWh.

We spent half a billion dollars to curtail supply made excess by around $2 billion worth of supply.