The Ontario Energy Board recently “issued a new edition of the Regulated Price Plan Manual.” I have read portions of the previous version in researching Failed time-of-use electricity pricing in Ontario.

Being familiar with the topic I was surprised to see Figure 4 in the updated February 16, 2016 manual. The manual explains:

Figure 4 below shows the forecast of hourly HOEP [Hourly Ontario Energy Price], by season, for the first year of the RPP. Prices are the forecast HOEP for the hour of day ending at the hour shown on the horizontal axis. The price points are plotted in the middle of the hourly intervals shown and reflect the average HOEP during that interval.



TheOEB manual goes on to make a number of observations based on a consultant’s forecast of hourly pricing averages for, as I understand it, the period from May 1, 2006 to April 30, 2007. The observations include:



In the summer, prices start to rise at about the same time as they do in the winter, about 7 a.m., but the most pronounced peak period is spread out over the afternoon, lasting from about 11 a.m. to 5 p.m. This corresponds to residential and commercial air‐conditioning use on the hottest summer days. Accordingly, summer has a single daily peak period.

I’ve gone to the actual IESO data and summarized weekday Hourly Ontario Energy Price (HOEP) averages for the summer periods of 2006 and 2015 (April 1- October 31). Navigant’s 2006 forecast was similar to 2006 averages, but by 2015 the market pricing shape was much different.

In 2015 the average HOEP is relatively flat from 8 am to 10 pm.

There are some complex explanations for the change in trend, which include solar generation. I consider solar the black spot of Ontario energy reporting, but using an anticipated cost curve from a decade ago to demonstrate time-of-use planning is another strong contender in the data bumpkin contest that continues in Ontario’s official electricity sector.

I also looked at the data for the winter regulated price plan periods, including the current one. Unlike the summer, a similar price trend exists over the course of a winter day, although a mid-day decline in rates begins earlier.

The trend of hourly winter period price appears to be more peaky in recent years, and I suspect this has to do with both the absence of coal-fired generators, which provided more peaking depth - or flexibility - embedded solar capacity, and the sytem operator’s struggle to forecast that fickle supply. Price spikes can now be severe as the demand on grid-connected supply is more difficult to predict.

On an average basis, time-of-use pricing makes increasingly little sense, particularly in the summer.

On an hourly basis, the pricing is increasingly tied to the weather - which is why anybody who thinks through growing wind and solar generation should think through real-time pricing, or critical peak pricing, and ignore time-of-use schemes.

The greater message in the data is on the value of different electricity generating options.

Solar does not deserve to be regarded as a high value source of electricity - it is currently more valuable than baseload but less valuable than dispatchable techonologies, and as solar’s share of generation grows it is known its value deteriorates.





spreadsheet with graphs