Yesterday I wrote on a new report estimating daily metrics in Ontario’s electricity sector on my main site. This post is going to look at the most expensive, and cheapest, days in my data set. This post is essentially an addendum to yesterday’s post.

The most expensive day for “Class B” consumers (which are directly or indirectly most ratepayers) is April 19th, 2015. The report for the day indicates a windy and fairly bright day with very little provincial demand, low market pricing (HOEP) and enormous net exports. These factors serve to make the costs for the day higher and disproportionately shifted to Class B consumers.

Two notable points regarding the record on the 19th:

it’s dependent on estimating embedded distribution connected (Dx) solar production. I’ve written on my attempts to do this, but the disclosure of specific Dx data is a spectacular shortcoming of the IESO.



The Bruce B nuclear station’s ~3,300 megawatts of capacity were out of production on April 19th, which fell during a rare vacuum building outage.



While the 19th may or may not have been the most expensive day ever, it indicates the low demand, high wind, good sun, character the most expensive day will have.

Most high commodity price days for “Class B” have very low market price components (HOEP) and high global adjustment components. The most expensive “Class B” day where the HOEP was high was March 4, 2014. The report for that day shows why a day with a market rate averaging $278 per megawatt-hour (MWh) can be cheaper for some consumer segments than the $4/MWh HOEP of the most expensive class B days: when the market recovers an amount greater than the contracted cost of supply, the global adjustment reduces consumer cost, and just as a global adjustment charge disproportionately harms “Class B” consumers, a global adjustment credit disproportionately benefits “Class B” consumers.

The cheapest day of 2015, in my estimates, is February 21. The report shows a very healthy HOEP rate of $97 meant the global adjustment was a credit. The “Class B” total (GA + HOEP) rate of $78 is therefore slightly below the overall average rate ($80/MWh). Wind and solar production was not high.

It is notable that the current rate period’s top 5 daily peaks, as currently indicated by the IESO, occur on days were the total rate for consumers is within $8/MWh of the year’s lowest cost day (less than a cent per kilowatt-hour). This indicates what generally drives pricing is oversupply, which depresses the HOE, transferring the costs of the excessive supply to the “Class B” rate class.

The cheapest day since the winter is October 6. My report for the day shows low total supply costs, due to very low nuclear output (Darlington was offline for its occasional vacuum building outage,and some units were offline at Bruce and Pickering), and very low wind. Notable here is that generation for natural gas was very high - about 4 times what it usually is. Accounting of generation costs in Ontario generally shows gas as expensive, but that’s because most gas generators receive payments whether or not they generate: the incremental cost of the next watt-hour from a gas plant already paid its capital and operation costs is, in reality, very low.

This final point has big implications for the design of a cap-and-trade structure in Ontario. A meaningful price on emissions would raise the HOEP disproportionately and greatly impact the cost shift that now exists - and it is designed to exist in order to moderate the prices paid by Ontario’s industry.

A meaningful price on natural gas in electricity is therefore likely to result in less Ontario industry.