Ontario power: Why Ontario effectively paid its neighbours $214,584.24 in one weekend hour to take our power

Ontario Negative Electricity Prices surge as IESO wholesale market faces surplus power, low demand, spring hydro runoff and strong wind output; exports rise, ratepayers fund the gap via the global adjustment surcharge.

Mild temperatures, high winds, spring run-off and a weekend combined to send the price of power below zero on Sunday in Ontario.

But despite the near-record negative price – which means, in theory, that producers are paying customers to take electricity – Ontario ratepayers will still pick up the tab.

The market price of electricity averaged minus 2.1 cents a kilowatt hour on Sunday, with power prices below zero across the market according to the Independent Electricity System Operator IESO.

On the full day’s production, the market generated a total of minus $7.8 million for the negative-priced output.

The below-zero prices were triggered in part by lower demand across Ontario. Mild temperatures meant that there was little demand for either heating or air conditioning, while the weekend meant that many workplaces are closed.

Meanwhile the spring run-off boosted production at hydro stations. And strong winds pushed wind generation record levels above 1,400 megawatts at times – that’s about the same output as the main generating station at Niagara Falls.

As well, some connections to Quebec were out of service, curbing hydro imports and bottling up power in Ontario and contributing to the surplus.

The market price for power never got above 3.2 cents a kilowatt hour on Sunday, and fell as low as minus 12.8 cents a kwh.

Some power users benefit. Export customers, in neighbouring states and provinces, can “buy” the below-zero power and, because the province sometimes pays to give away power, get a credit for it. So can some big Ontario industrial customers who buy on the wholesale market.

In the hour starting at 7 a.m. Sunday, for example, IESO records show that Ontario exported 1,675 megawatt hours of power, at an average price of minus $128.11. Most of it flowed to New York and Michigan.

That means, in effect, Ontario paid its neighbours $214,584.24 in that hour to take our power.

Who paid? Bruce Power, the province’s biggest private generator, has a contract with the Ontario Power Authority which provides a floor price.

Other private generators also have contracts with the Ontario Power Authority that are independent of the market price, even as planners discuss Ontario electricity supply needs for the future.

Ontario Power Generation’s nuclear and large hydro stations, central to the wind versus nuclear debate, also deliver power at regulated prices that don’t vary with the market.

But since the market isn’t generating any money for these contracted prices, somebody has to.

In the end, the gap between what power producers are guaranteed, and what the market provides, is made up in a surcharge on customers’ bills called the “global adjustment.”

In January – the latest month for which the global adjustment has been calculated – it amounted to 4.2 cents a kilowatt hour.

Householders who have electricity contracts with retailers pay the global adjustment as a surcharge on the contracted price. Those on the regulated price plan have it rolled into their over-all price.

While the negative prices may have cost consumers money, they made it a good day to see Niagara Falls.

For several hours Sunday, controllers throttled back production at the big generating station to curb production.

That meant more water plunged over the Falls instead of being diverted through the generators at Queenston.

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