PowerStream not keen on customers subsidizing exports

By Laurie Watt Barrie Advance Aug 07, 2012 

SIMCOE COUNTY – Ontario should give hydro customers a break and stop the Independent Electricity System Operator (IESO) from selling surplus power too cheaply, says PowerStream’s vice-president of regulatory affairs.

Colin Macdonald confirmed figures published in a new report by the Council for Clean and Reliable Energy. The research paper says a typical household pays about $2.50 a month to subsidize power to be sold out of Ontario. Ontario’s auditor general has also highlighted the issue.

“At certain times, (Ontario) has more supply than we need, which in some ways is a good thing. We have surplus. We’re selling it,” said Macdonald.

“When we sell the surplus power, we charge the market price, because that’s how it’s being sold through the IESO market.”

The price paid to private generators is almost always higher than the market price. But because the low market price doesn’t bring in enough money to cover the contract prices, Ontario customers are charged an extra fee, called the “global adjustment” fee (GA).

The GA was introduced in 2005, as a way to stimulate investment in new power sources and to recover costs in long-term contracts. 

The difference this year between the average market price and the globally adjusted price is 3.28 cents per kilowatt hour.

“Other global jurisdictions should pay the global adjustment portion,” said Macdonald. “It’s kind like putting something on the market on sale.

“Maybe they should be paying the full cost (price), not just the market price.”

Macdonald said the IESO market is a very small share of the Ontario market. Most power in Ontario is bought and sold through contracts with the Ontario Power Authority.

Changing what Ontario’s IESO charges for surplus power – which is being played on a North American market – would require legislation and new regulations, he added.

It would translate into quite a price shift. 

The study’s authors advocate a single hourly price, to be more consistent and ensure external customers pay what Ontario customers pay.

In the spring and fall, Ontario often has surplus power as demand is lower.