Note: As someone correctly pointed out to me the Provincial Benefit should also be considered. This is a 'correction' rate that is added to (or subtracted from) the market rate (HEOB) that I have charted below. The market rate it still very important when power generation is considered, but the retail rate is balanced by other forces. When I get the opportunity I will update the graph to show both and repost. I was aware of this when I wrote the HEOP becomes the basis of the commodity charge, but I failed to really identify Provincial Benefit. Note that home consumers generally see fixed rates or time of day rates, but that is a whole different story beyond the scope of this article.
Are power rates in the province going up because of increased generating costs? I looked at the Hourly Ontario Energy Price based on the weighted monthly average and was surprised by what I found. I was expecting to at least see some increase due to inflation, and possibly some due to changing generation methods. The chart below shows every month since they began recording in May'02 until the last full month with data - September'10. The trend is actually declining, but it appears there are long periods of time where the price remains just below the mean value of $50.88/MWh.
HOEP is the hourly price that is charged to Local Distributing Companies and other non-dispatchable loads. HOEP is also paid to self-scheduling generators. HOEP becomes the basis of the commodity charges in the Retail electricity market if customers receive their electricity from their Local Distributing Company. Customers who have arranged contracts with licensed Retailers are not affected by HOEP, but instead are charged their particular contract rate for the commodity.
HOEP is important when looking at the effect of power generation as it is most reflective of the wholesale market in the province. The HOEP is calculated in $/MWh, convert to $/KWh (which is what you generally see at the retail side) you need to divide by 1000. For example the latest month available (September 2010) is $32.91/MWh or 3.3¢/KWh. The data is from the Independent Electricity System Operator, the not-for-profit corporate entity appointed by the Government of Ontario with the authority for establishing, monitoring and enforcing reliability standards in the province.
I read some literature/propaganda from Denmark where they actually referred to market pricing as sending signals to manufacturers - because the price isn't actually the market price for many suppliers, and certainly not for consumers.
ReplyDeleteThis from the IESO business plan for 2011-2013:
"The IESO continues to believe that a competitive real-time electricity market is the most fair and efficient way to organize the electricity sector, with real-time prices having the potential to provide the cohesive force needed to efficiently coordinate all efforts. As it has since its formation over a decade ago, the organization will be responding to stakeholder requests for the IESO to take a leadership role in evolving the real-time market over the long term.
Over the business planning cycle, however, the objective is to achieve efficient electricity price signals so as to drive economically efficient investment and operational decisions in the consumption of electricity. The Ontario electricity market will continue to play an important role in achieving operational efficiency in the province while advancing Ontario’s electricity supply and consumption
policy objectives."
I'm not sure what that said - but it certainly backpeddles away from the HOEP being a price for electricity.
It's a signal.
Of oversupply?