Reviewing Ontario's Electricity System Operator
the IESO's 2024 Year in Review is disconcertingly bad.
Last week Ontario’s Electricity System Operator (IESO) released it’s “2024 Year in Review”, among other, more important, things. Posting an annual review is a long-time practice of the IESO going back to 2004. This one is notable not so much for its content as the tardiness in producing it, and poor content quality. It begins: “Total electricity demand in Ontario increased by about 1.7 per cent year over year at 139.4 terawatt-hours, up 2.3 TWh from the year before.” That’s wrong – and I don’t feel that’s unimportant.
“Ontario Demand” is an IESO metric that has essentially meant the demand for production from the IESO-controlled grid. There are many instances of summary reporting with the figure – none of which show is as being the 139.4 TWh (or only 2.3 TWh higher than in 2023). The graphic below is created with data summarized in the IESO’s current “Reliability Outlook” – which I won’t link to as the IESO makes it near impossible to find dated outlooks. Note that “losses” and “generator consumption” are part of “Ontario Demand” – because it’s not actually, as the IESO’s annual summary’s first words put it, “Total electricity demand in Ontario”: that would include self-generation (or behind-the-fence), and it would include the generation within the LDC (local distribution company) systems. What the calculation of “Ontario Demand” in this data set from the Reliability Outlook report, of 140.482 TWh, does manage to do is almost agree with totals published many times previously by the IESO in various reports – except for month 12, cuz’ standards.
So what? – as the IESO would say in shrugging off such things.
It’s possible to say very stupid things based on the poor reporting that comes from a lack of data handling discipline. Here’s another doozy from the IESO’s 2024 Year in Review: “The Hourly Ontario Energy Price [HOEP], which was lower in 2024 than the year before, was the result of lower natural gas prices, which in turn led to an increase in output from gas-fired generation.” This is true in the bizarre world where 2023’s average HOEP is taken from 2022, when it was 4.78 cents/kilowatt-hour, and not the actual 2023 average of 3 cents/kWh, which is, in my reality, lower than 2024’s 3.4 cents/kWh. In my reality gas output was not higher in 2024 than the previous year because gas prices were lower, nor were exports higher because the gas we import was cheaper here, but because the IESO market only attempted to recover the marginal cost of generation, unlike the market we export to, and a major alternative supply in the form of Quebec’s exports disappeared due to dry conditions in that province’s north.
I’d appreciate it if serious commentary weren’t undermined by the prattling from the IESO based on shabby data handling, and reporting, discipline.
I noted in the first paragraph the IESO has recently produced some “more important” work. Potentially. I didn’t get very far into the Annual Planning Outlook as I lost considerable interest when they failed to produced one of those annually, but I did get far enough to see what wasn’t included in the outlook (such as Trump and tariffs). I will opine that if there truly is concern about meeting load growth a priority at the IESO ought to be learning why exports remain high even when we are not dumping excess supply from their over-commitment in contracting. Another big thing at the IESO is the current implementation of a radical market redesign – not so radical as to introduce merchant generators and purchasers, but far more complicated than the one in place since 2002. Work at the IESO also continues towards a contracting binge that, from the little observation I’ve done, will be built on getting bids for supply such as wind based on how much revenue the proponents feel they’ll need per month. This approach should yield savings by de-risking generators’ exposure to the renewed market’s pricing. It’s not simply holding a red-blue team exercise to test a plan, but actually implementing a red team approach and a blue team approach at the same time.
Results of these efforts at the IESO are sure to offer consumers great savings over am imagined business-as-usual scenario. Not reporting reality ought to prepare the IESO nicely for exaggerating the counter-factuals required to have produced savings - if ever tasked with measuring its performance.