Electricity Prices Panel Presentation to CCRE Roundtable Hockley Valley March 27, 214 Amir Shalaby, Vice President, Power System Planning March 27, 214
Today s Journey to Residential Bills Part I: Electricity Service Components & Costs Starting portfolio Policy Investments: MW Prices: $/MWh Demand: TWh Dispatch Cost: $Billion Part II: Who Uses the Products & How it is Paid for Allocation: Global Adjustment Location Usage Bills: $/Month Service Charge) Regulated Charges 4% (Wholesale Market Service Charge) 4% * In nominal dollar, before credit from Ontario Clean Energy Benefit (OCEB) based on 8 kwh per month of electricity consumption 2 DRC 4% Distribution 23% Residential Bill in 214 $ 152 per month* HST 11% Transmission 8% Electricity (Generation & Conservation) 51 %
Part I : What are the products, what do they cost Generation makes up 2/3 of the total costs ($12/19 Billion) so I will focus on it Capacity changes (adding 15 GW) over ten year were primarily policy driven This capacity generates 16 TWh/year Demand in Ontario is about 14 TWh/year Wholesale 4% Conservation 2% Distribution 19% Transmission 8% Electricity Service Cost in 214 $18.7 B ($212) DRC 5% Generation 62% 3
Investments in generation from 25 to 215 45, 25: 31,6 MW 215: 39,4 MW 45, 4, 7,3 7 7 4, Installed Capacity 35, 3, 25, 2, 15, 1 5, 8,1 1,9 7,6 2,1 9 4,5 7,4 9,5 9, 35, 3, 25, 2, 15, 1, 5, 7,6 13, 1, 5, 25 Coal Nuclear Hydro Natural Gas Non Hydro Demand 215 Renewables Response Coal Nuclear Hydro Natural Gas Non Hydro Renewables Demand Response 4
Further capacity developments are on the horizon Installed Capacity, MW 45, 4, 35, 3, 25, 2, 15, 1, 5, 45, 4, 35, 3, 25, 2, 15, 1, 5, 213 214 215 216 217 218 219 22 221 222 Nuclear Hydro Non Hydro Renewables Natural Gas Coal Demand Response 5
This capacity serves Ontario demand : 14 TWh/year 18 18 16 16 14 14 Energy Demand, TWh 12 1 8 6 12 1 8 6 4 4 2 2 25 26 27 28 29 21 211 212 213 Note: IESO measured energy demand, corrected for weather 6
Capacity (in MW) produces Energy: 16TWh/year Energy (TWh) 2 18 16 14 12 1 8 6 4 2 213 214 215 216 217 218 219 22 221 222 Nuclear Hydro Non Hydro Renewables Natural Gas and Imports Coal Planned Flexibility 2 18 16 14 12 1 8 6 4 2 7 Note: The above graph appears as Figure 19: Ontario s Forecast Electricity Production, in the 213 LTEP.
Energy is sold at prices determined by contracts, regulations and markets $6 $6 Unit Cost of Generation (Real $212/MWh) $5 $4 $3 $2 $1 3 6 7 11 12 15 48 $5 $4 $3 $2 $1 $ Coal Hydro Nuclear Wind Bio Natural Gas Solar $ * 213 LTEP projections 8
Prices ($/MWh) times volumes (TWh) Results in the dollar cost of generation ($12B) 16, 14, Total Cost of Generation (Real $212 Millions) 12, 1, 8, 6, 4, 2, 213 214 215 216 217 218 219 22 221 222 Coal Nuclear Natural Gas Hydro Bio Wind Solar Planned Flexibility Figure depicts cost of Ontario s generation production which includes production for domestic use as well as export. Cost of conservation is not shown here. 9
The dollars come from Global Adjustment and Hourly Market Revenues 16 14 12 $212 Billions 1 8 6 4 2 213 214 215 216 217 218 219 22 221 222 Market Revenues (via, HOEP) Global Adjustment Generation Global Adjustment Conservation (including Funds) * Figure depicts domestic cost only, excluding exports. Cost of Conservation included here. 1
Projection of total cost of service 25 25 2 17.6 18.7 19.4 19.8 19.6 2.2 19.7 2. 2.4 2.7 2 $212 Billions 15 1 15 1 5 1.7 11.6 12.3 12.6 12.4 12.8 13. 13.1 13.5 13.8 5 213 214 215 216 217 218 219 22 221 222 Generation Conservation* Transmission Distribution Wholesale DRC *Includes the Aboriginal, Municipal and Community funds The above graph provides information consistent with Figure 6: Total Cost of Electricity Services, in the 213 LTEP. 11
Part 2: Who uses the product and how is it paid for The 16 TWh are sold at three different customer categories with varying firmness and prices 25 TWh to Class A (>5 MW) categories which are transmission connected customers which include large industrial, commercial & institutional 115 TWh to Class B (<5 MW) which are embedded in LDCs and usually comprised of residential, small commercial & institutional and small industrial 2 TWh exported 12
Energy sold serves domestic demand (Class A & B) and exports Energy, TWh 18 16 14 12 1 8 6 4 2 18 16 14 12 1 8 6 4 2 213 214 215 216 217 218 219 22 221 222 Class A Energy Demand Class B Energy Demand Exported Energy (sold at HOEP) Total Ontario Domestic Net Energy Volumes Demand 13
Products are priced differently $12 $1 $91 $97 $98 $97 $1 $11 $11 $13 $15 $212/MWh $8 $6 $4 $2 $ $82 $55 $21 $61 $63 $65 $25 $24 $25 $67 $32 $34 $7 $71 $71 $38 $37 $76 $77 213 214 215 216 217 218 219 22 221 222 $45 $47 Class B All In Electricity Rate (GA + HOEP) Class A All In Electricity Rate (GA + HOEP) Unit Cost of Export (sold at HOEP) The Class A all in rate is illustrative of the average rate for Class A, individual Class A customer will pay a GA rate based on their specific usage of the 5 highest hours in the prior year (base period) The actual market rate (HOEP) would be based on meter hourly profile, not annual average rate 14
Total amount paid for various products $16 $14 $12 $11 $12 $13 $13 $13 $14 $14 $14 $15 $15 $16 $14 $12 $212 Billions $1 $8 $6 $1 $8 $6 $4 $4 $2 $2 $ 213 214 215 216 217 218 219 22 221 222 Class A All in Cost (GA + HOEP) Class B All in Cost (GA + HOEP) Export Market Revenue (HOEP) $ The actual market revenue (HOEP) would be based on meter hourly profile, not annual average rate * Figure depicts domestic and exports revenue. Cost of Conservation included here. 15
Typical Residential Electricity Bill Before OCEB* $25 Monthly Residential Customer Bill Assumes 8 kwh, Nominal $ $2 $15 $1 $5 $138 $79 $152 $87 $162 $167 $92 $96 $17 $1 $178 $177 $15 $12 $181 $187 $14 $111 $193 $115 $ 213 214 215 216 217 218 219 22 221 222 Electricity Transmission Distribution Regulated Regulated Charges Charges (Wholesale (Wholesale Market Market Service Service Charge) Charge) DRC DRCHST The above graph provides information consistent with Figure 7: Typical Residential Electricity Bill Forecast, in the 213 LTEP. OCEB Ontario Clean Energy Benefit Based on Toronto Hydro s 212 annual average residential bill, assuming 8kWh/month Inflation rate of 2% assumed to convert real $212 dollars to nominal dollars 16
Large Industrial Electricity Price $14 $12 $1 $87 $92 $96 $1 $15 $12 $14 $111 $115 Nominal $/MWh $8 $6 $79 $4 $2 $ 213 214 215 216 217 218 219 22 221 222 Electricity Transmission Regulatory DRC The above graph provides information consistent with Figure 8: Industrial Electricity Price Forecast, in the 213 LTEP. Inflation rate of 2% assumed to convert real $212 dollars to nominal dollars Assumes transmission connected large user, hence excludes distribution cost 17
More detailed projections of global adjustment allocation used for rate setting purposes For purposes of this forecast, the cost share of global adjustment (GA) between Class A and Class B is 1% and 9%, and the volume share is assumed to be 17% and 83%, respectively. These ratios are held constant for the planning period As actual Class A and B share values change, the rate and bill outlooks will change correspondingly. An estimate of the monthly GA is prepared by the IESO, for LDC billing purposes: http://www.ieso.ca/imoweb/b1/b1_ga.asp Historical monthly data on GA is available at the following links: http://www.ieso.ca/imoweb/b1/b1_ga.asp http://www.ieso.ca/imoweb/b1/ga_archive.asp The Ontario Energy Board establishes the electricity commodity rates for households and small businesses via the regulated price plan, using higher resolution data that reflect current assumptions and circumstances. http://www.ontarioenergyboard.ca/oeb/industry/regulatory%2proceedings/policy%2 Initiatives%2and%2Consultations/Regulated%2Price%2Plan 18
More detailed planning data/information is available from OPA 213 LTEP modules provide information on assumptions and details of Demand forecast Conservation Supply Cost Air Emission http://powerauthority.on.ca/power planning/long term energy plan 213 19