TORONTO, ON --The agency that runs Ontario's electricity market has launched half a dozen investigations into promised imports and exports of electricity that never materialized during the summer months — and may have contributed to big price swings.
Harry Chandler, director of market assessment and compliance for the Independent Electricity Market Operator (IMO), said in an interview yesterday that each investigation could cover a number of separate transactions.
The last-minute failure of imported power to arrive means that the IMO is forced to buy high-priced domestically produced power to fill the gap, thereby jacking up the price for all consumers.
If an export fails, the IMO may be left with surplus power on its hands, depressing the price.
"These are allegations," Chandler stressed, declining to name any of the parties targeted by the probes. "We're trying to understand the facts."
The investigations came to light in a report issued last week by the market surveillance panel of the IMO on the state of the province's power markets. The panel looks for inappropriate market conduct.
In one instance, the panel says the failure of a large amount of imported power to arrive contributed to a 50 per cent jump in price from one hour to the next — to 43.7 cents a kilowatt hour from 29 cents. (The average price is about 5.7 cents.)
While imports and exports can fail for a number of legitimate reasons, the panel is worried about deals that are deliberately set up to fail, allowing some market players to speculate on the resulting price swings.
Revelation of a formal investigation into import failures comes as something of a surprise because the summary of the report states that in the opening months of the competitive market "there were no instances of inappropriate or anomalous conduct that warranted an investigation of any market participant."
Fred Gorbet, who chairs the market surveillance panel, said in an interview that the summary referred to investigations by the panel itself, which looks at any "inappropriate" behaviour, even if it's legal, but has no power to penalize.
The investigations now under way are being run by Chandler's compliance staff, which probes actual rule-breaking, and has the power to levy heavy penalties for those guilty of infractions.
Underlying the market surveillance panel's report is its warning that Ontario doesn't have enough electricity — and could face brownouts or blackouts next summer. The IMO had to appeal to Ontario consumers to curtail power use on four occasions over the summer.
The province kept the lights on during the record-breaking demand only by importing large quantities of power from neighbouring jurisdictions such as Quebec, New York and Manitoba.
But problems aren't confined to imports.
The panel points a finger at breakdowns by gas and coal-fired generating units at "critical points" during the summer, when the IMO struggled to keep the lights on in Ontario.
Prior to the panel's report, attention had centred on a prolonged outage of one of four reactors at the Bruce nuclear plant.
An equipment mishap extended a planned maintenance shutdown by a month in July and August. The extent of that outage came to light only in material filed with the Canadian Nuclear Safety Commission.
Bruce Power has argued that the Bruce outage wasn't a prime contributor to high power prices, pointing to 34 instances when other major generators were forced out of service on short notice.
Market rules don't allow the IMO to disclose what generators failed or how long they were out.
The panel's report backs up Bruce Power's argument, noting in its market analysis that "a number of fossil generating units were forced out of service for technical reasons at critical points."
Fossil generators burn natural gas, oil or coal. Most currently in operation are run by Ontario Power Generation Inc. (OPG).
OPG would not provide details of fossil plant shutdowns, citing rules on commercial confidentiality.
But OPG spokesperson John Earl said a review of the company's fossil generators found no unexpected problems.
"This summer OPG's fossil fleet operated better than what we'd called for in our business plan," he said.
Source: Toronto Star
