Energy & Power
Fraser study “misrepresents” cost of wind energy, says CanWEA
By Anthony Capkun
November 5, 2014 – A new Fraser Institute study, “What Goes Up… Ontario’s Soaring Electricity Prices and How to Get Them Down”, misrepresents the impact of wind energy on the electricity bills paid by Ontario consumers, insists the Canadian Wind Energy Association (CanWEA).
On behalf of CanWEA, Power Advisory LLC undertook an analysis of the Fraser Institute report; it concludes that, by focusing solely on the Global Adjustment (GA), the Fraser study fails to acknowledge several key drivers of electricity price increases, including the costs of upgrading and renewing aging electricity infrastructure, and the Debt Retirement Charge. When all elements of the electricity bill are taken into account, Power Advisory concludes that wind energy accounts for only 4% of a typical Ontario consumer’s electricity bill.
Power Advisory also concludes the Fraser study’s methodology ignores the major driver of reductions in the Hourly Ontario Energy Price (HOEP)—falling natural gas prices—which largely explains the increases seen in GA compensatory payments to all generators under Ontario’s electricity market structure.
“All new sources of power generation will cost more to develop than power plants built a generation or more ago, and wind energy is now cheaper than new nuclear power, cost-competitive with hydroelectric power and does not bear the commodity and carbon price risks associated with natural gas generation,” said CanWEA president Robert Hornung.