June 7, 2012
Ontario Power Generation and Hydro One see declines in revenue, profits and performance since 2009
The combined gross revenue of OPG and Hydro One for the 1st Quarter of of 2012 was $2,690 million, down 3.4% from from $2,784-million in 2009. The revenue drop can be explained by the drop in production of OPG’s unregulated hydro and lower market prices. In 2009 OPG sold 4.3 Terawatt hour (Twh) of unregulated hydro at a price of 4.4 cents a kWh or $44 million per terawatt hour (TWh ), producing revenue of $189 million. In 2012 unregulated hydro sold was 3.6 TWh and generated 2.2 cents per kWh ($22 million per TWh) and revenue of $79 million, for a revenue drop of $110 million.
In other markets the drop of 50% in the price per kWh would reflect itself in lower electricity prices, but not in Ontario. All power contracts signed by the OPA under the Green Energy Feed-in-tariff program, MicroFIT and NUG (non utility generators) programs receive guaranteed prices well above the wholesale market prices. In the market, the wholesale price has fallen over the past three years as Ontario keeps adding more renewable energy to the grid while consumption is falling. So we have a surplus of electricity. The take or pay long term OPA contracted power accumulates in the Global Adjustment pot. That pot for the 2009 Quarter was $500.6 million and for the 2012 Quarter was $1,728.8 million, a gain of $1,228.2 million or 245%. Guess who pays for this in their adjusted electricity costs? Ratepayers.