News & Updates

A Friendly Reminder to Audit Your Bills

Dec 27, 2017

Happy Holidays from CESi. 

 

As we head into 2018, we would like to remind everyone to take the time to review your billing and ensure you're not only in the proper rate classes but also being charged the correct rates. 

Every company can make mistakes. Some mistakes can be small enough to not register as a concern and some can be much much larger. Take the case of the "decimal point" error in this woman's recent bill.

http://www.goerie.com/news/20171226/erie-woman-receives-284-billion-electric-bill

Obviously, this is a case where the cost was in no way reasonable, but more often than not we can see small billing errors result in hundreds or thousands of dollars that many clients are paying without even registering as mistakes.

As our clients' audit numbers from 2017 for performance and profitability we would like to remind everyone that taking the time to review billing can be a major step in ensuring strong bottom line numbers for 2018.

Contact us for an honest, independent outlook on your current billing and contracts. You might be surprised at what is being left on the table! 



Ontario`s Cap and Trade November Auction Results

Dec 11, 2017

  On November 29th, 2017, Ontario held the fourth Cap and Trade Auction of the year. Earlier auctions have shown mixed results with participants showing hesitation in buying Future 2020 Allowances. This hesitation was due to uncertainty in the new program. By the third auction in September, that uncertainty vanished, as all 25 million plus Current 2017 Vintage Allowances, as well as all 3 million plus Future Allowances, were sold. This change in opinion may have come from confidence in the program as it continued into its 3rd auction combined with a strong Federal and Provincial stance on Greenhouse Gas emissions and an increasing societal shift towards environmental sustainability.

In the fourth auction, Current Allowances were sold at $17.38, which was the floor price set by Ontario, While the Future Allowances sold for $18.89, which was $1.51 over the floor price. Also, Future Allowances sold out, while only 83% of Current Allowances were sold.  This reflects a slight change in perception in the auction, which historically has always sold all of the Current Allowances above the floor price.   Ontario’s commitment to join Quebec and California’s joint Cap and Trade Auction may have buyers holding off on purchasing Current Allowances, while at the same time increasing their purchases of future allowances since it seems like the Cap and Trade Auction will continue, and prices are likely to increase. 

The Government of Ontario has not wasted any time in reinvesting the proceeds from the Cap and Trade. On August 30th, 2017, Ontario announced $377 million in programs and rebates to help residents and businesses save money and fight climate change, on top of its previous funding announcements. The Cap and Trade Auction is expected to increase residents’ bills by approx. $13 per month and an even higher increase can be expected for businesses in Ontario. However, with Ontario reinvesting in energy efficiency and reduction, now is the time to consult with a Certified Energy Manager to see what options are available for your business and to get in on these government programs to reap the rewards of these auctions.

Contact Canadian Energy Strategies Inc for information or to book a meeting with an in-house Certified Energy Manager.

The full auction report can be found here.

Ontario Ministry of Energy is Taking More Control Back from The Ontario Energy Board

Nov 29, 2017

  The Ontario Energy Board is the Province’s independent energy regulator and their role is to "make decisions and ensure that consumers are treated fairly and that the energy sector is reliable and sustainable".  Part of their role was to set electricity rates to ensure that the rates being charged covered the cost of electricity generated.  In the past this pricing was based on a competitive wholesale markets, and is now blended with the increase in provincially sponsored contracts for renewable energy.  This role however is being limited further with the incoming Fair Hydro Plan Act, which gives the Ministry of Energy, and specifically the Minister, the ability to set electricity rates.  This eliminates the independent and unbiased setting of electricity rates, and could potentially lead to politically motivated rates.  It also allows for potentially shifting the costs from one group of consumers onto others, although there is no indication that this will happen. 

 

 

Links:  Ottawa Citizen, OEB 

CHP Projects to No Longer be Funded Under the CFF and IAP

Nov 2, 2017

    The Government of Ontario has released a statement, through the 2017 Long Term Energy Plan (LTEP), that it will no longer provide funding for Combined Heat and Power (CHP) projects that burn fossil fuels.  The funding was coming from the Conservation First Framework (CFF) and the Industrial Accelerator Program (IAP).  Originally, CHP systems were touted as a way to reduce grid demand by generating electricity on-site.  CHP systems typically burn oil or natural gas, and due to the Government’s push to reduce Greenhouse Gas Emissions even further, they have decided to pull funding for CHP systems that burn fossil fuels, effective July 1st, 2018. 

The Government did remind businesses that funding is still available for other projects, such as waste energy recovery, renewable energy, and energy storage systems.  The opportunity is still out there to reduce demand and reliance on the grid, however the Government is pushing for those opportunities to move away from the burning of fossil fuels. 

Currently there are opportunities still available for CHP systems that burn non-fossil fuel gasses, such as biogas from waste.  Economically, CHPs may still be viable for your business without any Government funding, due to their lower cost electricity production and the potential reduced Global Adjustment charges if you are a Class A hydro customer.  If you are looking into CHPs, on-site generation, or storage, there is a wide variety of options and technology available.  As we progress battery storage systems will become more economical, provide grid reliability, and on-site electricity, and it seems the Governments next push will be in that direction. 

Our team at CESi has been navigating many of our customers through the analysis and feasibility of CHP or peak shifting projects and have the expertise to help all our clients save on their energy spend. Call or email (sales@ces-energy.com) for further information. 

Links: LTEP

Ontario Unveils the 2017 Long-Term Energy Plan

Oct 30, 2017

  The Ontario Ministry of Energy released the 2017 Long-Term Energy Plan (LTEP), titled Delivering Fariness and Choice, on October 26th.  The 2017 LTEP has a strong focus on providing Ontarians the choice on how they use electricity, promoting conservation first, and a continued push towards renewable and non-GHG emitting sources of generation. 

For Industrial customers, there is not a whole lot in the LTEP that will impact them.  The largest and most substantial potential change is how Class B customers will be charged Global Adjustment (GA).  Currently GA is charged to these consumers as a flat rate $/kWh.  The government is looking into potentially charging GA on a Time-of-Use basis, which they state will save some companies money and promote conservation.  This shift would essentially put Class B industrial users in the same boat as residential consumers, meaning that using electricity mid-day will cost more than off-peak hours.  Although the program makes sense, since electricity is cheaper in off-peak hours the associated GA should reflect that as well, it does mean that many Class B consumers will be charged more if they typically consume energy on-peak. 

Other notable changes for industrial users include a renewed commitment to energy conservation.  This statement is a welcome fact for customers who are putting money and resources into energy efficiency and conservation programs.  The statement included a continuation of the Industrial Conservation Initiative, with no news on whether the 500kW minimum will change, increased exploration into ways to provide assistance to mid-sized industry, and increased program offerings through the Green Ontario Fund.

Another change, one that is less welcome, is the statement that starting July 1st, 2018, CHP systems that use fossil fuels will no longer be eligible for incentives. CHP systems were gaining recognition as a way to ensure electricity reliability by generating electricity on-site.  In particular, critical facilities, such as hospitals, were just starting to adopt CHP systems.  Although the government is scrapping funding for CHP systems, the LTEP is looking at renewables and battery storage as options, and funding for those projects may be available. 

Lastly, we will look at the electricity price outlook for large industrial consumers.  The chart below can be found in the 2017 LTEP.

The two important things to note are that electricity prices are going to increase, and that the fine print of this chart means that it does not reflect most industrial users’ electricity pricing. This chart was created using a transmission-connected facility who is a part of the Industrial Conservation Initiative.  Transmission-connected companies total 59 in Ontario.  While these companies are large users of electricity, they do not represent the majority of industrial users in Ontario.  Many of these large users have the means to have a dedicated in-house energy management team.  This allows them to most effectively take advantage of government programs, such as the ICI and the Demand Response Auction, secure funding for projects, and identify energy reduction opportunities. 

However, the average industrial user does not have a dedicated energy manager, they may not meet the threshold for ICI or the Demand Response Auction, and may not have the capital required for efficiency upgrades.  These consumers are the ones most impacted by changes in electricity rates, however the LTEP does not outline what their current or forecast costs are.  For the average industrial consumer an external energy management team such as the one at Canadian Energy Strategies, provides the most cost-effective means to understand their usage and achieve savings.

Links: 2017 LTEP

Ontario’s Manufacturing Sector Attempting to Survive Rising Electricity Costs

Oct 23, 2017

    A recent study by the Fraser Institute has found links between Ontario’s rising electricity prices and a drop in manufacturing sector jobs.  It outlined that Ontario has the highest hydro rates in Canada, as well as some of the highest costs in North America.  Ontario’s electricity costs are also among the fastest growing, rising 48% in Toronto, from 2010 to 2016.  With the manufacturing sector being a crucial part of Ontario’s economy, as well as accounting for 40% of Canada’s exports, the industry is a strong one that has proven resilient to economic challenges.  However that industry has also started showing signs of stress over the last decade.

The Fraser Institute has noted that Ontario’s manufacturing sector has recovered slower than neighboring jurisdictions from the last recession, and its share of the GDP has decreased over the last decade while in other jurisdictions it is rising.  This data shows that factors such as global demand, exchange rates, and technology cannot solely account for the decline.  The study has specifically pointed at Ontario’s high electricity costs as a direct cause behind this decline placing 64% of the blame on those costs.  That 64% represents approximately 75,000 jobs lost as a result of the electricity prices.

The study also looked into the role that policy had in electricity prices and job losses.  The Government of Ontario’s green energy policy push has created jobs in the green tech industry, however, the study claims many of those are temporary and 1.8 jobs were lost for every green job created.  The Government has continued to back its decisions to push for a greener economy and, to its credit, coal has been phased out, smog has been reduced, and Ontario is one of the leaders in green infrastructure.  These positive changes have come at a cost which is reflected in the hydro rates as well as job losses. 

Overall Ontario’s manufacturing sector has been struggling and lagging behind.  Companies are closing doors and jobs are being lost.  However, there are still many businesses that are still doing well and employing hundreds of thousands of Ontarians.  Businesses that strive to improve and invest in new technology can reduce their electricity costs and lessen the burden of Ontario’s high hydro rates.  There are many opportunities to reduce electricity costs, and many of which can be partially funded through government funding.  In order for Ontario’s companies to thrive in this market, they need to be ahead of the curve in regards to energy management, and a Certified Energy Manager, such as those at Canadian Energy Strategies is the first step in the right direction.

Links: Fraser Institute

Ontario's Peaksaver Green Initiative Coming to an End

Oct 10, 2017

    On September 30th, 2017, Ontario’s PeaksaverPlus program which began in 2007 came to an end.  The program is ending due to multiple factors, including outdated technology, new smart thermostats that are more user friendly, and customers being more informed.  

The program, part of Save on Energy which is managed by the IESO, was rolled out at a cost of $270 million and was implemented in over 300,000 Ontario households.  The program did have successes, many of which stem from the fact that it was a pioneer program, and smart thermostats were relatively new on the market. 

It was designed to reduce demand remotely via the IESO during peak hours, however over the course of a decade it was only implemented 21 times (2 of which were on September 25th and 26th during the heatwave).  This demand reduction was touted as a clean and green solution to reduce peak demand in Ontario, but ultimately it was not used frequently enough to be worthwhile.  This is a prime example of how energy reduction strategies work when the customer is involved and there is an incentive to be involved.  Peaksaver was initially claiming that it would save people money by reducing usage during peaks, but having only reduced usage 21 times in 10 years means very little in the long run.

There is a new wave of programs coming to replace the Peaksaver program, including the new smart thermostats for 100,000 Ontario households.  This time however the responsibility and incentive to reduce usage is on the homeowner.  The new smart thermostats allow users to adjust their thermostat via an app on their mobile phone, making them more convenient and easier to keep track of.  Ultimately energy reduction has to be a priority of your household or business in order to benefit the environment and your bottom line.  There are many resources available that businesses can seek out, however the government programs can be difficult to interpret and time consuming to go through.  An energy manger, like those at Canadian Energy Strategies, can help by understanding these programs and bringing opportunities to you.

 


 

Source: CBC

 

Ontario's Cap and Trade Auction Results

Apr 4, 2017

Ontario held the first auction for it's Cap and Trade program on March 22, 2017 and the results were much better than expected. The results were released publicly April 3rd, 2017 and it indicated that all 25 Million allowances were purchased by capped market participants at a settlement price of $18.08 per allowance. 

Natural gas users can be optimistic as the majority of the credits were sold at a price near the settlement floor. However, many of the credits were sold well above floor pricing and if those were purchased by local utilities we will see the result of that pricing change on our July QRAM rates.

In reviewing the numbers we see that only 26% of credits allocated for 2020 were purchased. As expected, this stems from a fear of the programs longevity. We have seen major issues with the Cap and Trade Auctions in California and Quebec and we can only speculate that many in the industry are questioning the Cap and Trade approach. 

Going forward we have now injected over $400 Million into the Ontario Governments' climate change fund. As rate payers for the new program and fund, we can only hope that the money injected into this program will help Ontario's economy and work to reduce our ever growing energy costs. 

 

Auction Results:

https://files.ontario.ca/summary_results_report_english_2017-03-31.pdf

 

Natural gas ratepayers should see cap-and-trade costs on bills, auditor says

Dec 7, 2016

TORONTO—A survey conducted at the behest of the auditor general suggests nearly all Ontarians who heat their home using natural gas want to see the costs of cap and trade clearly displayed on their bills — and so does the auditor herself.

The Liberal government’s plan to have companies buy and sell pollution credits to reduce Ontario’s greenhouse gas emissions is expected to add about $5 a month to home heating costs, but those increases will be buried in the “delivery” line on natural gas bills.

The Ontario Energy Board announced this summer that cost impacts of cap and trade, which comes into effect Jan. 1, will not appear as a separate line item on consumers’ bills for natural gas, which is used to heat most homes in the province.

Ontario’s auditor general commissioned a survey of natural gas ratepayers and it found that 89 per cent of respondents “thought it important to disclose the impact of cap and trade on natural gas bills,” according to the auditor’s recent annual report.

Deep within Bonnie Lysyk’s 800-page report on health services, highway contractors, climate change initiatives and more, is a reference to the survey and an urging from the auditor that the OEB change its mind.

“The Office of the Auditor General feels that more transparency is still required by disclosing the portion of charges in natural gas bills attributable to the cap-and-trade program,” she wrote in the report.

The OEB’s response to the auditor was that it will hold a hearing that will assess the “reasonableness of the cost consequences” of the natural gas distributors’ cap-and-trade compliance plans, and in the public notice for that hearing there will be a mention of the $5 monthly estimated impact on bills.

The OEB said in a statement that administering cap and trade will become a regular part of utility business.

“All of the natural gas utility business costs are within the delivery line so it just makes sense to include it there,” wrote spokesman Karen Evans. Utilities will be expected to provide consumers with ongoing information about the program, she added.

Ontario Energy Minister Glenn Thibeault said in an emailed statement that a decision on breaking out the costs of cap-and-trade for consumers is up to the Ontario Energy Board.

Energy Minister Glenn Thibeault was not available Thursday or Friday to answer questions, but he said in an emailed statement that the decision is up to the OEB and it is an independent regulator.

“As always, the OEB makes decisions to recover necessary system costs from ratepayers and includes these recovery fees in the line items they deem most appropriate,” he wrote. “The government respects the authority of the Ontario Energy Board in this regard.”

The OEB got feedback from 80 stakeholder groups on whether to include a separate line item, and 75 of them wanted to see costs broken out on consumers’ bills, the auditor noted, including the Independent Electricity System Operator, and Enbridge and Union Gas themselves.

Both the ratepayers and the gas companies want the costs clearly spelled out on bills, but the OEB is hiding them because the Liberal government wants them do, said Progressive Conservative energy critic John Yakabuski.

“It’s political,” he said. “There’s no question it’s political. They don’t want you to know what cap and trade is costing you.”

NDP energy critic Peter Tabuns said he doesn’t buy the government’s line that the OEB is independent and can’t be ordered to disclose the cap-and-trade costs.

“That’s not true, they tell them what to do all the time,” Tabuns said. “When you talk to people who work or have worked in the Ministry of Energy in the past, the OEB is not considered much bigger than a road bump when it comes to making things happen the way ministers want them to happen.”

Quebec and British Columbia include the cost of carbon pricing as a separate line item on bills.

 

Cap and trade is also expected to add about 4.3 cents a litre to the price of gasoline.

 

Jones, A. (2016, December 04). Natural gas ratepayers should see cap-and-trade costs on bills, auditor says | Toronto Star. Retrieved December 07, 2016, from https://www.thestar.com/news/canada/2016/12/04/natural-gas-ratepayers-should-see-cap-and-trade-costs-on-bills-auditor-says.html

 

Is The Era Of Cheap Natural Gas Over?

Oct 11, 2016

 

Before there was a boom in oil production in the United States, the shale gas revolution led to massive flood of new supply, which sent prices careening downwards. Natural gas spot prices are always volatile, but have largely traded below $3 per MMBtu since 2014. With prices so low, companies pared back drilling plans and focused much more on liquids-rich and oil-heavy shale plays.

But a funny thing happened: instead of a subsequent crash in natural gas production as drillers pulled rigs from the field, output continued to rise, setting new records along the way. Part of that had to do with impressive advancements in drilling technologies and techniques, allowing companies to extract more gas for less money and with less effort. Another reason that gas output kept climbing was because a lot of gas is produced in conjunction with oil. The drilling frenzy for shale oil ensured that the gas kept flowing.

But the crash in oil prices put that to an end. Both oil and gas rig counts plunged, and natural gas production finally peaked in the U.S. and begun to decline. After hitting a high watermark in February 2016 at 92 billion cubic feet per day (Bcf/d), production has since shrunk by 5 percent. 

Meanwhile, on the demand side of the equation, the trajectory is only on the upswing. Years of low natural gas prices have led to a huge uptake in the electric power sector, hollowing out the coal industry, and leading to the construction of new gas-fired power plants at a frenzied pace. In years past, existing natural gas plants were simply used more, as low spot prices meant gas plants were cheaper to run than coal plants. But now an entirely new generation of power plants is coming online, which will ensure demand continues to rise into the future. The new plants are like a one-way ratchet, ensuring a structural increase in demand and not just a cyclical increase, as John Kemp of Reuters recently noted.

The U.S. has seen 25 gigawatts of new gas-fired electrical capacity added since 2012, bringing the gas fleet up to 448 GW. Another 11.5 GW will be commissioned by the end of next year as well. This is happening at the same time that utilities are rushing to shut down old coal-fired power plants, many of which have become unviable in a world with cheap gas and increasingly cheap renewable energy.

In short, the market for gas is seeing rising demand and falling supply, a recipe for a much tighter market. But that landscape is a 180-degree turnaround from what many analysts thought as recently as a few months ago. Last winter, mild temperatures led to lower-than-expected demand, and the record levels of production caused inventories to swell to levels not seen in years. On the heels of that incredibly bearish trend, prices dropped to their lowest point in nearly two decades in March. It was not hard to imagine several more years of rock-bottom prices.

But the most recent summer saw an unusual phenomenon play out, altering the expectations for natural gas prices. A time of year when inventories typically build, ahead of the annual spike in winter demand, the U.S. saw extraordinarily tepid increases in storage. That should not be surprising given that production began falling this year, but the weak summer storage build did catch the market off guard. Now natural gas prices have risen to $3/MMBtu for the first time in nearly two years. On Monday, during midday trading, Henry Hub was up another 2.6 percent to $3.28/MMBtu.

Things could grow tighter still as the same trends that led to the market to tighten are not going away: supply is falling, demand continues to rise (and will spike in the winter for heating needs), and storage levels are converging back towards average levels.

The era of sub-$3/MMBtu gas could be over for a while.

 

 

Cunningham, N. (2016, October 10). Is The Era Of Cheap Natural Gas Over? Retrieved October 11, 2016, from http://oilprice.com/Energy/Gas-Prices/Is-The-Era-Of-Cheap-Natural-Gas-Over.html