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Welcome to the Pareto Energy blog. This blog covers a wide range of topics within the green economy and includes energy conservation tips for your home or business, discussion of green economy concepts, new business concepts and ways of thinking about profitable management of energy resources.

Please read, comment and share these posts. We hope you find them valuable, we hope you take action to take control of your bills, or are inspired to run with a green economy idea of your own.


Rate Update - May 1/13

The Ontario Energy Board sets electricity prices effective May 1 and November 1 of each year estimating costs of generation, growth in demand, changes in energy mix and continued investment in revitalizing the provinces energy generation and transmission infrastructure.

Ontario has seen a lot of new and refurbished generation come online through 2012 and into 2013. This includes large new generation like a refurbished generator at Bruce Power while more renewable generators are added to the grid through the Feed-in-Tariff. While this new supply has come online, Ontario's languishing economy prevents demand from growing which is leading to an oversupply of electricity and negative pricing events.

To see how Ontario’s grid is performing, to learn about the generators that keep your lights on and understand the environmental impact of our electricity production, download Gridwatch by EnergyMobile Studios for your iOs device.

As of November 1, 2012 new Ontario Time-of-Use rates are as follows: 

  • Peak - New: 12.4¢/kWh - Old: 11.8¢/kWh (+0.1)
  • Mid-Peak - New: 10.4¢/kWh - Old: 9.9¢/kWh (-0.1)
  • Off-Peak - New: 6.7¢/kWh - Old: 6.3¢/kWh (-0.2)

Current rates can always be found on the Pareto Energy homepage, the May 1/13 rates are shown here:




LDC to PPA - Break the Dependency

"Billing" from EnergyMobile's Powercents iOs AppFirst, some assumptions. Let’s assume that the average cost of a kWh of electricity in Ontario is $0.125/kWh - energy, distribution, regulatory charges, debt retirment, HST, etc. This is a farily safe assumption, and prices are forecasted to increase by 35% by 2016.

Now, if someone came to you and said: “Person, how would you like your own solar array with no up front costs, and you’ll buy it’s energy for $0.125/kWh over the next 20 years?” 

How might you respond?

This is the approach used by SolarCity and is the conversation that starts a relationship known as a “power purchase agreement” (PPA).

Let’s assume that some people think this is a good idea - and solar panels start popping up in your community. People with solar panels today pay the same price for power as people without solar panels. Next year, the people with solar panels are paying a little less compared to people without. A few years down the road - those with solar panels are paying a lot less.

If next year you can sign a PPA at $0.125/kWh while the utility price has gone to $0.13/kWh, more people will sign PPAs and install solar panels. Since prices for solar equipment (panels, racking, inverters) continue to decline, the PPA price may have dropped to $0.122/kWh.

Eventually, it’s materially cheaper to have your own generator on the roof and use your utility connection to meet any gaps. Over the year, you aren’t getting much energy from them, and they aren’t getting much money from you. Sure, you still have to pay the same rate for power to fill gaps that everyone else does, but the bulk of your energy will be provided by your solar array at your PPA rate, while your neighbors are paying 120% of your rate to the utility company.

Well, your utility company makes it’s money on the “Distribution Charge” on your utility bill. They have trucks, offices and executives to pay and still have hundreds of kilometers of wires to maintain.

Hypothetically, lets say the utilities budget required to distribute energy in a community was $100m, and the distribution charge covered that expense at $0.04/kWh. What happens if 20% of the gridizens decide that they’d rather save money and have solar panels instead of pay these forever increasing electricity prices?

Obviously, if 20% of the customer base no longer pays delivery charges, the utility company is out $20m. Individuals putting solar panels on the roof have not reduced the kilometers of wires the utility company is responsible for, the age of transformers that need to be replaced, the salaries of staff or other costs associated with operating a local distribution company (LDC) / utility.

So, each of Ontario’s 74 LDCs will request a rate increase from the Ontario Energy Board - fun fact on rate increase applications, 1/2 of the applied for 4-year rate increase is dedicated to legal and application associated fees according to Ontario’s Auditor General. Let’s assume the LDC is successful in securing the rate increase to cover the lost distribution revenue, the cost of application, as well as some future contingency. This will be spread over the remaining 80% of customers. Remember, the original budget was $100m, the loss was $20m, the legal fees for the application were $20m over 4 years, plus a contingency and the new rate should generate $110m from a smaller rate base.

Elsewhere in Ontario, large renewable generators are coming online providing ample supply to the grid and reducing wholesale energy prices while increasing the policy portion of energy costs known as the “global adjustment”. So, the energy component on your conventional bills continues to rise (as predicted) and the delivery charge continues to rise while the price of the alternatives continue to fall.

Herein lies the crux. Ontario is investing in expensive generation projects - nuclear renewal, renewable energies and combined cycle enhanced natural gas cogeneration facilities - while distributed energy technologies - solar - continue to get cheaper.

First, a trickle of people will move to rooftop solar PPAs over traditional LDC connections. Prices for solar will fall, prices for energy and the delivery of it will rise.

Then, a wave of people will move to rooftop solar PPAs over traditional LDC connections and Ontario will pay generators not to generate, will pay first for expensive generation, mothball assets and scrap projects - all increasing the policy cost of energy (global adjustment). With fewer kWh’s to deliver, LDC’s will have to jack up delivery costs to service the (on average) 60 year old infrastructure. 

Sounds a bit apocalyptic - if you’re a LDC. What matters to you and me is that we get affordable, reliable power when we plug in out toasters, hair dryers or electric cars. None of us have a particular affinity for our utility company. Installing on-site generation and using the LDC as a backstop for variations will be like you sticking it to them, after years, decades, a century of them sticking it to you.

The question for ratepayers is - when will you switch? 

The question for utilities is - how will you adapt?

Ratepayers will find a solution in the market that provides cost comparable, reliable energy. As regulated rates continue to climb, the cost of alternatives continue to decline and smarter home technologies enter the market, there is, for the first time ever, competition for the bulk of your utility bill. 


Note: This post does consider the Ontario example where net-metering is not the standard practice. Ontario homeowners can apply (about once per year) to install solar panels for income generation and be compensated with a 'feed-in-tarriff'. If solar industries can survive in competition with delivered energy costs from the utility, how much longer will it make sense to pay 4x the consumption rate to support solar industries?


Smarter Homes

Remembering to turn off the lights, remembering to hit the switch on the power bar, not running the dishwasher when electricity prices are ‘on-peak’, etc. These chores aren’t very exciting and are far from a Jestons like vision of the future. Suggestions such as those are easy first steps to people battling energy prices that between 2010 and 2015 iare expected to rise by about 50% in Ontario.

Power bars and dark, cold homes don’t paint a exciting future for home life going forward. This has never been part of the “new normal” I believe in. I believe in the smart home. A programmable thermostat that makes sense, and that I can manage using my smart phone. I expect a fridge that knows how energy prices change and saves ice making for over night. 

Energy efficiency isn’t a lifestyle choice these days, the implications of needless energy waste are real for all gridizens (citizens of the grid). Even for those whose budgets aren’t stressed by fluctuating energy bills; no one wants to be wasteful. With energy prices (especially electricity) rates where they are and where they are going, wasting energy is wasting dollars.

The smart home of tomorrow will keep me comfortable, be well lit and do it’s part to keep bills down. Manufacturers are creating new products that provide better services that use less energy with lower standby loads. Motion and occupancy sensors are getting forever more intelligent and using that information to save you money, or keep you safe. 

Energy use is abstract, mere numbers on a page. Soon services that (with authorization) read your energy data will translate it into something meaningful, provide insight and guide you through the month. A smart home will give you feedback and be able to change how it behaves to suit your lifestyle.

Beyond energy, the smart home will keep you safe and by engaging you before sounding an alarm will provide enhanced security. It will build on other smart services like your personal video recorders to provide on demand entertainment (and curtail this significant energy vampire). Add in your electric car and the flexibility and options go even further.

What’s great about smarter homes beyond them being more comfortable, more convenient and more energy efficient is that it’s also great for our energy grid at large. Applications of these technologies can flatten the demand for electricity through the day which is a significant priority of grid operators. When smart homes can respond to the needs of the grid (peak production, localized congestion) the home can respond - increasing stability and reducing outages.

We hear a lot about the smart grid and know it’s costing us a lot of money, but what is it? Simply, the smart grid comes down to a two way flow of information and electrons vs. the old one way flow of electricity. In Ontario that infrastructure is built, but yet to be truly utilized. The growth of electric vehicles, rooftop solar generation and responsive, smart homes are all pieces of a the smart grid. For those who want a more simple, more efficient life, it should mean the end of dark homes with power bars you never turn off and laundry that’s costing you a fortune.