A recently released report indicates that a power plant in Brampton has “gamed” the province’s electricity system to the tune of $89 million.
The Ontario Energy Board recently announced that the Goreway Station Partnership, a generator that operates in the wholesale electricity market operated by the Independent Electricity System Operator (IESO), “repeatedly exploited defects in the Generation Cost Guarantee (GCG) programs.”
The plant’s exploitation led to it receiving $89 million in “gamed” GCG payments over a three-year period (June 2009 to June 2012).
“Goreway routinely submitted what were obviously inappropriate expenses to be reimbursed by the IESO, and ultimately borne by Ontario ratepayers,” the report reads.
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According to the report, the power station became operational in June 2009. Goreway sells power generated at its Brampton station through the IESO-administered markets–markets that were being monitored by the panel that produced the report.
“Goreway’s conduct in relation to the following three elements of the IESO-administered markets was the focus of the investigations,” the report reads. “The Real-Time and Day-Ahead Generation Cost Guarantee programs, the Congestion Management Settlement Credit (CMSC) payment regime, and the Day-Ahead Commitment Program.”
According to the report, the panel’s investigation period involved GCG submissions totaling $165 million and resulting payments to Goreway of $139 million. The report indicates that the IESO conducted an audit of Goreway’s GCG submissions.
As a result of the investigation, Goreway was fined $10 million and asked to repay a “substantial portion of the improper payments it received.”
While the panel appears to believe that the financial penalties are a positive development, it adds that “more remains to be done” to prevent such abuses from bilking ratepayers out of money in the future.
“The Panel has noted on more than one occasion that the RT-GCG program in its current form is overcommitting eligible resources at considerable expense to Ontario ratepayers,” the report says, before going on to add that “complexity in administration…lends itself to opportunities for exploitation.”
The report also notes that it might be difficult to implement a solution anytime soon.
“The Panel acknowledges that the IESO is considering a longer-term solution to issues associated with the RT-GCG program through its Market Renewal initiative, but by the IESO’s own admission that solution is many years away.”
The Panel also concluded that Goreway exploited defects in the CMSC regime in relation to its shut-down offer prices–prices that were routinely higher than the “threshold” established by the Panel in 2011.
The panel says a draft of the report was given to Goreway to “provide it with an opportunity to discuss the findings with the Panel.”
In a written response, Goreway representatives voiced their disagreement with the notion that they gamed the system or misled anyone, but added that they’re taking the report seriously.
“Although Goreway does not agree with many of the draft report’s findings and conclusions, including that Goreway engaged in gaming or that it deliberately misled the IESO, Goreway takes the MSP’s position on these issues seriously,” the response reads.
“Goreway has implemented initiatives designed to ensure that compliance is a central operating principle at Goreway, that a culture of compliance is supported throughout the organization.”
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