Ontario’s electric car goal could lead to increase in hydro rates, expert says

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The unintended costs of greening Ontario’s roadways
WATCH ABOVE: Ontario wants to put a million electric cars on the road by 2025. Shirlee Engel unpacks the potential unintended consequences of meeting the province's ambitious goal – Aug 10, 2016

Ontario’s ambitious goal to put an electric car in every multi-vehicle driveway over the next decade could lead to higher electricity prices, an economist warns.

Premier Kathleen Wynne has pledged that 12 per cent of cars will be electric by 2025.

READ MORE: Ontario boosts incentives to people who buy electric cars

That would see the number of electric vehicles on the road in the province jump from 7,000 to one million.

The province is addressing so-called “range anxiety” by building 500 charging stations by March 31, 2017, promising drivers will be able to travel long distances — from Ottawa to Windsor or Toronto to North Bay — without a drop of gasoline.

“Hydro rates have gone up significantly over the past several years,” says Brady Yauch, executive director and economist at the Consumer Policy Institute.

“If this requires more investment from utilities and more generation, prices will go up even more than they already have.”

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The projected spike in electric cars would amount to a 2.2 per cent increase in demand overall, according to the province’s Independent Electricity Systems Operator.

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Click to play video: 'The high cost of soaring Hydro prices in Ontario.'
The high cost of soaring Hydro prices in Ontario.

But while the provincial grid has more than enough capacity, local utility companies are bracing for potential system overload in urban areas where demand for electric vehicles is expected to be higher.

READ MORE: Hydro horror stories: tales from rural Ontario 

“What we don’t want to have happen — this is the biggest concern — is that the charging energy going into these vehicles superimposes itself on the peak that already exists,” said Dan Guatto, chief operating officer of Burlington Hydro and a board member of Electric Mobility Canada.

Consider the average electric car uses a load equivalent to what an entire home uses each day.

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The worst case scenario is pockets of neighbourhoods charging cars, cranking the air conditioning and using appliances all at the same time. This could produce a load that local grids just weren’t designed to handle.

“The cost of managing the load are much lower than increasing the capacity of distribution assets to accommodate yet a higher peak,” Guatto said.

That’s why it’s key that utilities understand where the cars will be on the grid and what time of day they’re plugged in.

READ MORE: 7 ways to lower your hydro bill this summer

“We recommended utilities and electricity providers keep monitoring communities to ensure that as you see a pickup in (electric vehicle) deployment in those areas that the system can respond,” said Steve McCauley of Pollution Probe, an environmental organization that has studied the potential impact of electric vehicles in 10 of Ontario’s major urban centres.

“We found the situation for at least the next 10 years was going to be sufficient,” McCauley said.

Local distribution companies are planning for any unexpected peaks in demand.

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Burlington Hydro is part of a pilot project to design a “smarter” grid that would use the province’s surplus power, which is sold at a loss to other jurisdictions.

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“We don’t just shift the charging to off-peak hours. We can also throttle the charging, spread it out over time to take full advantage of when the surpluses are available,” Guatto said. “And when they’re not available, do the opposite.”

READ MORE: Rural Ontarians left in the dark as electricity bills skyrocket

Still, no one can predict for sure what future costs will be. Utility companies factor in all new investment in rate increase applications to the Ontario Energy Board.

“The whole legislation around the Green Energy Act started off as, it’s going to affect (your hydro bill) by one per cent a year. But it’s turned out to be significantly more than that,” Yauch said. “So I think Ontarians want the province to be clear on what the real costs are.”

Ultimately, consumers will get a financial jolt whether they go electric or not. Monthly natural gas bills are going up by five dollars and the price of gasoline will increase by 4.3 cents a litre, as part of the province’s overall climate change strategy.

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