Ontario electricity rates: Experts explain how they would make power cheaper

Hydro towers are seen over a golf course in Toronto on Wednesday, November 4, 2015.
Hydro towers are seen over a golf course in Toronto on Wednesday, November 4, 2015. THE CANADIAN PRESS/Darren Calabrese

Over 90 per cent of Ontarians want some form of relief on their electricity bills, and Ontario Premier Kathleen Wynne has called high energy costs in the province her “mistake.” 

And as Global News first reported, nearly 60,000 households were disconnected in 2015 after they fell behind on their bills.

Read More: Shutting down nuclear plants, buying Quebec hydro is path to cheaper electricity

So what should the Ontario government do — if anything — to fix the problem? Global News asked three experts to weigh in and explain what they would do.

The following is by both Parker Gallant, a retired banker who now analyses Ontario’s energy sector and is the author of the blog “Energy Perspectives” as well as Jane Wilson, the president of Wind Concerns Ontario.

The Ontario government undertook its program to add renewable power without proper cost-benefit or impact analysis.

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Now we have electricity bills that are the fastest rising in North America. The rich contracts awarded to huge corporate wind power developers are a factor.

Here’s what we suggest:

Immediately cancel Large Renewable Procurement (LRP) II that is currently “suspended.” With its target of acquiring 1,000 megawatts (MW) of more renewable capacity — it’s not needed and will further add to consumers’ power bills.

Cancel the five wind power contracts awarded in 2016 under LRP I and save electricity customers about $65 million annually or $1.3 billion over 20 years. Cancellation costs will amount to a small fraction of the annual cost. Cancelling approved but not yet built wind power projects and the new FIT 5.0 program will also save money.

Cancel “conservation” spending of $400 million annually. Ontario has already cut back on power use by more than 12 per cent since 2005 when consumption was 157 tWh to 2015 when it had fallen to 137 tWh. Do this and save immediately on electricity bills.

Read More: Kingston Hydro cuts off single mom who chose groceries over utility bill

Move the Ontario Electricity Support Program to the Ministry of Community and Social Services, where this social assistance program really belongs. Electricity customers should not bear the burden of its costs. The move would create a budget shortfall so we recommend the following action:

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Levy a tax on wind (and solar) power generation. The auditor general reported that 20-year wind and solar contracts exceed those in other jurisdictions — the tax would help correct that.

Last, reduce the Time of Use (TOU) off-peak rate. This would encourage the shift of power consumption from peak to off-peak time in order to flatten daily demand, with less waste of hydro and nuclear power, and intermittent wind.

Let’s stop adding expensive, intermittent power to our system and stop punishing Ontarians.

The following is by Mark Winfield, a professor of Environmental Studies at York University, and co-chair of the University’s Sustainable Energy Initiative.

Recent public debates about electricity prices in Ontario have focused strongly on the cost of renewable energy under the Green Energy Act. This focus is misguided, as the province’s renewable energy program has only accounted for a relatively small portion of the total increases in electricity costs.

Nuclear power plant refurbishment projects, the construction of new natural gas fire plants, upgrades to long-neglected transmission and distribution infrastructure and simple inflation have accounted for much larger portions of the overall cost increases.

Read More: Ontario energy minister refuses to release data on rural electricity rates

The proposed refurbishments of the Bruce and Darlington nuclear power stations are by far the largest areas of risk for further cost increases, given the well-established history of delays and massive cost overruns on previous nuclear projects in Ontario.

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It is important to recall as well that Ontario’s electricity rates remain in the middle of the pack relative to other Canadian provinces and U.S. states. Similar rate increases have been seen in other jurisdictions needing to undertake major renewals of their electricity systems following extended periods of low capital investment, as has been the case in Ontario.

That said, there are several steps the province could take to reduce electricity costs to consumers, and to reduce the risk of further electricity cost increases in the future.

First, the province should make energy conservation its priority for investments in the system.

Conservation remains the most cost-effective way of meeting energy needs, and carries with it many benefits in terms of improved housing quality and economic efficiency.

Secondly, the province should undertake an independent, public, evidence-based evaluation of the environmental and economic risks associated with the Darlington and Bruce refurbishment projects, before they proceed.

An evaluation of the economic, environmental, and technical performance of potential alternatives to these projects, such as increased electricity imports from Quebec, should be undertaken in parallel.

Third, in the longer term, Ontario needs to establish a meaningful independent, public review and approval process for its electricity plans to ensure their resilience, and economic, social and environmental sustainability.

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Finally, the province must abandon the misguided sale of Hydro One. Privatization of the utility can only lead to higher costs for consumers.

The following is by Tom Adams, an energy consultant and researcher

Start telling the truth about the extent of the problems Ontario power consumers now face — that’s the most important government reform needed to start controlling Ontario’s power costs.

Three of the many false claims propping up Ontario’s power policies relate to exports, conservation and how Ontario’s rates compare.

Endlessly repeated government claims that Ontario’s soaring power exports are profitable don’t square with average export revenue yieldings — less than 20 per cent of the cost of production from generation being added under new government contracts.

Conservation programs, now costing in excess of $400 million per year, are harming, not helping consumers. Rising power rates have been driving down electricity demand since 2005. Meanwhile, the total annual cost that must be collected from consumers has soared. Collecting a rising total amount from declining units of sales is one of the many factors driving up rates. Subsidizing conservation might sound warm and fuzzy but notice that Ontario consumers are at the same time getting stung paying generators to not generate and massively subsidizing power exports.

The government and its fellow advocates for higher power rates claim that Ontario’s power rates compare well with other jurisdictions. The only evidence they have to support this nonsense are rate surveys that cherry pick a handful of the worst utilities in the United States. Ontario’s power rates do compare well against the European jurisdictions like Germany and Denmark that the Ontario government has tried to emulate, but Ontario’s residential power rates are now the highest in Canada and 13 per cent above the average for the contiguous U.S., exceeded by only 10 U.S. states.

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When the time comes to stabilize Ontario’s electricity future, Ontario’s legislature must repeal Green Energy and Green Economy Act, legislation that drove unprecedented politicization of power sector decision making and needlessly harms ratepayers.

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