Why has Ontario’s electricity become so expensive?

wind-turbines

After doubling the cost of electricity over the past ten years, the present government will see prices increase 40 per cent by 2018 – and independent analysts have presented even more pessimistic outlooks.  While Ontario’s power sector has strong fundamentals, we see prices continue to increase far in excess of inflation, while rates are falling in competing jurisdictions.

Ontario is now boasting the highest energy prices in North America and people are asking, how did this happen?  When we were in government, rates were frozen at 4.3 cents a kilowatt hour — government now charges 12.4 at peak.  I have a photocopy on file of a constituent’s February electricity bill – $641.67 to heat a 790 square foot house.

Ontario’s power policies took a profound turn in the wrong direction with the advent of the Green Energy and Green Economy Act of 2009.

There’s nothing cheaper than coal and waterpower – but the coal plants were shuttered just before this hard winter.  Our gigantic Nanticoke generating station, a billion dollar asset that is the largest of its kind in North America, sits empty.  Over supply from wind generators leads to spilling water over dams or wasting nuclear power, or selling electricity over the border at a loss.  While replacing conventional, and cheap, power generation like coal and water with massive amounts of wind and solar, the government signed 20-year power deals at uncompetitive prices.  The result has been sharply escalating electricity prices and the growing surplus of power.

We propose scrapping the Green Energy Act and implementing an immediate moratorium on industrial wind turbines until the jury is in on health and environmental studies.  We will not sign any more FIT contracts and will take a look at the existing ones.

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Taken together, 40 percent of the average electricity bill is comprised of regulatory and delivery charges.  After eight years, the power towers at Caledonia, marching in from Niagara, have yet to be strung with wires due to threats from native militants.  OPG remains plagued with cost overruns.  Both OPG and Hydro One suffer from high labour costs and top executives have the highest salaries in the public sector.  As well, consumers have been hit with the high costs of smart meters and smart grids – that computer system cost $250 million, and the bill is now due.

In Ontario, we have a hybrid market that relies partly on prices set in the open market, but more and more on prices set by government decree through long term, high-priced contracts.  When government controls a vital element of the economy, as it does with the electricity sector, we see it’s easy to distort the rational market forces that usually promote innovation and price competition.  We can’t keep contracting for power that we don’t need, at prices that consumers can’t afford.  That won’t change overnight, but introducing an element of private ownership and competitive bidding for power contracts will begin to move us back in the right direction.

Consumers have been hit with smart meters, overpriced energy contracts, money-losing exports, redundant government agencies like the Ontario Power Authority, and the list goes on…

Power bills shouldn’t be used to fund a failed job creation program.  Instead, government should take steps to make sure Ontario’s power system is efficient, dependable and delivered at the best price.

Government can and must do better.

 

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2 Responses to “Why has Ontario’s electricity become so expensive?”

  1. Jay Kim

    it is painful especially to low income family.
    it is not fair that high income people pay same rate as low income people.
    most countries vary the rate significantly as their income. the rate variation between the lowest and highest is 5 times in South korea.

    Reply

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