Karen Howlett, Whitby, Ont.
From Friday’s Globe and Mail Published on Thursday, Apr. 08, 2010 12:37PM EDT Last updated on Friday, Apr. 09, 2010 5:45AM EDT
Ontario is about to rival Prince Edward Island as the province with the highest electricity prices in Canada, and rates will, for the first time, exceed the average cost of keeping the lights on in the United States
Residential customers in Ontario will pay $300 more a year on average for electricity by the end of 2011, an increase of 25 per cent, according to energy consultants. And the rate increases won’t end there. Investments of more than $8-billion in green energy projects unveiled by the Ontario government Thursday will add another $60 a year to hydro bills by 2012.
The Ontario Power Authority announced Thursday that it has approved 185 wind, solar and biomass projects capable of generating 2,500 megawatts of electricity, enough to power 600,000 homes.
“This is the most significant climate change initiative in all of North America,” Ontario Energy Minister Brad Duguid said at Durham College in Whitby, where the projects were unveiled. “It puts us ahead of the game and that’s where we fully intend to stay.”
Electricity consumers will pay another $5 a month by 2012, when the projects are up and running. The province wants cleaner air and an economic future, and that comes with a cost, Mr. Duguid said. The projects will create 20,000 jobs in Ontario’s battered manufacturing heartland and also help the McGuinty government meet its pledge to replace the province’s pollution-spewing, coal-fired electricity plants with cleaner sources of power by 2014.
“We’re very conscious of the impact on the consumer of increasing costs,” Mr. Duguid said. “This is one of the challenges for our generation.”
Historically, Ontario’s electricity prices have placed it in the middle of the pack in Canada. Prince Edward Island has the highest prices. Ontario has also enjoyed lower electricity prices than the United States, said energy consultant Tom Adams.
But consumers will pay another 3.04 cents a kilowatt hour for electricity next year, bringing the total cost, including distribution, to 14.54 cents, according to energy consultant Tom Adams. The calculation is based on typical consumption of 800 kilowatt hours a month.
By comparison, the average residential rate in the United States will rise just 2 per cent to 11.74 cents next year, according to a forecast this week by the U.S. Energy Information Administration.
“By 2011, we are going to blow past them,” Mr. Adams said.
Several factors are responsible for the looming higher prices in Ontario, according to Bruce Sharp at Aegent Energy Advisors Inc. The government is luring green-energy investors with the promise of generous long-term contracts that include a guaranteed revenue stream. As well, the new harmonized sales tax will add 8 per cent to everyone’s bill starting July 1, or $98 a year for the average bill. The introduction of time-of-use billing, which charges 9.3 cents a kilowatt during peak periods and 4.4 cents during off-peak periods, will result in a $50 a year increase for the typical residential consumer, Mr. Sharp said.
Environmentalists defended the higher costs associated with green energy projects.
“Any new plant you build today is going to be in this kind of a cost range,” said Keith Stewart, director of WWF-Canada’s climate change program. “When you look back 100 years, the naysayers were saying, ‘don’t build Niagara Falls, it’s too expensive.’ But that’s what powered our economy for the first half of the 20th century.”
But Progressive Conservative energy critic John Yakabuski criticized the government for not being more forthcoming about the impact of these projects on electricity prices.
“They’re not talking about what it is going to do about prices,” he said.
Ontario Premier Dalton McGuinty and British Columbia Premier Gordon Campbell have been locked in a race for supremacy in the burgeoning market for green energy projects for the past year. On Thursday, Mr. McGuinty leapfrogged ahead of Mr. Campbell by awarding just over $8-billion in renewable-energy projects that will create enough power to light 600,000 homes. This is in addition to a $7-billion deal inked in January with South Korean industrial giant Samsung Group.
But Mr. Campbell won’t be sitting on the sidelines for long. He plans to recapture the lead by rolling out legislation as early as next month to establish his province as a green-energy powerhouse.
And in the past month, electricity utility BC Hydro awarded green energy contracts worth an estimated $3.8-billion and has another eight contracts pending that could bring the total to over $6-billion.
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An interesting comment on this article:
Say hello to the subsidized green economy.
Say hello to subsidized green jobs
Say hello to higher electricity bills
Say hello to higher taxes
Say hello to inflation
Say goodbye to our manufacturing sector
A second interesting comment:
I find it unbelievable that McGuinty & Co. is so busy painting themselves green that they cannot see the effect that the deals that they have put together with the wind and solar will have on future electricity rate in Ontario.
Currently the rate charged is in the 6 cent/kwh range. McGuinty & Co. is signing 20 year contracts with solar producers at 80 cents/kwh and with wind producers at 40 cents/kwh. If wind and solar are going to account for 50% of energy as promised by today’s McGuinty & Co. announcement, I can see that a rate of 30+ cents /kwh is highly probable.
If people are bothered by the sound of wind turbines is will be nothing compared to the great sucking sound of all of our industry moving to parts of the world (Quebec, Mexico, southern USA)where electricity is less expensive.
I agree that the coal fired units need to be converted to natural gas but the amount of our electrical usage that is supplied by coal is miniscule when compared to all other sources.
McGuinty & Co. like to play the “coal” card whenever it suits them but they are never up front enough to tell the hard working people of Ontario that it really is just a charade.
Whenever McGuinty & Co. make one of these announcements there should be a disclaimer that states …. “WARNING …swallowing this message could be dangerous to your health …. It may contain bullsheet”
Roseman: How to compare energy bills online
July 07, 2010
With your fans and air conditioners running full blast in this summer heat, you should be paying close attention to your electricity bill.
Many utilities are moving to time-of-use prices, forcing customers to shift consumption to off-peak periods.
Meanwhile, many private companies are urging homeowners to avoid worries by switching to a fixed-price electricity contract.
Comparison shopping is easier now that the Ontario Energy Board has developed a billing calculator for residential electricity and natural gas customers at its website, http://oeb.gov.on.ca.
Here’s how the calculator works, using my own Toronto Hydro account as an example.
First, you have to enter your monthly electricity usage. I checked my last two utility bills and found it was 960 kilowatt hours, higher than the average provincial rate of 800 kwh.
Second, you have to select either tiered pricing (the older system) or time-of-use pricing. If you don’t know your consumption, you can go with the calculator’s default option of 54 per cent off-peak, 26 per cent mid-peak and 20 per cent on-peak.
Then, the calculator shows you an estimated monthly bill from your utility.
In my case, it was $127.41 – of which about half ($68.95) was the cost of electricity.
The rest of the bill was made up of delivery charges ($44.62), regulatory charges ($7.12) and the debt retirement charge ($6.72).
Finally, there was the 13 per cent HST, bringing my total amount to $143.98.
What happens if you sign a fixed-price contract with an energy retailer? The calculator gives you a side-by-side comparison of your monthly bills.
First, you pick a retail contract price, which you can get from a helpful website, http://www.energyshop.com, that provides natural gas and electricity cost comparisons.
I used 7.99 cents a kilowatt hour, which Direct Energy offers as a five-year fixed rate. The result: My total electricity charges would be $179.86, compared to $143.98 with Toronto Hydro (a 25 per cent increase).
Surprisingly, the electricity cost was only $10 more than on my utility bill. There were the same charges for delivery $44.62), regulatory ($7.12) and debt retirement ($6.72), plus the 13 per cent HST ($20.69).
But my fixed-price contract bill had an extra charge for the provincial benefit ($21.12) – which accounts for differences between the market price for electricity and what the government has agreed to pay to public and private generators.
If the market price for electricity falls, as it has recently, the provincial benefit grows. Once a debit on contract customers’ bills, it’s now an extra charge.
If you stay with your local utility, you won’t see the provincial benefit as a separate item on your bill, since it’s factored into the regulated price.
I wasn’t tempted to switch yet. So, I tried the calculation again to see if I’d save money with Direct Energy’s lower three-year rate of 6.99 cents.
This time, my total bill was $168.60, compared to Toronto Hydro’s $143.98. Though the electricity cost went down, the provincial benefit stayed the same at $21.12.
To learn more about the provincial benefit and see monthly updates, check the Independent Electricity System Operator’s website, http://www.ieso.ca.
I applaud the Ontario Energy Board for providing this useful tool, though I wish it had done so earlier.
Those who pay electricity bills in the city and the country will find a handy comparison of monthly bills among all the province’s utilities. Costs range from $101 to $184 a month for the same usage.
Ellen Roseman writes about personal finance and consumer issues. You can reach her at email@example.com, 416-945-8687 or ellenroseman.com