Ontario Chamber of Commerce calls for cheaper hydro
Soaring electricity prices are hurting businesses in the province, the Ontario Chamber of Commerce argues.

TheStar.com
July 8, 2015
Robert Benzie

Soaring electricity prices are short-circuiting businesses in the province, the Ontario Chamber of Commerce warns.

In a new 23-page report to be released Wednesday, the 60,000-member business lobby argues Queen’s Park must act — including forcing homeowners to shoulder more of the burden with higher hydro bills.

“Rising electricity costs will continue to have an impact on employment and economic growth in the province,” says the study entitled Empowering Ontario: Constraining Costs and Staying Competitive in the Electricity Market.

“OCC survey results show that one in 20 businesses in the province expect to close their doors in the next five years due to rising electricity prices,” said the report, which comes as Premier Kathleen Wynne is readying the sell off of 60 per cent of Hydro One, the public transmission utility.

“In addition, 38 per cent will see their bottom line shrink, with the cost of electricity delaying or cancelling investment in the years to come.”

This is a marked contrast to how affordable hydro powered the province’s economy over the last century or so.

“In the past, the strength and reliability of the system and the low price of electricity contributed to the province’s competitive advantage. However, these days Ontario is no longer a low-cost electricity jurisdiction.”

Allan O’Dette, the chamber’s president and CEO, said there will be a price to pay for inaction.

“If real and meaningful action is not taken to mitigate these increases, businesses will leave the province, jobs will be lost, and our economy will suffer,” said O’Dette.

To that end, his group wants to ensure residential electricity consumers continue to pay their fair share of hydro costs

“Keep the debt retirement charge (DRC) on residential bills until it has been retired, spreading the burden of past government decisions across ratepayers,” the chamber urged.

That charge of 0.7 cents per kilowatt hour of use — to help pay down the debt of the old Ontario Hydro — has appeared on electricity bills since May 1, 2002.

But it is due to be phased out for residential users as of next January, saving homeowners an average of $70 a year.

“By keeping the DRC on residential bills, business will not be forced to bear the full brunt of the costs, and a cost reduction on bills will still take place for all customers,” the reports said.

“Since it is estimated that the DRC will be retired by 2017-18 without residential contributions, it is likely that it could be paid off more quickly, and in a more equitable fashion, if spread across all customers,” it continues.

“This move would send a positive signal to the business community, whose growth and productivity is currently hindered by the regulatory and high-cost climate that provincial governments have created in the province.”

The chamber also wants to see:

• Greater transparency in electricity pricing to allow consumers to better see what is driving costs.
• Local utilities allowed to more easily merge, creating efficiencies that could benefit all consumers.
• A competitive U.S.-style “capacity market” structure for financing new electricity generation rather than the current centralized model, which would ensure supply increases with demand.
• Using the vast amount of data collected from smart meters to shape energy and economic policy.

“The government of Ontario has before them a number of decisions that must be made in order to bend the trajectory of soaring electricity costs,” said O’Dette.

“A first step will be to increase the transparency of decision-making in the system so that there is clear accountability and confidence in the electricity market.”

Progressive Conservative Leader Patrick Brown said chamber’s report highlights “how Ontario’s rising electricity rates are crippling businesses in Ontario and placing a huge financial burden on seniors and families.”

“Ontarians are tired of Liberal inaction on hydro rates,” said Brown.