Wednesday
Apr152015

A competitive energy regime will power business forward

“Ontario’s decision to phase out the use of coal-fired generation facilities has branded the province as a leader in modern, clean energy.  Ontario’s energy supply now consists of a strong mix of nuclear, hydro, gas, and renewable.  

However, this path has not been without its challenges.  The province’s competitiveness suffers from its relatively high electricity prices for industrial users. While minor steps have been taken since the release of the 2013 Long Term Energy Plan (LTEP) to mitigate costs, further system-wide cost savings should be explored within the province’s existing energy landscape.  Further, Ontario should focus its investments in areas such as nuclear and data analytics where Ontario can be an innovation and export leader and that, at the same time, can lower long-term costs.”

The above statement is from “Emerging Stronger 2015: Ontario’s Path from Recovery to Growth” which the Greater Peterborough Chamber of Commerce co-released with the Ontario Chamber of Commerce (OCC) in January of this year.  The OCC is currently writing a report on the issue and delegates to the OCC AGM at the end of the month will be having a discussion to ensure that the business case is brought forward effectively to government.  

Electricity is the second largest input cost for business, second only to labour costs.  Therefore, understanding the electricity system and pricing has also been an ongoing concern for the Peterborough Chamber Policy Committee and Board of Directors.  A letter written to the Minister of Energy, Bob Chiarelli in January 2014 expressed three concerns: 

  • The forecasted prices do not promote Ontario as a competitive place to do business, in fact, they give reason for manufacturing companies of all sizes to leave the province
  • Comparing mid-peak time of use pricing in Ontario to other provinces finds Ontario at more than double what is charged in Quebec and Manitoba
  • The decreasing price gap between on- and -off peak hours will hurt the advanced manufacturing sector in the Peterborough area, and the province in general

Unfortunately, the Minister’s answers failed to address these concerns in a concrete way.  Read the original article addressing the Minister’s letter at connectingptbo.ca/ news/2014/4/17/frankly-accepting-the-long-term-energy-plan-is-asking-a-lot.html.

The Chamber of Commerce and many businesses in the Peterborough area are aware of the conservation programs available to companies.  In February, the Chamber’s PBX networking event hosted Peterborough GreenUp and several members. Rocky Ridge Drinking  Water and Swish Maintenance Ltd spoke about their energy saving stories.  Recently, Chamber member Boston Pizza was recognized for installing an energy-efficient piece of equipment through a provincial program that will save the restaurant over $2500 in electricity costs, and save on the amount of power the restaurant consumes.   There are many more stories just like these in our community.  Peterborough Distribution Inc (PDI), our local distribution company,  delivers these provincial programs that help businesses conserve energy.  More information can be found at www.pdiconserves.ca

However, reducing energy use is only part of the story for businesses.  The additional line items on electricity bills such as the Global Adjustment (GA) and Debt Retirement Charge are variable and could cost a business upwards of $600 or more per year.  Yet there is little official clarity on how the GA is calculated.  Recently the government announced that residential customers will no longer be paying the Debt Retirement Charge.  This approach to paying off the debt is not a true solution.  While there will be some relief for residential customers starting in 2016, businesses will continue to pay, once again impacting on the competitiveness of the Ontario economy.  

It’s not simply the cost of electricity businesses are paying on their bill.   The OCC in a 2013 report called “Energizing Ontario” describes the system as being shaped by “competing visions” from historical issues to labour issues to transmission and infrastructure needs to how to move forward with renewable energies.  

In his address to the Peterborough Chamber AGM in March 2015, Canadian Chamber Senior Director of Economic, Finance & Tax Policy Hendrik Brakel identified Ontario as being the growth leader for Canada in the next year or so.  If Ontario is to fulfill this goal the province will need to be firing on all cylinders and an uncompetitive energy regime is unacceptable. 

Comment through the "Peterborough Chamber" group of LinkedIn. 

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