Entries in electricity prices (6)

Wednesday
Sep142016

Some relief for businesses on energy bills

The provincial government hit the reboot button with a speech from the throne earlier this week.  

The Ontario Government again identified jobs and growth as their top priority. They also confirmed that next year’s budget will be balanced, delivering on the Government’s promise to eliminate the deficit by 2017-18. Previously announced investments in childcare, tuition reduction, skills training, and healthcare, were echoed, as were investments in the Business Growth Initiative, Jobs and Prosperity Fund, and the Climate Change Action Plan.

However, the area that received the most attention was electricity pricing and lowering bills.  This is good news for businesses in two categories: 

  1. Those, mostly in Rate Class B, that were unable to take advantage of the Industrial Conservation Initiative (ICI) because they did not qualify; and
  2. Those businesses on time of use pricing such as retail and restaurants.

The announcement of the expanded ICI is the culmination of significant advocacy from the Ontario Chamber of Commerce (OCC), including a 2016 provincial policy resolution from the Peterborough Chamber of Commerce and the 2015 report Empowering Ontario.  It means the government is listening to what the Chamber Network has to say and this week’s announcement indicates that change is coming. 

The government explains that the Industrial Conservation Initiative will be expanded so that any company that consumes more than 1MW will be eligible. Presently, 300 companies are enrolled in the program which has saved the grid 800MWs through conservation – relatively the size of two gas plants.

With the announcement earlier this week, another 1000 companies will be eligible. By simply enrolling in the program, those 1000 companies could each save 14% on their bill. Depending on their ability to reduce peak electricity consumption, they could save up to 34% when the program is fully implemented, which could be 2018. 
This expanded program is in line with what we heard from a number of businesses at a roundtable event earlier this year with the Peterborough Chamber of Commerce, the OCC and Peterborough Distribution Inc, where they expressed concern over the lack of incentives in the electricity realm for Class B users.  

“Electricity pricing is the number one issue we hear about from our members, so we are thrilled to see the advocacy of the Peterborough Chamber of Commerce in partnership with the OCC make a difference,” says Jason Becker, Chair of the Board of the Directors, Peterborough Chamber of Commerce. “We hope to see our member businesses use the expanded program to save money on their electricity bills.” 

The small businesses on time-of-use pricing will see some relief as well.  Throughout summer consultations on the Small Business Too Big To Ignore campaign, the Peterborough and Kawartha Chambers of Commerce heard about the negative impact of rising electricity prices and security of the electricity network.   Under the provincial government’s plan announced in the throne speech those customers, from retailers to restaurants, will receive the eight per cent savings – an amount equal to the provincial portion of HST.  If passed, this legislation will take effect January 2017.  

Transparency is the reason the Peterborough Chamber and Ontario Chamber Network are still asking for a clearer picture around the makeup of electricity bills.  

The following recommendations were passed earlier this year as lobby points to government:

  1. Make public the full breakdown of the cost-drivers behind electricity distribution and generation and how investment decisions since 2003 have impacted electricity cost. 
  2. Complete and make public a jurisdictional comparison, along with Class A, Class B and Time of Use Pricing for small businesses, that can be used to better understand how Ontario stacks up to its neighbours and competitors for business investment.  

“While the measures announced in the throne speech are certainly welcome relief for business, there remains a fundamental problem with the structure of Ontario’s energy system,” says Stuart Harrison, President & CEO, Peterborough Chamber of Commerce. “Perhaps it’s time for a look at the future strategy.”

Thursday
Apr142016

Electricity prices set to go up for small business on May 1

The price of electricity is one of the most consistent concerns we hear from our Chamber members.  Many fit into the time-of-use system.  The Board of Directors has submitted a policy resolution to the Ontario Chamber of Commerce AGM for consideration.  If approved, the resolution will ask the provincial government to complete an apples-to-apples comparison between Ontario and neighbouring jurisdictions as well as a more defined breakdown of the price of electricity.   You can read the submission here.

If you would like to share your electricity price story and its impact on your business or if you have an idea for a solution email: sandra@peterboroughchamber.ca

Media Release today on increased electricity prices starting May 1: 

The Ontario Energy Board (OEB) announced new time-of-use (TOU) electricity prices for households and small businesses starting May 1. The price is increasing by approximately $3.13 per month on the "Electricity" line, and about 2.5% on the total bill, for a household that consumes 750 kWh per month. 

Ontarians consumed less electricity than expected over the recent milder winter. As a result of lower usage, Regulated Price Plan (RPP) prices did not recover the full cost of serving RPP customers. One of the main reasons prices are increasing in May is to recover this shortfall.

New summer TOU hours will also take effect May 1. This chart outlines TOU prices and the times they are effective as of May 1, 2016:  

Wednesday
Oct282015

What's on the minds of Peterborough businesses?

The stack of issues impacting the business community is growing.  In fact, you could say that 2015 has been a growth year, but not always in a good way.  With all of the issues and concerns that our local businesses must wade through to stay compliant, to plan for their future, to know if their business is moving in the direction they want and whether or not they’re ready to hire, perseverance is required.  Peterborough has seen a number of new businesses open in our downtown and industrial park, and along our two other main commercial thoroughfares, Lansdowne and Chemong. For that, we thank you.  

At the Peterborough Chamber of Commerce we’ve been working with the Chamber network to make sure your concerns are heard at all levels of government.  This includes programs to help bring taxes to a level consistent with other like communities, red tape and regulation, pension plans, workplace insurance, infrastructure needs for transportation of goods, trade deals, and reaching new markets. 

Municipally, we have fought to get the Tax Ratio Reduction Program back into the City of Peterborough budget.  Our partners in this venture the Kawartha Manufacturers Association and Peterborough and the Kawarthas Association of Realtors see the value in the program, which will put Peterborough on a more level playing field with communities like Barrie.

Provincially, the list of areas of concern has grown over the past year.  The proposed Ontario Retirement Pension Plan (ORPP) is still set to come into effect January 2017 on a phased in basis.  Employers would pay 1.9% for each employee to a maximum of $1,643 per year.  Employees would contribute a matching amount. There are some exceptions and the provincial government is currently saying that if the Canada Pension Plan (CPP) is improved upon then there may be no need for the ORPP.  The Peterborough and Kingston Chambers of Commerce successfully presented a policy resolution in Ottawa asking the federal government to allow employees to contribute more to CPP should they choose.  The Canadian Chamber of Commerce will now be able to take that recommendation from the business community to the federal government.

The rate framework of the Workplace Safety and Insurance Board is in the midst of major overhaul.  Some of the changes include the number of rate groups and how a rate is determined.  The Peterborough Chamber was involved in a taskforce examining the issue and submitted a report to the provincial government representing the business perspective.  

Federally, the business community and the Chamber Network are advocating for projects such as Energy East, which will not only be a national job creator but an opportunity to use more of Canada’s natural resources in our own country.  Also on the list is help for innovation investment in new energy technologies, a place in the Trans Pacific Partnership (TPP) deal, and an improved and more open relationship between the business community and rail.

The graphic shows a number of issues the Peterborough Chamber of Commerce is currently working to address through our lobbying and advocacy efforts. If there is an issue you feel we have missed please let us know through  sandra@peterboroughchamber.ca or 705.748.9771 x215.

The mission of the Chamber is to strengthen the business community, speak as one to government, and push for legislative change that allows Peterborough businesses to stay competitive.

Look for our Policy Report Card 2014 under "Lobbying" at peterboroughchamber.ca

Comment through the "Peterborough Chamber" LinkedIn group.

Wednesday
Jul152015

Empowering Ontario: staying competitive in the electricity market

An electrical tidal wave is building and it has the Ontario economy in its cross hairs as the cost of electricity continues
to rise.  The Greater Peterborough Chamber of Commerce in conjunction with the Ontario Chamber of Commerce (OCC), recently released a white paper called “Empowering Ontario: Constraining Costs and Staying Competitive in the Electricity Market”.  The paper is the result of year long consultations with over 100 businesses, energy experts, and government agencies. The report also contains a public opinion poll conducted by Leger Marketing.  The research tells us that electricity prices in Ontario have reached a crisis point, with 81 percent of Ontarians concerned that rising prices will impact the health of the Ontario economy and their disposable income.  

“The price of electricity is expected to continue to rise over the next two decades,” says Stuart Harrison, President & CEO, Greater Peterborough Chamber of Commerce. “If something is not done now to mitigate these increases, businesses will leave the province, jobs will be lost, and our economy will suffer.” 

Despite a significant hit in the past decade, Ontario’s manufacturing industry has managed to reinvent itself, albeit on a smaller scale. However, for a sector of our economy, provincially and locally, that is sparking ingenuity, demanding highly skilled employees and offering high paying jobs, electricity prices are threatening to douse that spark. Industrial electricity prices have increased 16 percent in the last two years and will increase a further 13 percent over the next five years. Not only do electricity prices make it hard for manufacturers to do business, but we’ve already seen other jurisdictions attempt to poach Ontario manufacturers and convince them to set up shop in the United States.

The impact of rising electricity prices is also having an impact on other sectors of the economy.  OCC survey results show 5 percent of businesses expect to close their doors in the next five years because of electricity prices, while 38 percent of businesses expect their bottom line to shrink, which will delay or cancel any investment back into their business.  

A comparison of Ontario’s industrial electricity rate to other jurisdictions shows Ontario at roughly 10 cents per kilowatt hour (kWh) compared to Alberta at 9 cents, BC and Quebec at 5, and Manitoba at 4 cents per kwh.  In 2013, electricity service cost the province $17.6 billion.  The Independent Electricity System Operator (IESO) estimates the cost of electricity service will rise to approximately $20.2 billion by 2018 (OCC Report July 2015 & Figure 2).  

Of particular concern to businesses is the Global Adjustment (GA).  This portion of an electricity bill creates much confusion.  The GA accounts for the difference between the market price and the regulated contract price paid to generators, renewable power sources (through FIT), and to some Ontario Power Generation (OPG) facilities.  It also covers spending on conservation and demand management programs. For businesses, the GA is a flat rate applied to consumption that fluctuates from month-to-month limiting a businesses’ ability to forecast appropriately (OCC Report July 2015 & Figure 4).

The report Empowering Ontario makes five recommendations to the provincial government:

  1. Increase transparency
    What you can measure; you can manage.  Currently what makes up the global adjustment and timelines around retiring the debt retirement charge is not disclosed to the public.  Increasing the transparency of cost drivers and components of a business’ bill will go a long way to ensuring government accountability and evidence-based decisions.
  2. Keep the Debt Retirement Charge on residential bills 
    Spreading the burden over the entire ratepayer base (residential, commercial and industrial customers) will see the debt retirement charge be paid off more quickly and not impact one ratepayer more negatively than the other. 
  3. Incentivize voluntary consolidation of local distribution companies
    This will help by creating efficiencies in the distribution sector that are economically feasible and make good business sense.  This can be done by removing barriers to consolidation and access to capital for a longer period of time.
  4. Move to a more competitive capacity market structure
    This would allow for cost savings by procuring supply on a shorter-term, most cost efficient basis. 
  5. Unlock the power of smart meter data
    By creating a province-wide data platform that collects, stores and analyzes data points from across regions and distribution networks, the province can make better decisions to address system needs. 

Electricity prices are consistently reported as the number one concern impacting the competitiveness of
businesses in the province.  However,  part of the big picture problem for Ontario businesses is the cumulative regulatory burden that has grown as a result of a number of new initiatives from the provincial government.  In the past year alone, the Government of Ontario has implemented or announced several programs that will have a direct impact on business, including increases to minimum wage, a review of the Labour Relations Act, the ORPP, and a cap-and-trade system (OCC Report July 2015).  

What this report tells us is that a tidal wave is coming, however, the report also provides solutions the provincial government can use to lessen the impact and create a better electricity system that works for the province as a whole.  

Comment through the "Peterborough Chamber" group of LinkedIn. 

Thursday
Apr232015

OCC: Budget 2015 What it means for business

2015 Ontario Budget Analysis

Today, the Government of Ontario tabled its 2015 Budget. What follows is a summary of the key highlights from a business perspective.

On the whole, this is a no-surprise, mixed-bag budget for Ontario businesses. The government is making much needed investments in transportation infrastructure across the province, but little is being done to address the growing burden on businesses and get the province’s fiscal house back in order.

 

The provincial deficit has risen

The 2014-15 deficit is projected to rise to $10.9 billion, up from $10.5 billion in 2013-14. The total debt is projected to grow to $284 billion this year – equivalent to $20,772 of debt for every Ontarian. Ontario now spends $11.4 billion a year on interest payments to finance its debt.

Government remains committed to eliminating the deficit by 2017-18 by managing compensation costs and continuing its comprehensive program review.

OCC Analysis

Budget 2015 makes the right commitments but is vague on details when it comes to how the government will meet its deficit reduction targets.

We applaud the government for making difficult decisions in terms of wage restraint measures. Government has held average annual growth in program spending to 1.5 percent and they are making difficult spending cuts in education, health, and other vital areas.

However, the government of Ontario needs to win the confidence of employers by adopting a clear plan to achieve their deficit reduction targets. As a start, it should adopt new service delivery models in areas where these models can bring efficiencies.

Addressing the fiscal situation should continue to be the top priority for government. Eliminating the deficit is the most important step the government can take to improve Ontario’s competitiveness and create jobs in the province.
 

Government is plowing ahead with the Ontario Retirement Pension Plan

The 2014-15 deficit is projected to rise to $10.9 billion, up from $10.5 billion in 2013-14. The total debt is projected to grow to $284 billion this year – equivalent to $20,772 of debt for every Ontarian. Ontario now spends $11.4 billion a year on interest payments to finance its debt.

The government is reiterating its commitment to establishing a standalone, mandatory Ontario pension plan by 2017. The Ontario Retirement Pension Plan (ORPP) will require employers and employees to contribute 1.9 percent of an employee’s yearly earnings (up to a maximum of $90,000) per year.

Budget 2015 commits government to establishing a body (the ORPP Administration Corporation) that will be responsible for administering the plan and investing contributions.

OCC Analysis
The OCC remains concerned about the impact that the ORPP could have on the economy. According to our recent survey, only one in four businesses in Ontario can afford the costs associated with the new plan, while 44 percent of businesses will reduce payroll or hire fewer employees in response to the ORPP.

Budget 2015 provides little in the way of clarity for employers on the details of the ORPP. We continue to call on government to develop a comprehensive understanding of the impact of the ORPP and to re-examine the narrow exemption rules it has in place. As it stands, only employers that offer defined-benefit pension plans are exempt from making contributions to the ORPP. These narrow parameters ignore the contributions that many employers are already making to their employees’ retirement through defined-contribution plans, for example.
 

Government is making important investments in transportation infrastructure

Budget 2015 increases dedicated transportation infrastructure funds by $2.6 billion to $31.5 billion available over 10 years. These funds will be used for transit, transportation, and other priority infrastructure projects across Ontario. About $16 billion of this will be invested in transit the Greater Toronto and Hamilton Area (GTHA) while $15 billion will be invested in transportation and other priority infrastructure projects outside the GTHA.

OCC Analysis

We welcome increased spending in areas of strategic, economic importance, including transportation infrastructure. The Province should continue to make use of its world-leadingAlternative Financing and Procurement (AFP) expertise in order to ensure it is getting the best bang for its infrastructure buck.

 

Employers will continue to be shocked by rising electricity rates

Budget 2015 makes a few small tweaks to existing electricity programs. The Industrial Conservation Initiative (ICI), which provides a financial incentive to larger businesses to shift their electricity consumption from peak periods, is being expanded by lowering the threshold for qualifying industrial sectors from five megawatts to three. The Northern Industrial Electricity Rate (NIER) program is being extended beyond March 2016, with annual investments of up to $120 million.

OCC Analysis

Budget 2015 does little to address business’ concerns over rising electricity rates. According to the OCC’s most recent survey, rising electricity prices are the number one factor hurting business competitiveness.

While the expansion of the ICI and the extension of the NIER program is encouraging, we remain very concerned about out-of-control electricity rates. Coupled with the announced sale of a portion of Hydro One, there is significant uncertainty in the business community in this respect.
 

Same old, same old on Ring of Fire

Budget 2015 reiterates government’s previous commitment of up to $1 billion towards the development of transportation infrastructure in the Ring of Fire region. Since making this commitment, the government has established the Ring of Fire Infrastructure Development Corporation (ROFIDC) to facilitate investment decisions.

OCC Analysis
Budget 2015 shows little in the way of progress on development of the Ring of Fire since this time last year. There is still no infrastructure plan in place, there remains little agreement between the most important players, and delays in issuing exploration permits have stalled any potential development. As we have noted previously, we are still years away from opening a mine in the Ring of Fire. Further, development timelines are increasingly characterized by uncertainty.
 

Government is aggressively pursuing an asset recycling strategy

The government has increased its asset optimization target to $5.7 billion, up from a $2.6 billion target in 2014. The government reiterated its earlier announcement that it is selling 60 percent of Hydro One and will inject the profit into transportation infrastructure.  

OCC Analysis
The OCC supports the government’s goal to maximize the value of its assets. As it undertakes its asset review, government must ensure that its actions do not hurt domestic industry and, as it relates to the sale of electricity infrastructure, do not put the rate payer at risk.

 

Government is implementing a Cap and Trade regime to combat climate change

The government has reiterated that it is introducing a cap and trade system, and will set an overall emissions limit (the cap) on those facilities included in the program. Businesses will have their own greenhouse gas quota and will then be able to sell (trade) their quota if they are under their emissions limit.

OCC Analysis
The government has only recently announced its intention to move forward with a cap and trade system, and so questions about the parameters of the system remain. We do not yet know which sectors will be subject to the system, how emissions limits will be set, or the timelines for implementation.

We are concerned that this cap and trade system could add to the already onerous burden that government seems to be placing on the shoulders of employers.

 

Other notable announcements:

  • Good news for forestry: The government is enhancing the Jobs and Prosperity Fund by $200 million and is extending eligibility to the province’s forestry sector.
  • Innovation initiative: The government is investing $20 million to establish a Health Technology Innovation Fund and appoint a Chief Innovation Strategist.
  • Cuts to the Apprenticeship Training Tax Credit: The government is returning ATTC funding levels to their pre-recession level, resulting in $30 million in cost-savings.
  • Beer coming to a grocery store near you: The government is reiterating its commitment to permit the sale of beer in grocery stores for the first time in Ontario history.
  • Youth employment:  The government is renewing the Ontario Youth Jobs Strategy to the tune of $250 million in the next two years. The strategy provides incentives to employers to employ young Ontarians
Comment through the "Peterborough Chamber" group of LinkedIn.