Entries in electricity rates (4)

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:  

Thursday
Jul302015

Political parties respond to Chamber electricity report

The Ontario Chamber of Commerce and the Greater Peterborough Chamber of Commerce have received responses from the three political parties on the white paper “Empowering Ontario: Constraining Costs and Staying Competitive in the Electricity Market”.  That the responses came within days of the report, shows the importance of this issue. The Minister of Energy, Bob Chiarelli, wrote a letter inviting the Ontario Chamber of Commerce to a meeting and detailed the government’s current work.  The following is an excerpt from the Minister’s letter that responds to the five recommendations made in the OCC report: 

Recommendation #1: Transparency of electricity pricing and system cost drivers

We agree that it is beneficial for all consumers to be able to understand what goes into electricity bills and have the knowledge to manage their electricity usage. That's why Ontario has mandated that electricity bills must transparently break down the cost of electricity line-by-line to help consumers understand each aspect that contributes to the bottom line price. It shouldn't be lost that there are few commodities businesses and families consume that present a cost breakdown in this manner.

It's also why the Ministry of Energy has implemented the Ontario Energy Report, a quarterly report that provides an up-to-date snapshot of Ontario's energy sector. Going forward in report, we intend to include information related to industrial electricity prices.

Recommendation #2: Keep the Debt Retirement Charge (DRC) on residential bills until it has been retired

The government is proud of our commitment to remove the Debt Retirement Charge (DRC) from the bills of residential electricity users after December 31, 2015. This is an important step in helping families reduce the cost of electricity by an average of $70 a year. I would also note that as outlined in the 2015 Ontario Budget, the government remains on target to retire the residual stranded debt by the end of 2018, which is consistent with the projected timeline for removing the DRC from the bills of commercial and industrial consumers.

In addition to taking action to mitigate residential electricity rates through initiatives such as removing the DRC, as I have noted above, the government is also committed to reducing electricity rates for industrial consumers through programs such as ICI, NIERP and IEI, and for small business through the Ontario's Five-Point Small Business Energy Savings Plan.

Recommendation #3: lncentivize voluntary consolidation of local distribution companies  (LDCs) through multiple  channels

Since receiving the recommendations from the Distribution Sector Review Plan in 2012 that identified the potential for upwards of a $1 billion in savings to ratepayers through Local Distribution Company (LDC) consolidation, the government has been committed to encouraging voluntary consolidation as well as innovative partnerships and transformation in the sector to bring about savings for  electricity  ratepayers.

The 2015 Ontario Budget included significant new tax reduction measures as well as two important steps the government will take to encourage further  consolidation  and  encourage  savings to ratepayers.

First, the province intends to move forward with the proposed merger of Enersource Corporation, Horizon Utilities, Hydro One Brampton Networks Inc. and PowerStream Holdings Inc. to ensure value for the province and to help catalyze LDC consolidation for the benefit of ratepayers throughout their service territory. This merged utility will be a catalyst for consolidation and an example of the significant savings to ratepayers that emerge from the kind of consolidation it represents.

Second, to further incent consolidation the Province also announced steps to lower the transfer tax on municipal electrical utilities (MEUs) and address other potential tax implications of consolidation, for the period beginning January 1, 2016 and ending December 31, 2018, by:

  • Reducing the transfer tax rate from 33 to 22 per cent;
  • Exempting MEUs with fewer than 30,000 customers from transfer tax; and
  • Exempting capital gains arising under the Payments in Lieu of Taxes (PlLs) Deemed Disposition Rules.

The intent of the transfer tax is to ensure that MEU's contribute their fair share to the pay down of stranded debt and to compensate for the loss of Payments in Lieu (PlLs) to the Province if an MEU is sold to a private entity. As such, these time-limited tax changes strike a fair balance between ensuring the pay down of the stranded debt and encouraging consolidation for the benefit of ratepayers. Without this balanced approach, the retirement of the residual stranded could be extended, and the DRC retirement for commercial and industrial users could be affected.

Recommendation #4: Continue to move away from a central procurement model to one that is more flexible and competitive

We continue to explore the possibility of implementing an auction mechanism to procure required electricity capacity resources. We would procure these resources only when needed and at the lowest possible cost.

In support of this work, we continue to work with the Independent Electricity System Operator (IESO) to design a capacity auction in which all resources will be able to compete, including renewable and natural gas-fired generation, demand response and capacity imports.

I would note that contrary to the conclusions in your report, only uncontracted and unregulated resources would be able to compete in a capacity auction. Stakeholders throughout the Ontario electricity sector have participated, and continue to participate, in the design process through IESO's extensive stakeholder engagement process. Such an auction will ensure that we implement sufficient resources to meet future electricity needs in Ontario at the lowest possible cost.

Recommendation #5: Unlock the power of smart meter data by capitalizing on data analytics  at a province-wide level
 
As a result of Ontario's smart grid objectives, smart meter rollout and its centralized Meter Data Management and Repository (MDM/R), Ontario has the opportunity to derive value from access and analytics of electricity data in areas like economic development and innovation, research, system planning, government policy and consumer engagement.

While respecting the key principles of privacy and security, the Ministry is exploring ways to further unlock the potential of the data contained in the MDM/R to empower consumers, advance the government's goals for creating a culture of conservation and enhance operations and efficiencies within the energy industry and related sectors.

To this end a number of initiatives are underway.

The IESO is currently developing a MDM/R Data Mart Facility and has also recently launched the MDM/R Data Access Foundation Project. These initiatives will enhance the current function and operations of the MDM/R and establish privacy and security rules for enabling broader access to data.

Ontario Liberal Party with OCC Response

PC Party Response

The Progressive Conservative Party responded with a statement from PC Leader Patrick Brown in which he says, “The Ontario Chamber of Commerce has highlighted how Ontario’s rising electricity rates are crippling businesses in Ontario and placing a huge financial burden on seniors and families.”   

Ontario PC Party Response

NDP Response

The NDP responded with a comment from Energy Critic Catherine Fife detailing how her party has heard the same concerns from small and medium businesses, as well as the NDP’s concern about the sell-off of Hydro One. 

Ontario NDP Response

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. 

Saturday
May022015

Peterborough Chamber of Commerce helps set lobbying agenda at Ontario Chamber AGM

 

 

 

 

 

 

 

 

The Peterborough Chamber of Commerce is in business to help strengthen your business.  That’s exactly what was happening in Cornwall this past weekend when over 120 Chambers of Commerce and Boards of Trade gathered for the Ontario Chamber of Commerce Annual General Meeting (OCC AGM).  The delegates were gathered to debate the recommendationsto government from over 40 policy resolutions. 

Board Chair Pat Marren, President & CEO Stuart Harrison and Policy Analyst Sandra Dueck brought forward two resolutions on behalf of the Peterborough Chamber membership.  

The first resolution was in partnership with the Greater Kingston Chamber of Commerce and calls on the provincial government to bring the "Heads and Beds Levy" more in-line with today's costs. The payment in lieu of taxes from post-secondary institutions, hospitals and correctional facilities has not changed from the current value of $75 since 1987, which puts a significant strain on local residential and commercial tax rates.  It’s estimated that adjusting the heads and beds levy to reflect inflation would provide approximately $1.1 million in additional funds to the City of Peterborough’s annual budget. The resolution passed.  

The Peterborough Chamber of Commerce also brought forward a resolution asking for support of the Energy East Project. The Chamber Network had great debate on this issue including two very close votes on several amendments. In the end, the Network supported the project with a recommendation to the National Energy Board to carefully investigate the impact on natural gas supply and prices.  

"This conference is where the local Chambers are able to bring their issues to the provincial level," says Stuart Harrison, President & CEO, Peterborough Chamber of Commerce. "The Energy East resolution brought forward by the Peterborough Chamber was relevant and fostered an informative conversation on a project that will have significant and positive economic impact on Peterborough, the province and Canada." 

Through the policy resolution process, the Chamber Network has officially identified the Energy East project as a major economic driver for the province of Ontario and here at home.  GE Peterborough has been awarded the contract to build the motors that will move the oil through the pipeline.  This contract will bring 250 jobs to the city and is a positive reflection of government strategically investing in our business community.  The Chamber Network has included strategic business investment in its “Emerging Stronger” lobbying platform for the past four years.  The National Energy Board will be assessing the project based on economic impact, safety and environmental concerns.    

Board Chair Pat Marren also spoke in favour of a resolution from the Tillsonburg Chamber of Commerce calling for a one-permit system for trucking companies in the province.   “As someone who is in this business and actually deals with the permit renewal process in my company I would like to see this resolution remain on the books,” Marren told the delegates. “My company is required to get an Ontario permit for all Kings’ highways plus 20-25 townships or municipalities separately throughout the year.  Each permit requires Certificates of Insurance, WSIB Clearance certificates plus the application for each municipality which is slightly different in each case.  One annual permit that covers the entire province would save countless man hours and help us improve productivity.”  

A resolution on WSIB reform also received approval from the delegates.  Of particular note was a call for
exemption from WSIB coverage for those construction employers who have obtained comprehensive 24/7 insurance coverage.

Chambers from across the province also debated and approved a suggested course of action for a mental health strategy in the workplace.  In all four recommendations were made including asking the Government of Ontario to develop a comprehensive workplace mental health strategy that emphasizes mental health awareness, education and rehabilitation for employees.  The strategy must not be prescriptive or place an additional burden on businesses but should instead be focused on improving mental health awareness.

Reducing the growing cumulative regulatory burden on business was also an issue of high priority for the Chamber Network and one that will take centre stage in the coming months.

The Ontario Chamber Network also passed recommendations to government on the Ontario Retirement Pension Plan, electricity, the College of Trades, agri-business and installing and developing a province-wide broadband strategy. 

As a result of the policy work the Peterborough Chamber of Commerce is channeling the collective strength of the business community in Peterborough.

Comment through the "Peterborough Chamber" group of LinkedIn.