Entries in Ontario Chamber (12)

Thursday
Aug202015

Greater Peterborough Chamber of Commerce and Ontario Chamber of Commerce call for transparency on implications of Hydro One sale 

PETERBOROUGH, AUGUST 20, 2015: The Greater Peterborough Chamber of Commerce have joined a province wide coalition of 36 Ontario Chambers of Commerce and Boards of Trade calling on the Government of Ontario to provide factual evidence that electricity prices will not increase as a result of the government's decision to sell off 60 percent of Hydro One.

“Rising electricity prices are a collective concern and have put Ontario businesses at a competitive disadvantage,” said Stuart Harrison, President & CEO of the Peterborough Chamber “It is important to recognize that electricity represents a significant cost to employers. As the government moves forward with the sale of Hydro One, it is essential that it works to ensure that business operation in Ontario remains affordable by containing electricity costs.”

In a recent report by the OCC, Empowering Ontario, Ontario’s chambers of commerce called for increased transparency around electricity and system cost drivers from the provincial government. The partial sale of Hydro One should be subject to a similar level of scrutiny. 

In the short time since the release of the 2013 Long Term Energy Plan (LTEP), industrial electricity rates have increased by 16 percent, and will increase a further 13 percent over the next five years. According to a survey conducted by the OCC, one in twenty businesses will either shut their doors or move to another jurisdiction in the coming years due to these rising rates. The Government of Ontario needs to make certain that the cumulative burden on business operation in Ontario does not increase due to the partial sale of Hydro One.

“The Ontario Chamber Network is concerned that the sale of Hydro One could adversely affect the cost of doing business in the province by adding to the rising price of electricity,” said Harrison. “As such, we are seeking detailed clarification from the government on how the sale will impact electricity prices.”

Members of the Chamber Network, Boards of Trade and local businesses are joining efforts to highlight the concerns being felt by business owners across varied sectors and regions in Ontario. The Chamber Network looks forward to the provincial government joining these discussions in order to provide some clarity around the future competitiveness of Ontario’s electricity system.  

Letter to Premier Wynne 

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

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.
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. 

Monday
Jan192015

Peterborough Businesses: Help shape the next provincial budget

WHAT SHOULD BE IN THE NEXT PROVINCIAL BUDGET? TELL US AND YOU COULD WIN TWO ROUND-TRIP TICKETS FROM AIR CANADA!

Help shape Ontario's 2015 Budget and add your voice to Canada's most credible survey of business opinion. The Ontario Chamber of Commerce is asking members of Chambers of Commerce across the province to have their say:

 

  • What are the critical issues impacting your bottom line?
  • Can you afford the proposed Ontario Retirement Pension Plan?
  • How is your business being affected by Ontario’s skills gap?

 

By taking a moment to complete this short survey, you will be entered into a draw to win two round-trip tickets to any Air Canada flight destination in Canada and the continental United States.

TAKE THE SURVEY

Please note that this survey closes on February 13 at 5pm (EST) and that only the prize winner will be contacted. Promotional consideration for this survey has been provided by Air Canada.