Entries in PC (1)

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