Power politics

Chamber makes case for reforming electricity generation in Ontario

The complaint was too common to ignore. The Ontario Chamber of Commerce (OCC) was getting the same comment over and over: the cost of electricity was becoming an overwhelming expense. For some businesses, it was the second-highest cost after labour.

So the Chamber took on a study, examining why those costs were so high and what to do about it. On Wednesday, it submitted that report to the Ontario government, with 10 recommendations to lower hydro costs— a factor the Chamber says threatens the viability of one in 20 businesses in the province.

Some of those recommendations aren’t politically desirable—the Chamber suggested the province renege on its promise to end the debt retirement charge for residential users at the end of 2015 so that the cost continues to be spread out, rather than borne solely on the backs of businesses.

But the hope is that by implementing at least some of the recommendations, Ontario can help businesses stay competitive and viable. Rising costs force small businesses to raise prices and cut back on staff. In the manufacturing sector, companies like Goodyear, which reportedly cited power costs when it pulled out of an expansion in Napanee this year, are also feeling the pinch.

Mike McLeod, general manager for the Prince Edward Chamber of Commerce, jumped at the opportunity to sit on the committee that prepared the report. With a background working as a civil servant in the Ontario government, including with the Ontario Energy Board, and a position advocating for County businesses, McLeod was uniquely qualified to provide insight. He is also enthusiastic about energy.

“It’s hugely complex. And that’s the problem. There are so many factors. You tweak something on one side; it causes a problem over here. You try to fix this problem, it causes two problems back over here,” says McLeod. “What we’re trying to do with the report is help inform the public, help raise the public’s information on it… even though it’s complex, you really still have to try to understand it.”

The report is only partly successful in simplifying the issues. Among the recommendations is this:

“Incentivize voluntary consolidation of local distribution companies through multiple channels,” by which the OCC suggests the government remove roadblocks to allowing local energy distribution companies to combine their efforts for the lowest possible delivery and usage costs.

Another recommendation is just about as opaque:

“Move away from a central procurement model to more competitive capacity market structure,” which means enabling market demand to drive generation purchases.

The report’s top recommendation is simply introduce more transparency into what has become an increasingly confusing and frustrating system to navigate.

The Ministry of Energy quickly ruled out the notion it would keep the debt retirement charge on residential bills. None of the other recommendations have yet been addressed.

The ministry did point out some of the programs it has put in place for businesses to improve their energy efficiency, such as a roving manager that helps businesses understand their usage and how to improve it, and grants up to $50,000 toward implementing that infrastructure.

The problem is those grants must be paid for, and that money goes back toward the list of charges on electricity bills. It also means a business must already have some of the capital and time needed to implement those changes, a rare thing for owners of the County’s small and medium-sized businesses.

Another problem is that reducing usage is only a part of the solution. There is still an increasing cost associated with simply being connected to a system that gathers more power than its users need.

And as McLeod says, fixing some of these problems can lead to even more elsewhere. He hopes that by offering the report and getting feedback on what energy consumers need, a plan can be created that will address all the problems.

“Not everybody’s interested in electricity. But it is an essential service. Whether the government says it is or it isn’t, it is an essential service. We can do nothing without electricity. If this can help a little bit, to get people to think about it…we need that kind of feedback. Silence doesn’t help anybody.”