As the cost to produce hydro reaches record lows, Ontarians are paying more than they ever have on their hydro bills. The Liberal government has been under fire lately due to rising hydro bills, especially in rural communities. The causes range from an oversupply of power, global adjustment fees, and over paying for green energy
Ontario currently has to produce a certain amount of power each day to meet the demand of consumers. To avoid power outages, more electricity is created than the amount needed and the excess energy is sold to Canada’s neighbouring states south of the border, at rates lower than the cost of production.
“There is a fine balance between making sure we have enough power and not too much,” says press secretary to the minister of energy, Colin Nekolaichuk.
According to Mr. Nekolaichuk, Ontario has contracts with the United States and has sold around 200 to 300-million dollars worth of extra energy to them in 2015.
The money lost through the existing contracts with the U.S is paid for by ratepayers in the “global adjustment” line of their bill.
Daniel Hoornweg, the associate professor and research chair in Faculty of Energy Systems and Nuclear Science at UOIT, said the “global adjustment” fee is where electricity consumers pay for the costs to run and keep the system going.
“It’s an attempt to capture the long-term costs of maintaining and fixing the energy supply’s infrastructure. As well as the cost of building a new plant.” Said Hoornweg.
Although, in 2013 the provincial government took a small step in the right direction when they renegotiated their green energy contract with Samsung and managed to save Ontario $3.7-billion.
Even after the renegotiations Lysk found in 2014, Ontario still pays twice the market price for solar energy and three and a half times the price for wind energy.
Bonnie Lysk, the auditor general, concluded, in the 2015 Annual Report, ratepayers paid an extra $37billion more than was needed from 2006 to 2014 through the “global adjustment” part of their bill.
She also found, electricity consumers will pay an additional $133-billion by 2032, due to the global adjustment line on the hydro bill.
Ms. Lysk has criticized the government in the past for signing overly generous contracts, especially when the big push for green energy came in 2009.
The Provincial government has not since renegotiated any of their generous contracts with green energy companies, but Mr. Nekolaichuk said, the costs will drop over time.
“As the technology matures, the price of wind and solar will continue to go down.”
Prices will continue to climb until the summertime, when Ontarians will see a 17 per cent drop in their hydro bill on top of the 8 per cent rebate which went into effect in January. There has also been a 50 per cent increase in rebate programs for low income households, recently announced by the provincial government. The rebates should save low income households about 35 to 60 dollars a month, costing taxpayers $2.5 billion over the next three years.
Rebate programs are good for helping families in the short-term, but to fix Ontario’s skyrocketing electricity bills long-term, the Liberal provincial government needs to address the root of the problem. They should renegotiate contracts, freeze the privatization of Hydro One, and adjust the costs absorbed by ratepayers through the global adjustment fee.
Until the government begins to work on these issues, sincerely, skyrocketing electricity bills for Ontarians should come as no shock.