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High hydro rates hurting business: OCC

By Carol Mulligan, Sudbury Star

The Greater Sudbury Chamber of Commerce is calling on the Ontario government to address the impact of rising electricity rates on businesses by increasing transparency and reducing the complexity of understanding hydro rates in the province.

The Sudbury chamber, which represents about 1,000 businesses, has added its voice to a report released Wednesday by the Ontario Chamber of Commerce, an umbrella organization representing 60,000 members in Ontario.

The report, Empowering Ontario: Constraining costs and staying competitive in the electricity market, makes five recommendations for government and energy agencies to curb rising hydro costs and help businesses survive.

If those measures aren’t taken, the report shows one in 20 businesses in Ontario, or 5%, could be out of business within five years.

Geoff Jeffery, a lawyer with Weaver Simmons LLP, is immediate past chair of the Greater Sudbury chamber.

Jeffery said the OCC released the report when electricity is in peak demand to draw attention to the impact high hydro rates are having and to make sure the provincial government is paying attention.

The OCC isn’t saying the Liberal government of Premier Kathleen Wynne has done nothing because it has made permanent the Northern Industrial Electricity Rate Program. That program offers hydro subsidies in the millions to large companies such as Vale and Glencore, but doesn’t benefit medium-sized companies.

It’s not a popular stand necessarily, but the Sudbury chamber supports selling part of Hydro One because most of the proceeds of that sale will go to retire the hydro debt.

It shares the fears of some people and organizations, however, that the sale could result in increased prices by competitive interests, “but overall we think at least it’s action that’s being taken by the government.”

The five recommendations from the year-long study are:

  • Increase transparency of electricity pricing and system cost drivers.
  • Keep the debt retirement charge on residential bills until it’s paid.
  • Incentivize voluntary consolidation of local distribution companies.
  • Move from a central procurement model to a more competitive capacity market structure.
  • Unlock the power of smart meter data by capitalizing on meter data analytics provincially.

The report points out the cost of electricity directly influences Ontario’s ability to attract and retain businesses and grow the economy. Historically, the strength and reliability of the system and its low cost contributed to the province’s competitive advantage, says the OCC in its report.

But the Ontario long-term energy plan showed hydro costs rising dramatically in the next several years.

The OCC report includes a public opinion poll that says rising electricity rates have reached a crisis point for businesses and consumers in Ontario. More than 90% of people in northern Ontario fear high energy costs will hurt the health of the provincial economy. Overall in Ontario, 81% of residents share that fear.

The same percentages apply in relation to fears that increasing hydro bills will reduce their disposable income.

It’s not surprising people in the North are more attuned to the cost of electricity given the harsh climate.

“But we’re also employed by those companies we know are energy-intensive. You don’t think too much perhaps working at an office building in downtown Toronto about the cost of the lights and the generator,” said Jeffery.

But if you work for a large company in Sudbury that has huge electricity bills that are going up, you are “well aware that an increase in costs could threaten the security of (your) employment.”

Jeffery and the Sudbury chamber share the OCC’s desire for the Ontario government to open its books on electricity costs and tell us why they are so high.

“But we also need more simplicity in terms of being able to relate and being able to (understand) where these price increases are coming from,” he said.

It suggests the province publish average electricity rates and disclose the cost of large investments, which would increase accountability.

One of the most concrete of the five recommendations for Jeffery is looking at the

capacity market. That “rings true for us as business people because what it’s about is supply and demand, and managing supply and demand, which seems to not be working with the hydro system in Ontario at the moment.”

Ontario has such a large over-supply of electricity, it is exporting it.

“If we could better predict how demand is going to fluctuate, then the organizations, the companies that are supplying energy to the system would better be able to plan on incurring capital costs and infrastructure … so that we’re not in this over-supply situation.”

The OCC realizes there aren’t any simple solutions to high energy prices, but it has a message for the provincial government.

“This is a significant problem that’s going to impact upon the economy of the province and it demands (your) full attention.”

Jeffery said OCC reports, such as two on the Ring of Fire, have been “heard” by government.

Wynne spoke with the OCC at its spring meeting in May in Cornwall and addressed representatives in Sudbury at the Federation of Northern Ontario Municipalities’ conference earlier this year.

The Greater Sudbury Chamber of Commerce surveys members every year about the issues that most concern them and rising electricity costs always features prominently on that list, said Jeffery.

A BC Hydro smart meter. FILE PHOTO, 24 HOURS

A BC Hydro smart meter. FILE PHOTO, 24 HOURS

 

To read the OCC report, go to www.occ.ca.

carol.mulligan@sunmedia.ca

 

 

http://www.thesudburystar.com/2015/07/08/high-hydro-rates-hurting-business-occ

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