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Local restaurant owner shocked by electricity. Says ‘ouch’

Thursday, April 23, 2015
Darren Taylor

Ontario home and business owners will be paying more for electricity beginning May 1.

The Ontario Energy Board (OEB), which regulates electricity and natural gas in the province, announced new time-of-use (TOU) electricity prices for homes and small businesses this week.

The price of electricity will go up for the typical household by approximately $5.71 a month, or about 4.6 percent.

Under time-of-use pricing, electricity will cost twice as much during peak period (16.1 cents per kWh, 11 a.m. to 5 p.m. on weekdays) than it does during the off-peak period (8.1 cents per kWh from 7 p.m. to 7 a.m. weekdays and holidays).

While households can try to do what they can to conserve electricity use during that peak period, restaurant owners serving the lunch crowd have no choice but to use electricity during those hours.

That has some Sault restaurant owners concerned.

“In a word, I would say ‘ouch,'” said Rob DiRenzo, owner of Muio’s Restaurant, speaking to SooToday.

And that is how DiRenzo describes electricity costs now, before the May 1 increase even takes effect.

“It definitely hits the bottom line, no doubt about it, and I can see it going up in the hotter months with air conditioning and that sort of thing.”

“Basically we’ll put up with it for the summer, then once fall comes I’ll do a review of the rates and see how much damage it has done financially, and then just go from there to decide if something has to be cut…in staffing, or our food prices going up, it’s got to come from somewhere,” DiRenzo said.

“I just don’t have a choice, I hate to do it (cut staff or raise prices) but sometimes it has to be done,” Di Renzo said.

“I shut down my kitchen for a couple of months in January and February (while the bar remained open), just so I could cut costs (because of heating expenses during the long, cold winter the Sault experienced),” said Dana Fazi, owner of Dana’s Bar & Grill.

“I have electric heat in here, so in winter my electricity soars.”

“It’s hard having electric heaters here at a business in Sault Ste. Marie where it’s cold and we have snow for six months of the year,” Fazi said.

Spring is here and Fazi has recently reopened her kitchen, but said “it’s a constant struggle to pay electricity.”

“Any restaurant owner who has extra cash should store some away for the winter, if they’re able to.”

“It (the cost of electricity) may affect the food prices here (after May 1),” Fazi said.

“I would like to know what the justification is for hiking our electricity.”

Local restaurant owners SooToday spoke to said they are not aware of any Ontario government relief programs for small businesses dealing with electricity costs during peak period.

“The rebates I get on my bill are basically the same as everyone else,” DiRenzo said.

“There’s nothing I know of (in regards to provincial electricity cost relief for restaurants).  They’re supposed to be encouraging small businesses but they seem to make it more difficult for us to survive,” Fazi said.

The electricity price changes affect homes and small businesses that purchase electricity from the local utility and have a smart meter.  Customers who have signed energy contracts with an energy company will not pay the new rates.

Still, the price of electricity is tough, said Smoke’s Poutinerie owner Paul Fowler, who opened up his local restaurant in April 2014, and who signed a contract with an energy company.

“The first year of business is always a struggle, but (electric) power has been one of our biggest struggles as far as bills are concerned by far, and gas as well,” Fowler said.

Fowler’s restaurant ovens are gas-powered, but its heat, air conditioning, lighting, walk-in freezer, cooler, exhaust fans and other items are, of course, powered by electricity.

“From a small business perspective the hydro rates and gas rates are crippling.”

In regards to air conditioning during hot summer months, for example, Fowler said “it’s not like at home where you can just take off more layers and turn on a fan, you’ve got to keep your customers comfortable so we have no choice but to run the air conditioning.”

“The air conditioning and the fridges, the hotter it gets the harder they work.”

“I think everybody (all restaurant owners) will have to raise prices,” Fowler said.

“We’ll minimize costs (at Smoke’s Poutinerie) where we can, but at some point we’ll have to reevaluate after the end of the summer and see if we have to raise prices.”

“But we can only do so much and still have to sell food, whereas they (electricity suppliers) could triple their prices and we’ll still have to pay it.  It’s unfortunate.  They set the price and if you don’t like it, you don’t get power, it’s a dictatorship type of relationship,” Fowler said.

Under time-of-use (TOU) electricity prices, homes will have it slightly easier if they use electricity during the mid-peak period (12.2 cents per kWh from 7 a.m. to 11 a.m. and 5 p.m. to 7 p.m. weekdays) or during the off-peak period (8.1 cents per kWh from 7 p.m. to 7 a.m.  weekdays and holidays).

The Ontario Energy Board said the latest increases are due to costs associated with Ontario Power Generation’s (OPG) nuclear and hydro-electric power plants along with costs for ‘new generation’ (wind turbines).

Ontario Power Generation is a public company owned by the provincial government and is responsible for about half the electricity generation in Ontario.

The Ontario government has said the new prices will encourage Ontarians to conserve electricity.