TORONTO – Energy analyst Tom Adams says Ontario’s messy hydro situation isn’t going to get better any time soon.
And last Monday’s Ontario Energy Board announcement that peak rates will increase to 16.1 cents/kWh from 14 cents/kWh is the result of bad decision making for years, he said.
But the news gets worse, we haven’t reached the peak when it comes to price increases, he said.
Adams expertise has been developed over the years working for Ontario Independent Electricity Market Operator Board of Directors and the Ontario Centre for Excellence for Energy Board of Management. He has also given expert testimony before legislative committees and regulatory tribunals delving into the energy sector across Canada.
Here are Adams thoughts on where we are in Ontario and how we got there:
On what’s driving these increases:
“At very big picture level, if you look at increases since 2008, the big factors are; coal shut down, wind and solar and biomass, conservation, the cost of new gas plants, renegotiation of existing contracts for hydro-electric and old gas plants, export loses, pension costs and rising costs at OPG (Ontario Power Generation).”
On the serious need to control prices and the challenge before the govern:
“That’s an understatement. What we have here is a tremendous amount of cost momentum. There are a lot of locked-in costs that have not yet shown up on your bill but are coming.”
On whether the government is doing enough to bring these costs under control:
“This file is on fire. This thing is way out of control. Electricity prices are skyrocketing. The government is making decisions every day that is making the situation worse, not better.”
On how can individuals avoid paying more and conservation:
“One of the prime drivers that is causing rates to rise is falling demand, lower sales of electricity. Approximately $20 billion has to be collected this year, $21 (billion) next year, $22 (billion) the year after. But we have declining units of sales. So, the way the math works, conservation is driving up your rates.”
On why hydro billing and prices are so complicated:
“What we have here is a legacy of a lot of politicians meddling in a complex industrial sector … Ontario politicians just can’t shut up about electricity. They have to talk about it four times a week in Question Period. The electricity file gets all of the calm, careful, thoughtful planning that Question Period can provide.”