October 13, 2016
Ontario Minister of Energy Glenn Thibeault is promising Ontario’s electricity customers some relief, according to several press releases springing from the Throne Speech in early September.
While the costs of the relief including the 8% Provincial Sales Tax abatement and the “low-density” monthly reduction is worrying, in that funding for it has not been disclosed, a bigger hit may be coming. The Minister said “more than a thousand new businesses soon eligible for ICI, in the September 15th press release.
ICI is the “Industrial Conservation Initiative” and refers to Class A customers (companies with peak demand is 5 megawatts or higher) whose electricity rates are subsidized by the Class B customers (demand over 50 kilowatts but less than 5 megawatts) if they reduce consumption during a few “peak” hours over the course of a year.
In Germany, the equivalent of Ontario’s Class B ratepayers pay 98% more for a kilowatt (kWh) of power than a German industrial consumer, according to statistics from Eurostat. Looking at the information for Ontario on the IESO site it appears that with the Minister’s announcement Ontario’s ratepayers may soon be put in the same position. Currently it appears a kWh of power (commodity only) costs an average Ontario ratepayer 58% more than a Class A industrial consumer. The foregoing calculation is based on the GA (Global Adjustment) information from IESO plus the average HOEP (hourly Ontario energy price) for the 2016 January/August period.
The Minister’s announcement of an expanded ICI program reducing peak demand from 3 MW to
1 MW and adding “more than a thousand new businesses” will push the commodity cost down for those 1,000 businesses reportedly by 34%, but the contracted value of the generated power will remain.
Someone will have to pay for the difference.
Unless Minister Thibeault has suddenly found a cache of money that Finance Minister Sousa is willing to part with, it will be left to Class B ratepayers to pick up the tab.
The Energy Minister’s press release suggested a “Customer Impact Example” which was a plastic manufacturer whom he suggests could save $42K per month or $500,000 per annum. If all 1,000 of those businesses are successful in doing that, the implication is that the cost of the ICI shift may total $500 million.
Quick math indicates the 4.5 million “average” residential ratepayers will be looking at an increase in their bills of about $10 a month, or $120 on an annual basis. Coincidentally, that $10 a month is almost equal to the $11 a month those same ratepayers will supposedly save due to the removal of the Provincial Sales Tax portion (8%) of the HST.
What it is: another crushing blow to all of the residential ratepayers of the province.
The Energy Minister’s concept of a “benefit to all consumers in Ontario” looks to be simply a shuffling of money from one ratepayer’s pocket to another.