Monday, April 20, 2015

Ontario Electricity Prices Going Up Yet Again May 1st 2015, Peak Rates Rise A Whopping 15%

Ontario sets electricity prices every April and October with the changes beginning May 1st and November 1st. Obviously prices have been steadily increasing and the change for May 1st is no exception.

Summer weekday peak rates (from 11 am to 5 pm) rise from 14 cents per kWh to 16.1 cents per kWh, a 2.1 cent increase. That's a 15 percent increase, which obviously is quite massive, considering that prices are changed twice per year and they already went up in November 2014. Plus we found out the province is dropping the Green Energy Benefit that cut electricity rates by 10% next year although to be fair they are also getting rid of the smaller debt reduction charge.

Summer weekday mid-peak rates (from 7 am to 11 am and 5 pm to 7 pm) rise from 11.4 cents per kWh to 12.2 cents per kWh, a 0.8 cent increase and a 7% increase.

Summer off peak rates (from 7 pm to 7 am and weekends and holidays) rise from 7.8 cents per kWh to 8.1 cents per kWh, a 0.3 cent increase and a 3.85% increase.

Obviously the big change here is the on-peak increase which is far beyond inflation. Clearly they want people to shift to using electricity during off-peak hours, considering the on-peak price is roughly double the off-peak price. My guess is that this has to do with significant numbers of wind turbines coming on line this year which Ontario is pretty much contractually obliged to buy at relatively high prices. Wind blows the most during the middle of the night when demand is low so there's a mismatch and shifting some demand to the night would help. Plus obviously demand is at peak during the middle of the day when no wind is blowing (although solar production is highest during the middle of the day).

There's some other strange feedback effects going on too. Ontario has been producing too much power of late (see Scott Luft's blog for numerous posts) and ends up exporting it at a loss. Electricity prices going up means people will use less, which means there is more of a surplus which is sold at a loss resulting in a vicious circle.

All in all, Ontario's electricity prices have been rising at a ridiculous rate for years now compared to all our neighbouring states and provinces, which obviously isn't good for manufacturing in the province or business in general. It will be interesting to see what the rate rises are in November. 

No comments:

Post a Comment