Farm electrical rate needed says OFA president

Wednesday, July 8, 2015

by SUSAN MANN

The Ontario Federation of Agriculture agrees with an organization representing the province’s businesses that electricity rates are way too high but the two organizations part company on how to deal with the soaring prices.

Federation president Don McCabe says the Ontario Chamber of Commerce’s recent report highlights the need for a farm or industrial rate for the province’s farming businesses.

“We still continue to work towards that goal,” he says, noting the federation contributed information to the Chamber’s report.

The Chamber isn’t in favour of a special rate for various sectors, says Andrea Holmes, senior policy analyst. “In this report we tried to stay away from niche ratepayer programs. We wanted to focus on creating system-wide cost savings.”

The Chamber released its report Wednesday calling on the government to address businesses’ rising electricity costs. The report is called Empowering Ontario: Constraining Costs and Staying Competitive in the Electricity Market.

Since 2013, electricity rates in Ontario have risen by 16 per cent and will increase a further 13 per cent over the next five years, the report says.

A survey of the Chamber’s 60,000 members found that one in 20 businesses will close in the next five years due to high electricity costs. The Chamber consistently hears “the price of electricity is undermining members’ capacity to grow, hire new workers and attract investment,” Chamber president and CEO Allan O’Dette says in a news release.

McCabe says he understands why the Chamber would say it wants electricity rates lowered for businesses overall. But the federation “doesn’t represent all businesses. We represent the farming sector and we want to see a lower farm or industrial electricity rate for our sector.”

Under current approvals by the Ontario Energy Board, downtown Toronto rates will be about 12.5 cents per kilowatt for electricity while for rural Ontario the rate will be 20 cents per kilowatt, McCabe says. “That’s because of distribution costs and added costs that have been placed in the system through various sorts of regulations.”

With electricity rates at 20 cents per kilowatt, farmers will be taking a hard look at their bill and decide, “whether or not it’s time to go off the grid. Maybe they can produce power cheaper,” he says.

Holmes says the Chamber’s report doesn’t specifically address farming. However “we are very cognizant of those energy intensive sectors that might use more electricity than others. Lowering system costs, which is what the report sets out to do, would help all ratepayers, particularly farming or other energy-intensive sectors.”

Small and medium-sized businesses are the most heavily impacted by rising electricity costs, she says. Small businesses can’t shift their usage to times of day when power is cheaper. Medium sized businesses often aren’t eligible for programs offered for large industrial users, she says.

The report makes several recommendations. They include:

• Increasing transparency of electricity pricing and the drivers of system costs. Shining a light on the components of electricity bills plus what contributes to the rising rates will hopefully lead to better decision making in the future, Holmes says.
• Keeping the debt retirement charge on residential bills until the entire debt has been retired. The government is removing charge as of Jan. 1, 2016. Holmes says the current debt is more than $7 billion and the government’s projection is it will be paid off by 2017/18. The Chamber is concerned that removing the charge from residential bills will result in industrial ratepayers having to pay the bulk of the debt.
• Provide incentives for local distribution companies to voluntarily consolidate.
• Move away from the central electricity procurement model.
• Use smart meters to their full potential by collecting data provide-wide and using the information to increase forecasting or offer different rate plans for different ratepayers.

The government has rejected the Chamber’s call to keep the debt retirement charge in place for residences. But “we understand how important it is to help businesses in Ontario address energy costs,” says Dan Moulton by email. He’s the spokesman for Ontario Energy Minister Bob Chiarelli. “We will seek to reduce costs through conservation initiatives and prudent system planning” along with programs designed to reduce businesses’ electricity costs. BF