Energy bills go up again, regulator points finger at renewables

Ontario’s renewable energy producers are largely to blame for the coming price hike for ratepayers.

Ontario electricity consumers are once again set to be hit with a hike to their electricity bills, with the province’s rich contracts handed out to renewable energy producers the main culprit.

The Ontario Energy Board (OEB) recently approved a number of price increases to electricity rates over the next 12 months – with some electricity consumers facing a 4.7% hike, depending on what time of day they use power.

For off-peak electricity consumption (between 7 p.m. and 7 a.m. in the summer months) prices will increase by 0.3 cents to 7.5 cents per kilowatt hour (kWh). For mid-peak electricity consumption (weekdays 7-11a.m. and 5-7 p.m.) prices will increase by 0.3 cents per kWh to 11.2 cents per kWh.

During peak electricity (weekdays from 11 a.m. to 5 p.m.) prices will increase by 0.6 cents per kWh to 13.5 cents per kWh.

The total bill for the average customer will increase by 2.4% over the next 12 months – or nearly double the Bank of Canada’s core inflation forecast.

In its explanation for the price increase, the OEB noted that renewable energy was the “primary factor” for the increase in the cost of supplying energy.

According to data from the OEB, the cost of electricity from renewable energy producers will be $3.4 billion over the next 12 months, while the value of that power on the open electricity market is $400 million.

Overall, renewable energy producers (wind, solar and bio energy) provide 10% the total supply of electricity, yet receive 31% of the subsidies that ratepayers must provide in the form of the Global Adjustment, the OEB noted. The Global Adjustment is the difference between what a producer is paid for power and what it’s worth on the open market and is a line on every customer’s power bill.

Brady Yauch is an economist and Executive Director at the Consumer Policy Institute.

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