Scott Stinson explains why Ontario consumers are facing huge price hikes for electricity over the next 18 months:
It’s no secret that Dalton McGuinty’s Liberals have placed a huge bet on growing a green-energy sector by subsidizing the production of renewable energy. Although energy bills have been steadily rising since the party took power in 2003 — the average cost of a kilowatt of electricity was more than 30% higher last year than it was five years ago — the Liberals have somewhat masked this fact by handing a 10% rebate back to consumers with the euphemistically named Clean Energy Benefit, which also happens to utterly contradict the conservation incentive that should be part of a switch to a greener grid.
Electricity costs, though, are set to spike.
“Ontario’s power system is fuelled by consumers to the tune of about $16-billion a year,” says Tom Adams, an energy consultant who has written extensively on electricity and environmental issues. “That number is headed for $23-billion or $24-billion soon, by 2016,” he says in an interview.
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Mr. Adams notes that when the Green Energy Act, with its guarantees of above-market rates for wind and solar electricity known as feed-in-tariffs (FIT), was introduced in 2009, the Liberals said electricity costs would only be impacted by about 1% annually. We now know that rates for consumers are rising by 9% a year. “The government says about half of that is due to Green Energy, but if they were being honest it would be more than that,” Mr. Adams says.
The coming increases, meanwhile, which can partly be attributed to locked-in contracts for renewable energy, are also a result of a host of other factors, from new generation capacity being introduced to phase-out costs of existing facilities to new transmission capacity being added to the energy grid.