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Ontario electricity costs keep growing despite subsidy: Fraser Institute


November 29, 2019
By Kavita Sabharwal-Chomiuk

A new study by the Fraser Institute finds that electricity prices in Ontario continue to rise, despite the Ontario government’s attempts to lower them.

“Ontarians know their hydro bills skyrocketed over the past 10 years, but many may be surprised to learn those costs continue to go up,” said Elmira Aliakbari, associate director of natural resource studies at the Fraser Institute and co-author of The Ontario Government’s Electricity Policies 2018-2019: How They Are Failing and How to Fix Them.

The study finds that even after introducing a debt-funded government subsidy, residential electricity prices in Toronto climbed five per cent from April 2018 to April 2019. Large electricity consumers (large factories, for example) in Toronto experienced a 10 per cent increase in electricity costs during that same period.

As a result, Ontario residents are paying an average of 22 per cent more for electricity than the rest of Canada. Meanwhile, large electricity consumers in Ontario – who face the highest electricity rates in the country – are paying 65 per cent more than large consumers in the rest of Canada.

One reason the survey posits that electricity prices in the province continue to rise is that the province’s surcharge on electricity, called the Global Adjustment, continues to rise. It has increased 13 per cent (adjusted for inflation) between June 2018 and June 2019, from 12.1 cents/kWh to 13.7 cents/kWh. The largest single component of the surcharge is contract costs with renewable energy generators, which account for 34 per cent.

“In order to meaningfully reduce electricity costs in Ontario, policymakers must deal with the fundamental reasons why electricity costs continue to rise, which are the subsidies being paid to renewable energy providers,” Aliakbari said.