A Positive: Ontario’s increase in Electricity Rates!

One of the main reasons for an increase in Ontario electricity rates is the recent change from fossil fuels to renewable energy as a source for generation of power.  Germany and Denmark are in the front rank of countries who are switching to renewable energy, and their residents pay the highest rates in the world.

Canadians have enjoyed cheap energy.  Our country is blessed by abundant sources of hydro power.  Our gas prices have always been considerably lower than in Europe.  So until now Ontario voters have been reluctant to accept increases caused by a change from fossil fuels to renewable sources of energy. Inevitably the cost of electricity has been a sensitive political issue.

Ontario’s Minister of Energy very recently announced an average increase in the price of electricity of $120 per annum.  The Energy Critic of one opposition party criticized the Government, claiming that the cost of electricity was becoming unaffordable for everyone. The inference is that the Government should continue subsidies to keep rates low, although this critic did not go this far.

For many years the Paris-based International Energy Agency (IEA) has delivered a message to governments that shelter their citizens from the full market price of energy through measures that subsidize consumption. In the opinion of the IEA, consumption subsidies are particularly troublesome because they artificially increase demand for increasingly scarce and environmentally damaging energy sources.

The Ontario Government is well aware of other lessons to be learned from the experience of Denmark and Germany. In the long run investment in renewables is projected to decrease the wholesale cost of electricity.

Further, as they do not benefit from subsidies, residents in these countries are very conservation conscious in their use of electricity. Conservation reduces GHG emissions, helping countries meet their emission targets.

We almost forgot to mention the positive feature. In his public statement the Minister emphasized that the rate increase was necessary as the Government has heavily invested in “green energy”. What a difference from 2005 when coal generated 19% of Ontario’s electricity!

The Government clearly considers that Ontario voters will accept policies that reduce GHG emissions.  We agree!


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