We can expect the provincial government’s Green Energy Act to come under another round of fire given a damning report that coincides with more well-above-inflation rate hikes.
As of May 1, residential electricity rates will jump four or five per cent, depending on off-peak, mid-peak or peak billing.
Hard on the heels of that announcement, the Fraser Institute issued a report that forecasts energy prices to increase 40 or 50 per cent over the next several years, pushing Ontario into becoming one of the most expensive jurisdictions in North America when it comes to electricity costs.
The report pins the large increases on the use of renewable energy sources such as wind and solar, stressing the province could have chosen cheaper alternatives to a clean environment as it moved away from coal-fired plants.
“The Ontario government defends the GEA by referring to a confidential 2005 cost-benefit analysis on reducing air pollution from power plants. That report did not recommend pursuing wind or solar power, instead it looked at conventional pollution control methods which would have yielded the same environmental benefits as the GEA, but at a tenth of the current cost. If the province sticks to its targets for expanding renewables, the GEA will end up being 70 times costlier than the alternative, with no greater benefits,” reads the report, Environmental and Economic Consequences of Ontario’s Green Energy Act.
Even without the Green Energy Act, however, energy is going to cost us more. Aging infrastructure – from nuclear plants to the wires that bring power to our homes – needs to be replaced. As consumers of electricity, we’ve never paid the actual cost of bringing it to us, let alone all the things that come along with our dependence on energy, such as the environmental impacts.
As with so much of our infrastructure, we’re having to renew decades-old systems while building the new ones to accommodate population growth.
In short, there are plenty of valid reasons why rates will continue to rise – sharply, in many cases – over the next several years. Green energy may or may not be the only scapegoat. While the Fraser Institute study is fairly harsh, other reports have praised the province’s efforts.
A study by the Pembina Institute, for instance, argues consumers would see virtually no relief from high electricity prices if the province cancelled its support for renewable energy under the Green Energy Act. The study indicates that investing in renewable energy today is likely to save Ontario ratepayers money within the next 15 years, as natural gas becomes more expensive and as the cost of renewable energy technology continues to decrease.
The report finds electricity prices are set to continue rising sharply over the next decade whether or not the green initiatives are scrapped, with prices peaking around 2022, when Ontario’s nuclear fleet is currently scheduled to undergo significant shutdowns. Even if future contracts for renewable energy were ended today, the organization’s modelling shows there would be very little change to projected electricity price increases –amounting to roughly a $4 difference on the average household’s monthly electricity bill.
One thing is certain, however: as utility bills climb, so too will the pressure on the provincial government.
