Price of hydro will continue to rise says industry expert

In spite of the Liberal government's promise to make electricity more affordable, a local engineer says residents of Waterloo region shouldn't expect to pay less for their hydro any time soon.

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"Depending on who you talk to, electricity prices in Ontario have risen between 80 and 140 per cent over the past decade," says Barbara Robinson, CBC KW's infrastructure columnist, and she expects that trend to continue.

The largest component of these soaring prices is something called the Global Adjustment Factor, which Robinson says is the difference between what we pay for electricity and what it actually costs to produce electricity.

Overpriced contracts

Buying electricity isn't like buying a pair of shoes. The Electrical Utilities need to plan for average and peak day use, and consider the long term needs of the province, so that adequate supply can be planned for, says Robinson.However, that adequate supply could be secured by purchasing from our neighbours, rather than entering into long term contracts.

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Robinson says, Ontario spent way too much when it entered into contracts with various suppliers. Between 2010 and 2012, the majority of contracts signed for solar power were signed at a rate of 80.2 cents/kWh, at the direction of the then-Provincial government.Electricity of this type can currently be purchased on the open market for 3 or 4 cents/kWh, to which we should add the current Global Adjustment factor of about 10 cents/kWh, which is still substantially cheaper, she says.

We're just going to have to get that money from the tax base. And the electricity customers and the tax base are the same people.- Barbara Robinson

"Furthermore," says Robinson, "these contracts that we signed are such that, even if the supply is not delivering power to the grid, we still have to pay the same amount. We often don't need them to supply power to the grid, and we're paying for it anyway."

The reason why we don't need the power is that Ontario has what Robinson calls a "significant glut" of average power supply, which would cause a blackout if it were all delivered to the grid.

What this all boils down to is that we are paying top dollar for electricity, Robinson says, and then paying our neighbours to take it off our hands.

Liberal promises

Hydro customers don't see the Global Adjustment Factor on their electricity bill; instead, the increase is buried in the hourly rates, which also pays for the price of conservation projects, the decommissioning of coal plantsand fixed costs associated with nuclear and gas power plants.

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Recently, the Wynnegovernment promised to provide rebates to urban and rural residents to offset high electricity rates, but Robinson says the gesture won't help.

Robinson says, the 8 per cent reduction is doing nothing to reduce the soaring costs of producing and delivering electricity in Ontario.

"We're just going to have to get that money from the tax base. And the electricity customers and the tax base are the same people," she said.

Robinson says, the only real solution to Ontario's burgeoning electricity rates is for the government to implement recommendations made in the auditor general's 2015 report on the electrical system.