Price shock: Fraser report shows Ontario hydro prices surging at twice national average
Published Thursday, July 20, 2017 12:06PM EDT
Last Updated Thursday, July 20, 2017 1:42PM EDT
Ontario energy prices have skyrocketed significantly higher and faster than the rest of the country over the last nine years, with Torontonians paying twice the national average, according to a report from the right-leaning Fraser Institute.
Energy prices in Ontario shot up 71 per cent from 2008-2016, more than doubling the Canada-wide average increase of 34 per cent. The Fraser Institute says prices underwent a particularly significant spike from 2015-2016, when they surged by 15 per cent in Ontario.
“This was two-and-a-half times greater than the national average of six per cent during the same period,” the study authors wrote in their report.
Toronto and Ottawa experienced the most significant price increases, according to the Fraser results. The average monthly residential electricity bill from 2010-2016 in Toronto, with taxes, was $77.09, making it double the national average of $37.68 in major Canadian cities over that period. Ottawa wasn’t far behind Toronto, with an average monthly bill of $66.96 from 2010-2016.
Last year, Torontonians paid an average of $60 more per month than the Canadian average of $141, while Ottawa residents paid $41 more than the average. For comparison’s sake, Montreal had the cheapest electricity bills of any major city in the country, with an average bill of $83 per month, or $58 cheaper than the national average in 2016.
They estimate that the average Toronto resident paid $720 more than the national average in 2016 alone.
The Fraser Institute’s comparative study showed the national average rising by 3.7 per cent annually from 2008-2016. Prices in Ontario jumped by 7.1 per cent over the same period, after registering an increase of just 3 per cent from 2002-2007.
British Columbia and Quebec energy prices were also on the rise from 2008-2016, while prices in Alberta were more erratic. Energy costs dipped from 2008-210, jumped in 2011 and then started trending downward from 2012-2016.
Price increases out of sync with other factors
The authors say the real of their report is the fact that energy prices rose far more rapidly than inflation, household spending or economic growth. The numbers show that from 2008-2015, Ontario prices increased 2.5 times faster than household disposable income, four times faster than inflation and 4.5 times faster than real GDP.
“That kind of disjunction tells you you have a problem,” Kenneth P. Green, who co-authored the study, told CTV Toronto.
The Fraser Institute says the high cost of electricity is a “made-in-Ontario problem directly tied to the provincial government’s policy choices.” The study laid much of the blame on the rollout of several renewable energy projects that have resulted in large additional costs for consumers in Ontario.
“Ontario’s high electricity prices can be attributed to poorly structured long term contracts, the phase-out of coal energy, and a growing electricity supply and demand imbalance in the province that is resulting in Ontario exporting electricity at a loss,” the study authors wrote. They urged the provincial government to reform its policies to bring the price of energy down closer to the national average.
“It’s government choices that led to this consequence,” said Green, who is the senior director at the Fraser Institute’s Center for Natural Resource Studies. “Really, they have to walk back from where they are toward where the rest of the world is going, which is natural gas, nuclear power, hydro(electric power) and not wind and solar power.”
Green said natural gas is a particularly cost-effective option for the province, and one that most of its neighbours in Canada and the U.S. are already taking advantage of.
“The continent is awash in natural gas, and nobody should be using anything else,” Green said.
Former Liberal premier Dalton McGuinty cancelled the construction of two gas-fired power plants in Oakville in 2010.
Premier Kathleen Wynne said at a Liberal convention last November that she had made a “mistake” by focusing too much on larger problems with the hydro system, instead of paying attention to consumers’ rising hydro bills.
Her government introduced legislation in March to lower the price of hydro bills by 25 per cent over the next 10 years. However, the plan defers those charges to a later date, as a “Clean Energy Adjustment” tax will eventually take effect to repay those savings over 20 years.
The Liberal Party has held sway in Ontario since McGuinty led the party to victory in 2003. His successor, Kathleen Wynne, has been in power since 2013.