Government control, green energy to blame for climbing hydro prices, prof says

A well-known Canadian academic has weighed in with some criticism of the Ontario Energy Board's increase in electricity prices, which will go into effect May 1.

"It is really undermining the message of being much more energy-efficient, it seems there's a penalty for being energy-efficient instead of a reward for it," said Ian Lee, assistant professor with Carleton University's Sprott School of Business in Ottawa, who spoke with SooToday in a telephone interview Tuesday.

"I think this harms the Ontario government's message on energy conservation, because people will rightly claim if they go and do all these things (taking energy conservation measures in their own homes, such as spending money on retrofits), all they are going to do is increase their prices to make up for the fact they're getting less revenue coming in because people are being more energy-efficent." 

In April, the OEB announced Ontarians consumed less electricity for heating purposes during the recent milder-than-usual winter. 

Because of that, Regulated Price Plan (RPP) prices did not recover the full cost of serving RPP customers.

As a result, recovering that shortfall is one reason why electricity prices will go up, the OEB announced. 

The price is increasing by approximately $3.13 per month on the "Electricity" line, and about 2.5 percent on the total bill, for a household that consumes 750 kWh per month.

New summer electricity prices can be found here

"Our consumption of energy has actually gone down per person, we retrofit our houses, there are more energy efficient businesses in Ontario (but prices are still going up)" Lee said.

Lee blames much of the rising electricity prices on "the green energy agenda" in Ontario in recent years.

"I remember in the 1960s and 70s we had some of the lowest electricity prices in all of North America."

"Last decade, Quebec Premier Jean Charest offered a very long-term, massive electricity contract to Ontario which was reported at five cents a kilowatt hour and Premier Dalton McGuinty said 'no,' saying we want a made-in-Ontario electricity policy, so we got one, and now we're paying for it."

"The justification was we wanted to make our electricity green, but some of the greenest electricity in North America is in Quebec, so we not only turned down really, really cheap electricity, but we turned down really, really green electricity," Lee said.

"That's a double loss."

"I think all of this makes a compelling argument for privatizing hydro in Ontario," Lee said.

"Most of the utilities in the U.S. are privatized and they're much more attuned to the cost of doing business, whereas governments aren't."

Hydro One, formerly Ontario Hydro (the Crown corporation responsible for Ontario's electricity), is currently in a state of transition.

In 2015, the Ontario government began selling shares of the corporation to the public.

It is the government's goal to eventually sell 60 percent of the corporation's shares in order to pay for other provincial needs.