New research finds Ontario becoming increasingly uncompetitive because of higher electricity rates

TORONTO, ONTARIO - New research shows that Ontario is losing its competitive edge because of sharply rising electricity costs, and warns that future power supply choices will have a dramatic impact on the provinceÂ’s economy, standard of living and employment levels.

The studies were commissioned by the Association of Major Power Consumers in Ontario (AMPCO) to assist in a better understanding of the economic impacts of the electricity policy choices facing the province.

“We undertook this research because the Ontario Power Authority did not adequately consider the price implications of its recent recommendations on supply mix, nor did it examine how the higher electricity rates resulting from its recommendations would affect the economy,” said AMPCO President Adam White.

“This research proves that under the Ontario Power Authority plan, Ontarians will pay more and get less; electricity rates will soar, economic growth will decline and investment will be lost,” White said in a recent speech to the Toronto Board of Trade. “The Energy Minister has some huge decisions to make and we feel that the OPA supply mix advice has failed to provide a sound basis for these important decisions.”

Since 2001, the studies concluded, electricity rates have risen 60 per cent in Ontario, a higher rate of increase than in any other comparable jurisdiction in Canada and the United States. The research concludes that the OPA plan will increase electricity prices further—by up to 55 per cent by 2025—and in the process will reduce real Gross Domestic Product by about $16 billion a year, and cause annual employment to be reduced by as much as 100,000 jobs by 2025.

AMPCO identified and studied an alternative plan to introduce the best available high-efficiency and low-emission coal technologies to Ontario. The studies found this plan would reduce annual electricity costs to Ontario electricity consumers by more than $5 billion per year compared to the current plan. The alternative plan would boost real GDP by 1.8 per cent over the current plan to shut down coal altogether.

The studies concluded that if coal is eliminated from OntarioÂ’s supply mix, Ontario electricity consumers will be forced to rely increasingly on imported power, much of it from lower efficiency higher emitting U.S. coal plants upwind of Ontario. Other research has identified these U.S. coal plants as major contributors to elevated smog and other emission levels in Ontario.

Major conclusions reached by the three AMPCO studies include:

- Industrial electricity rates in Ontario are already the second-highest in 18 U.S. and Canadian jurisdictions;

- The current plan to phase out coal altogether will result in higher electricity prices, higher inflation, lower economic growth, disposable income, corporate profits, government revenues, reduced investment and lost jobs;

- OntarioÂ’s electricity system will be dangerously close to being tapped out if coal plants are shut down according to the current plan. By 2015, there would be little reserve margin and Ontario would be increasingly reliant on imports to meet domestic needs;

- Smog-causing emissions, such as sulphur dioxide and oxides of nitrogen, will be as low or lower under the alternative plan than emission levels achieved under the OPA plan.

Carbon dioxide reductions under the alternative plan would easily comply with draft federal regulations to implement Kyoto protocol requirements; and net CO2 emissions from electricity generating plants could be reduced much more efficiently and affordably by taking advantage of emission offset provisions of the Kyoto Protocol, rather than closing these plants altogether.

The Association of Major Power Consumers Ontario is a province-wide industry organization that promotes the global competitiveness of Ontario industry through reliable supplies of electricity at affordable rates. AMPCO members represent a wide range of resource, manufacturing and processing industries that use very large amounts of electrical energy.