Saskatchewan town turns carbon trap into cash

Ontario Clean Energy Adjustment lowers hydro bills by shifting global adjustment costs, cutting time-of-use rates, and using OPG debt financing; ratepayers get inflation-capped increases for four years, then repay costs over 20 years.

Key Points

A 20-year line item repaying debt used to lower rates for 10 years by shifting global adjustment costs off hydro bills.

✅ 17% average bill cut takes effect after royal assent

✅ OPG-managed entity assumes debt for 10 years

✅ 20-year surcharge repays up to $28B plus interest

Ontarians will see lowered hydro bills for the next 10 years, but will then pay higher costs for the following 20 years, under new legislation tabled Thursday.

Ten weeks after announcing its plan to lower hydro bills, the Liberal government introduced legislation to lower time-of-use rates, take the cost of low-income and rural support programs off bills, and introduce new social programs.

It will lower time-of-use rates by removing from bills a portion of the global adjustment, a charge consumers pay for above-market rates to power producers. For the next 10 years, a new entity overseen by Ontario Power Generation will take on debt to pay that difference.

Then, the cost of paying back that debt with interest -- which the government says will be up to $28 billion -- will go back onto ratepayers' bills for the next 20 years as a "Clean Energy Adjustment."

An average 17-per-cent cut to bills will take effect 15 days after the hydro legislation receives royal assent, even as a Nov. 1 rate increase was set by the Ontario Energy Board, but there are just eight sitting days left before the Ontario legislature breaks for the summer. Energy Minister Glenn Thibeault insisted that leaves the opposition "plenty" of time for review and debate.

Premier Kathleen Wynne promised to cut hydro bills and later defended a 25% rate cut after widespread anger over rising costs helped send her approval ratings to record lows.

Electricity bills in the province have roughly doubled in the last decade, due in part to green energy initiatives, and Thibeault said the goal of this plan is to better spread out those costs.

"Like the mortgage on your house, this regime will cost more as we refinance over a longer period of time, but this is a more equitable and fair approach when we consider the lifespan of the clean energy investments, and generating stations across our province," he said.

NDP critic Peter Tabuns called it a "get-through-the-election" next June plan.

"We're going to take on a huge debt so Kathleen Wynne can look good on the hustings in the next few months and for decades we're going to pay for it," he said.

The legislation also holds rate increases to inflation for the next four years. After that, they'll rise more quickly, as illustrated by a leaked cabinet document the Progressive Conservatives unveiled Thursday.

The Liberals dismissed the document as containing outdated projections, but confirmed that it went before cabinet at some point before the government decided to go ahead with the hydro plan.

From about 2027 onward -- when consumers would start paying off the debt associated with the hydro plan -- Ontario electricity consumers will be paying about 12 per cent more than they would without the Liberal government's plan to cut costs in the short term, even though a deal with Quebec was not expected to reduce hydro bills, the government document projected.

But that was just one of many projections, said Energy Minister Glenn Thibeault.

"We have been working on this plan for months, and as we worked on it the documents and calculations evolved," he said.

The government's long-term energy plan is set to be updated this spring, and Thibeault said it will provide a more accurate look at how the hydro plan will reduce rates, even as a recovery rate could lead to higher hydro bills in certain circumstances.

Progressive Conservative critic Todd Smith said the "Clean Energy Adjustment" is nothing more than a revamped debt retirement charge, which was on bills from 2002 to 2016 to pay down debt left over from the old Ontario Hydro, the province's giant electrical utility that was split into multiple agencies in 1999 under the previous Conservative government.

"The minister can call it whatever he wants but it's right there in the graph, that there is going to be a new charge on the line," Smith said. "It's the debt retirement charge on steroids."

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Renewable Energy Security strengthens affordability and grid reliability through electrification, wind, and solar, reducing fossil fuel volatility exposed by the Ukraine crisis, aligning with IEA guidance and the Paris Agreement to deliver resilient, low-cost power.

Key Points

Renewable energy security is reliable, affordable power from electrification, wind and solar, cutting fossil fuel risk.

✅ Wind and solar now outcompete gas for new power capacity.

✅ Diversifies supply and reduces fossil price volatility.

✅ Requires grid flexibility, storage, and demand response.

Oil, gas, and coal have been the central pillar of the global energy system throughout the 20th century. And for decades, these fossil fuels have been closely associated with energy security.  

The perception of energy security, however, is rapidly changing. Renewables form an increasing share of energy sectors worldwide as countries look to deliver on the Paris Agreement and mitigate the effects of climate change, with IEA clean energy investment now significantly outpacing fossil fuels. Moreover, Russia’s invasion of Ukraine has demonstrated how relying on fossil fuels for power, heating, and transport has left many countries vulnerable or energy insecure.  

The International Energy Agency (IEA) defines energy security as “the uninterrupted availability of energy sources at an affordable price” (IEA, 2019a). This definition hardly describes today’s global energy situation, with the cancellation of natural gas deliveries and skyrocketing prices for oil and gas products, and with supply chain challenges in clean energy that also require attention. These circumstances have cascading effects on electricity prices in countries like the United Kingdom that rely heavily on natural gas to produce electricity. In Europe, energy insecurity has been even further amplified since the Russian corporation Gazprom recently cut off gas supplies to several countries.  

As a result, energy security has gained new urgency in Canada and worldwide, creating opportunities in the global electricity market for Canada. Recent events provide a stark reminder of the volatility and potential vulnerability of global fossil fuel markets and supply chains. Even in Canada, as one of the largest producers of oil and gas in the world, the price of fuels depends on global and regional market forces rather than government policy or market design. Thus, the average monthly price for gasoline in Canada hit a record high of CAD 2.07 per litre in May 2022 (Figure 1), and natural gas prices surged to a record CAD 7.54 per MMBtu in May 2022 (Figure 2).  

Energy price increases of this magnitude are more than enough to strain Canadian household budgets. But on top of that, oil and gas prices have accelerated inflation more broadly as it has become more expensive to produce, transport, and store goods, including food and other basic commodities (Global News, 2022).  

Renewable Energy Is More Affordable 

In contrast to oil and gas, renewable energy can reliably deliver affordable energy, as shown by falling wholesale electricity prices in markets with growing clean power. This is a unique and positive aspect of today’s energy crisis compared to historical crises: options for electrification and renewable-based electricity systems are both available and cost-effective.  

For new power capacity, wind and solar are now cheaper than any other source, and wind power is making gains as a competitive source in Canada. According to Equinor (2022), wind and solar were already cheaper than gas-based power in 2020. This means that renewable energy was already the cheaper option for new power before the recent natural gas price spikes. As illustrated in Figure 3, the cost of new renewable energy has dropped so dramatically that, for many countries, it is cheaper to install new solar or wind infrastructure than to keep operating existing fossil fuel-based power plants (International Renewable Energy Agency, 2021). This means that replacing fossil-based electricity generation with renewables would save money and reduce emissions. Wind and solar prices are expected to continue their downward trends as more countries increase deployment and learn how to best integrate these sources into the grid. 

Renewable Energy Is Reliable 

To deliver on the uninterrupted availability side of the energy security equation, renewable power must remain reliable even as more variable energy sources, like wind and solar, are added to the system, and regional leaders such as the Prairie provinces will help anchor this transition. For Canada and other countries to achieve high energy security through electrification, grid system operations must be able to support this, and pathways to zero-emissions electricity by 2035 are feasible.  

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Ontario electricity pricing consultations will gather business input on OEB rate design, Industrial Conservation Initiative, dynamic pricing, global adjustment, and system costs through online feedback and sector-specific in-person sessions province-wide.

Key Points

Consultations gathering business input on rates, programs, and OEB policy to improve fairness and reduce system costs.

✅ Consults on ICI, GA, dynamic pricing structures

✅ Seeks views on OEB C&I rate design changes

✅ In-person sessions across key industrial sectors

The Ontario government has announced plans to hold consultations to seek input from businesses about industrial electricity pricing and programs. This will be done through Ontario's online consultations directory and though in-person sector-specific consultation sessions across the province. The in-person sessions will be held in all areas of Ontario, and will target "key industries," including automotive and the build-out of electric vehicle charging stations infrastructure, forestry, mining, agriculture, steel, manufacturing and chemicals.

On April 1, 2019, the Ontario government published a consultation notice for this process, confirming that it is looking for input on "electricity rate design, existing tax-based incentives, reducing system costs and regulatory and delivery costs," including related proposals such as the hydrogen rate reduction proposal under discussion. The consultation process includes a list of nine questions for respondents (and presumably participants in the in-person sessions) to address. These include questions about:

The benefits of the Industrial Conservation Initiative (described below), including how it could be changed to improve fairness and industrial competitiveness, and how it could complement programs like the Hydrogen Innovation Fund that support industrial innovation.

Dynamic pricing structures that allow for lower rates in return for responding to price signals versus a flat rate structure that potentially costs more, but is more stable and predictable, as Ontario's energy storage expansion accelerates.

Interest in an all-in commodity contract with an electricity retailer, even if it involves a risk premium.

Interested parties are invited to submit their comments before May 31, 2019.

The government's consultation announcement follows recent developments in the Ontario Energy Board's (OEB) review of electricity ratemaking for commercial and industrial customers, and intertie projects such as the Lake Erie Connector that could affect market dynamics.

In December 2018, the OEB published a paper from its Market Surveillance Panel (MSP) examining the Industrial Conservation Initiative (ICI), and potential alternative approaches. The ICI is a program that allows qualifying large industrial customers to base their global adjustment (GA) payments on their consumption during five peak demand hours in a year. Customers who find ways to reduce consumption at those times, perhaps through DERs and enabling energy storage options, will reduce their electricity costs. This shifts GA costs to other customers. The MSP found that the ICI does not fairly allocate costs to those who cause them and/or benefit from them, and recommends that a better approach should be developed.

In February 2019, the OEB released its Staff Report to the Board on Rate Design for Commercial and Industrial Electricity Customers, setting out recommendations for new rate designs for electricity commercial and industrial (C&I) rate classes as Ontario increasingly turns to battery storage to meet rising demand. As described in an earlier post, the Staff Report includes recommendations to: (i) establish a fixed distribution charge for commercial customers with demands under 10 kW; (ii) implement a demand charge (rather than the current volumetric charge) for C&I customers with demands between 10kW and 50kW; and (iii) introduce a "capacity reserve charge" for customers with load displacement generation to replace stand-by charges and provide for recognition of the benefits of this generation on the system. The OEB held a stakeholder information session in mid-March on this initiative, and interested parties are now filing submissions in response to the Staff Report.

Whether and how the OEB's processes will fit together with the government's consultation process remains to be seen.

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Columbia River Treaty Negotiations involve Canada-U.S. talks on B.C. dams, flood control, hydropower sharing, and downstream benefits, prioritizing ecosystem health, First Nations rights, and salmon restoration while balancing affordable electricity for northwest consumers.

Key Points

Talks to update flood control, hydropower, and ecosystem terms for fair benefits to B.C. and U.S. communities.

✅ Public consultations across B.C.'s Columbia Basin

✅ First Nations priorities include salmon restoration

✅ U.S. seeks cheaper power; B.C. defends downstream benefits

With talks underway between Canada and the U.S. on the future of the Columbia River Treaty, the B.C. New Democrats have launched public consultations in the region most affected by the high-stakes negotiation.

“We want to ensure Columbia basin communities are consulted, kept informed and have their voices heard,” said provincial cabinet minister Katrine Conroy via a press release announcing meetings this month in Castlegar, Golden, Revelstoke, Nakusp, Nelson and other communities.

As well as having cabinet responsibility for the talks, Conroy’s Kootenay West riding includes several places that were inundated under the terms of the 1964 flood control and power generation treaty.

“We will continue to work closely with First Nations affected by the treaty, to ensure Indigenous interests are reflected in the negotiations,” she added by way of consolation to Indigenous people who’ve been excluded from the negotiating teams on both sides of the border.

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The stakes are also significant for the province as a whole. The basics of the treaty saw B.C. build dams to store water on this side of the border, easing the flood risk in the U.S. and allowing the flow to be evened out through the year. In exchange, B.C. was entitled to a share of the additional hydro power that could be generated in dams on the U.S. side.

B.C.’s sale of those downstream benefits to the U.S has poured almost $1.4 billion into provincial coffers over the past 10 years, albeit at a declining rate these days amid scrutiny from a regulator report on BC Hydro that raised concerns, because of depressed prices for cross-border electricity sales.

Politicians on the U.S. side have long sought to reopen the treaty, believing there was now a case for reducing B.C.’s entitlement.

They did not get across the threshold under President Barack Obama.

Then, last fall his successor Donald Trump served notice of intent, initiating the formal negotiations that commenced with a two day session last week in Washington, D.C. The next round is set for mid-August in B.C.

American objectives in the talks include “continued, careful management of flood risk; ensuring a reliable and economical power supply; and better addressing ecosystem concerns,” with recognition of recent BC Hydro demand declines during the pandemic.

“Economical power supply,” being a diplomatic euphemism for “cheaper electricity for consumers in the northwest states,” achievable by clawing back most of B.C.’s treaty entitlement.

On taking office last summer, the NDP inherited a 14-point statement of principles setting out B.C. hopes for negotiations to “continue the treaty” while “seeking improvements within the existing framework” of the 54-year-old agreement.

The New Democrats have endorsed those principles in a spirit of bipartisanship, even as Manitoba Hydro governance disputes play out elsewhere in Canada.

“Those principles were developed with consultation from throughout the region,” as Conroy advised the legislature this spring. “So I was involved, as well, in the process and knew what the issues were, right as they would come up.”

The New Democrats did chose to put additional emphasis on some concerns.

“There is an increase in discussion with Canada and First Nations on the return of salmon to the river,” she advised the house, recalling how construction of the enormous Grand Coulee Dam on the U.S. side in the 1930s wiped out salmon runs on the upper Columbia River.

“There was no consideration then for how incredibly important salmon was, especially to the First Nations people in our region. We have an advisory table that is made up of Indigenous representation from our region, and also we are discussing with Canada that we need to see if there’s feasibility here.”

As to feasibility, the obstacles to salmon migration in the upper reaches of the Columbia include the 168-metre high Grand Coulee and the 72-metre Chief Joseph dams on the U.S. side, plus the Keenleyside (52 metres), Revelstoke (175 metres) and Mica (240 metres) dams on the Canadian side.

Still, says Conroy “the First Nations from Canada and the tribes from the United States, have been working on scientific and technical documents and research to see if, first of all, the salmon can come up, how they can come up, and what the things are that have to be done to ensure that happens.”

The New Democrats also put more emphasis on preserving the ecosystem, aligning with clean-energy efforts with First Nations that support regional sustainability.

“I know that certainly didn’t happen in 1964, but that is something that’s very much on the minds of people in the Columbia basin,” said Conroy. “If we are going to tweak the treaty, what can we do to make sure the voices of the basin are heard and that things that were under no consideration in the ’60s are now a topic for consideration?”

With those new considerations, there’s still the status quo concern of preserving the downstream benefits as a trade off for the flooding and other impacts on this side of the border.

The B.C. position on that score is the same under the New Democrats as it was under the Liberals, despite a B.C. auditor general report on deferred BC Hydro costs.

“The level of benefits to B.C., which is currently solely in the form of the (electricity) entitlement, does not account for the full range of benefits in the U.S. or the impacts in B.C.,” says the statement of principle.

“All downstream U.S. benefits such as flood risk management, hydropower, ecosystems, water supply (including municipal, industrial and agricultural uses), recreation, navigation and other related benefits should be accounted for and such value created should be shared equitably between the two countries.”

No surprise if the Americans do not see it the same way.  But that is a topic for another day.

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Ireland electricity support measures include PSO levy rebates, RESS 2 renewables, CRU-directed EirGrid backup capacity, and grid investment for the Celtic Interconnector, cutting bills, boosting security of supply, and reducing reliance on imported fossil fuels.

Key Points

Government steps to cut bills and secure supply via PSO rebates, RESS 2 renewables, backup power, and grid upgrades.

✅ PSO levy rebates lower domestic electricity bills.

✅ RESS 2 adds wind, solar, and hydro to the grid.

✅ EirGrid to procure temporary backup capacity for winter peaks.

Ireland's Cabinet has approved a package of measures to help mitigate the rising cost of rising electricity bills, as Irish provider price increases continue to pressure consumers, and to ensure secure supplies to electricity for households and business across Ireland over the coming years.

The package of measures includes changes to the Public Service Obligation (PSO) levy (beyond those announced earlier in the year), which align with emerging EU plans for more fixed-price electricity contracts to improve price stability. The changes will result in rebates, and thus savings, for domestic electricity bills over the course of the next PSO year beginning in October. This further reduction in the PSO levy occurs because of a fall in the relative cost of renewable energy, compared to fossil fuel generation.

The Government has also approved the final results of the second onshore Renewable Electricity Support Scheme (RESS 2) auction, echoing how Ontario's electricity auctions have aimed to lower costs for consumers. This will bring significantly more indigenous wind, solar and hydro-electric energy onto the National Grid. This, in turn, will reduce our reliance on increasingly expensive imported fossil fuels, as the UK explores ending the gas-electricity price link to curb bills.

The package also includes Government approval for the provision of funding for back-up generation capacity, to address risks to security of electricity supply over the coming winters, similar to the UK's forthcoming energy security law approach in this area. The Commission for the Regulation of Utilities (CRU), which has statutory responsibility for security of supply, has directed EirGrid to procure additional temporary emergency generation capacity (for the winters of 2023/2024 to 2025/2026). This will ultimately provide flexible and temporary back-up capacity, to safeguard secure supplies of electricity for households and businesses as we deploy longer-term generation capacity.

Today’s measures also see an increased borrowing limit (€3 billion) for EirGrid – to strengthen our National Grid as part of 'Shaping Our Electricity Future' and to deliver the Celtic (Ireland-France) Interconnector, amid wider European moves to revamp the electricity market that could enhance cross-border resilience. An increased borrowing limit (€650 million) for Bord na Móna will drive greater deployment of indigenous renewable energy across the Midlands and beyond – as part of its 'Brown to Green' strategy, while measures like the UK's household energy price cap illustrate the scale of consumer support elsewhere.

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Alberta Electricity Market Reforms aim to boost grid reliability and efficiency through a day-ahead market, transmission policy changes, clearer pricing signals, AESO oversight, and smarter siting near existing infrastructure to lower consumer costs.

Key Points

Policies add a day-ahead market and transmission fees to modernize the grid and improve reliability.

✅ Day-ahead market for clearer pricing and scheduling

✅ Up-front, non-refundable transmission payments by generators

✅ AESO to draft new rules by end of 2025

The Alberta government is implementing significant electricity policy changes to its electricity market to enhance system reliability and efficiency. These reforms aim to modernize the grid, accommodate growing energy demands, and align with best practices observed in other jurisdictions.

Proposed Market Reforms

The government has outlined several key initiatives:

• Day-Ahead Market Implementation: Introducing a day-ahead market is intended to provide clearer pricing signals and improve the scheduling of electricity generation. This approach allows market participants to plan and commit to energy production in advance, enhancing grid stability.

• Transmission Policy Revisions: The government proposes reforms to transmission policies, including the introduction of up-front and non-refundable transmission payments from new power generators. These payments would vary based on the proximity of new generators to existing transmission lines with available capacity. As part of a broader market overhaul, this strategy encourages the development of power plants in areas where existing infrastructure can be utilized, potentially reducing costs for consumers and businesses.

Government's Objectives

Minister of Affordability and Utilities, Nathan Neudorf, emphasized that these changes are necessary to meet growing energy demands and modernize Alberta’s electricity system. The government's goal is to create a more reliable and efficient electrical system that benefits both consumers and the broader economy.

Industry Reactions

The proposed reforms have elicited mixed reactions from industry stakeholders amid profound sector change across Alberta:

• Renewable Energy Sector Concerns: The Canadian Renewable Energy Association (CanREA) has expressed concerns about the potential for punitive market and transmission changes, and some retailers have similarly urged caution. They advocate for policies that support the integration of renewable energy sources and ensure fair treatment within the market.

• Regulatory Oversight: The Alberta Electric System Operator (AESO) is tasked with preparing restructured energy market rules by the end of 2025. This timeline reflects the government's commitment to a thorough and consultative approach to market reform.

Implications for Consumers

The Alberta government's proposed market changes aim to enhance the reliability and efficiency of the electricity system by considering measures such as a Rate of Last Resort to provide additional stability. By encouraging the development of power plants in areas with existing infrastructure, the reforms seek to reduce costs for consumers and businesses. However, the success of these initiatives will depend on careful implementation and ongoing engagement with all stakeholders to balance the diverse interests involved.

Alberta's proposed electricity market reforms represent a significant step toward modernizing the province's energy infrastructure. By introducing a day-ahead market and revising transmission policies, the government aims to create a more reliable and efficient electrical system and promote market competition more effectively. While these changes have generated diverse reactions, they underscore the government's commitment to addressing the evolving energy needs of Alberta's residents and businesses.

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