Industry concerned by power price hikes

One analyst – who had already predicted a hefty increase in power prices – says the contracts will push power bills even higher for consumers and businesses.

High prices mean higher costs, said Ian Howcroft, Ontario vicepresident of Canadian Manufacturers and Exporters.

Some of the members we represent have real concerns about their future ability to operate in Ontario if – as one member puts it – we become an island of high prices, Howcroft said.

He said his members want to talk to officials at Queens Park to present the viewpoint of businesses that use power.

Bruce Sharp of Aegent Energy Advisors had earlier predicted power prices would rise about $304 a year for a typical household because of the harmonized sales tax, timeofuse pricing and other factors.

But with the awarding of the renewable power contracts, he says a more likely figure is an increase of $377 per household by the end of 2011. That would push the annual bill for a home using 1,000 kilowatt hours of electricity to $1,585 from todays level of $1,208, he figures.

The new contracts for wind, solar and waterpowered generation will pay the companies an average of 15.2 cents a kilowatt hour, Sharp says. Thats close to four times the standard market price.

Sharp estimates the renewable energy contracts awarded to date will provide about 5 per cent of the provinces power. But theyll make up 11 per cent of the total cost of generation because of the price.

Energy minister Brad Duguid downplayed the impact when he made the announcement. His officials wouldnt estimate the average price that will be paid under the new contracts.

Duguid pointed out that Ontario needs to replace aging generators. All new facilities will produce higherpriced power than the existing ones, whether from renewable sources or not.

The province also provided $450 million of funding over three years in its recent budget to cushion the impact of higher power prices for industries in Northern Ontario.

But Sharp said that higher prices for energy producers can mean job losses for energy consumers. If were raising the price of energy, what are we doing to energyintensive businesses? he said.

Consumers got one more notice of a price increase: The Ontario Energy Board approved new rates for Toronto Hydro, which will be in addition to the higher prices charged on the energy portion of the bill. The new rates will raise a typical household bill by a further $3 to $4 a month, or $36 to $48 a year, starting May 1.