Consumers to face higher power prices

Ontario Electricity Infrastructure Upgrades will demand major reinvestment as utilities modernize the grid for conservation, green energy, renewables, EVs, and storage, while accommodating nuclear and distributed generation, likely driving higher electricity rates province-wide.

Ontario’s local electric utilities need “billion and billions” of dollars in investment, and will be seeking higher prices to raise the money, says the head of the utilities’ association.

Jim Keech, chair of the Electricity Distributors Association, said utilities are under pressure to renew their systems on numerous fronts.

“Green energy, electric vehicles, electric storage and conservation programs are all very positive and good things to be looking at,” he said in an interview.

“But I don’t think we can lose sight of the need for billions in infrastructure reinvestment, really just to keep the lights on.”

Asked if that means higher prices for electricity, he replied:

“It’s definitely going to translate to higher rates for many customers. I think the Ontario Energy Board is quite aware of that and hopefully the government and minister of energy is as well.”

Electricity consumers have already been bracing for higher prices as more costly forms of generation come on line.

Proposed new nuclear plants will need higher prices, as will new energy from renewable power sources.

Now, Keech says the wires system needed to deliver the power will also need significant investment. The current system isn’t designed to handle power from multiple, relatively small sources scattered all over the province.

It also needs to upgrade to get ready for widespread use of electric vehicles under the Ontario energy plan adopted in recent years.

Keech was speaking as his association released a paper with energy industry warnings on the state of the province’s electricity sector.

The association’s members are local utilities, many of whom are owned by municipalities. The utilities own the wires that deliver power directly to homes and most businesses.

Among its recommendations, the association says the province should consider merging the Ontario Power Authority and the Independent Electricity System Operator into a single unit.

That picks up on what was a political issue during this fall’s election campaign, when the Conservatives argued that that the power authority was expensive and unnecessary. They vowed to axe it if they came to power.

The local hydros say they’d like a review of the roles wof the province’s various energy agencies, if not outright mergers of agencies.

“Either of these approaches could lead to significant efficiency improvements within the industry, a reduction in overlap, and more coordinated and timely decision-making,” the paper says

Currently the power authority, with a budget of $73.9 million, does over-all planning for the power system. It also holds and administers power contracts with dozens of private generators.

The system operator, with a budget of $128 million, operates the provincial power grid minute to minute, matching demand with supply and running the market that sets the price for power not under contract.

Local hydros struggle sometimes to meet the edicts from multiple agencies, as well as the ministry of energy, Keech said.

“It’s difficult for us to do along with just keeping the lights on,” he said.

“Keeping the lights on and investment in infrastructure is an area I sometimes think we’ve lost sight of.”

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