The Future of Ontario's Electricity Rates
The Current Situation
Ontario has some of the lowest electricity prices in the world at approximately 12.8 cents/kWh.
Now, why is that?
Well, it comes down to a few factors.
Firstly, Ontario has a healthy mix of inexpensive generating stations. Legacy hydro stations, wind farms, and nuclear plants all contribute cheap, mostly renewable electricity to Ontario’s grid. The only other sources are some solar farms and natural gas plants that get put online during peak usage times.
The second factor is subsidies, which we will talk about in the next section.
Before we go further, let’s discuss what people think about electricity rates in Ontario.
At this year’s virtual Cottage Life Show we asked people to fill out a survey about what they thought of electricity rates at the cottage.
Here is what we learned:
- Approximately 64% of cottagers expect electricity rates to rise at a rate greater than, or significantly greater than inflation
- Approximately 50% of cottagers are concerned about total electricity costs over the next year. This rises to 60% over the next three years
It is clear to see that rising electricity costs are a main concern for cottagers so let’s look at the factors that are going to contribute to higher bills going forward.
Ontario spends a whopping $6 billion annually subsidizing electricity costs for consumers. The bulk of these subsidies are untargeted and do not always end up in the hands of those who need it most. Only $800 million of the total are going to low-income households or to rural/remote customers who pay more for their electricity anyways.
Currently, the subsidy is based on how much power you use, so, a family living in a large 4-bedrrom house will receive a larger subsidy than the family living in an apartment even though they likely have a higher level of income and can afford to pay more for their electricity.
The Ontario Electricity Board (OEB) has put forth a statement saying that these untargeted subsidies need to end as that money can be better spent elsewhere.
So, with the chances of these subsidies disappearing getting more likely, electricity costs are probably going to increase in the coming years. But there is also another factor that is likely to contribute.
Infrastructure Repairs and Upgrades
Much of the infrastructure around energy generation and distribution in Canada was constructed soon after the second world war and is in need of repairs and upgrades if it is to remain stable and reliable for years to come.
The Canadian Energy Association estimates that investments will need to reach $1.7 trillion by 2050 to effectively repair and upgrade the system.
Although this is not specific to Ontario, much of this investment will need to be paid for by provincial governments and will likely contribute to rising electricity rates in the coming years.
So, it is obvious that electricity rates are set to rise. Luckily, there are ways to lower your electricity bill so that when these changes occur, you won’t be in for such a shock. A great way to offset your electricity costs is by installing a microgeneration wind turbine on your property.
A microgeneration wind turbine will generate clean electricity that can supplement the energy you draw from the grid. If you want to find out more check out our resources page for answers to FAQ’s and informative brochures.
For further reading on this topic, check out these sources: