The Ontario Government is embarked on a review process to ensure electricity costs are not an obstacle to Ontario industry being competitive. This initiative holds great promise. But, if not carefully managed, electricity reform could have undesired consequences.
I firmly believe the Ontario government can provide a good electricity system for our manufacturers, greenhouse operators, industrial and institutional energy consumers. But they must follow 7 principles:
1. Energy customers need to be in control of their energy consumption and purchasing decisions. The energy system has been overly dependent on governments and utilities to determine prices and costs. This mindset has, over time, left customers as price-takers. Giving customers greater control over their own destiny with regard to energy use and procurement will restore balance and will drive down prices over the longer term.
2. Energy customers need good and timely access to their data. With control comes responsibility and accountability. To effectively manage their energy consumption and costs, customers need to easily make sense of their utility bills. With knowledge comes the ability to act.
3. Market price signals give customers needed information. Reliable price signals help customers make informed decisions. A well-designed, competitive retail energy market provides the best way to discover true prices. Energy markets have been moving in this direction for some time. The provincial government should not slip back into the top-down regulatory price-setting of the past.
4. Smaller businesses should no longer be disadvantaged.The government should no longer pick winners or losers. Government must allow the market to competitively adapt, not set Industrial Rates. This will be easier to do when the first three principles are followed.
5. Ontario’s energy system must be trusted.Timely, ongoing investments are needed to ensure power quality, reliability and supply.
6. Energy policy should reinforce the competitive advantagesof Ontario’s clean grid. The risks of global climate disruption are driving a conservation and renewable energy transition across the globe. Ontario’s clean electricity grid is a North American competitive advantage. Any new energy direction for Ontario should recognize and build upon this formidable strength.
7. Allow energy consumers to generate power. Rapid advances in small scale power generation are enabling energy consumers to also become energy producers. These entrepreneurs are reducing costs, becoming more environmentally sustainable and “future-proofing” their business risks.
Alleviating price pain points with single “one-off” actions could have unintended and unwanted consequences. Nothing is gained by transferring pain from one set of energy customers to another. Entrepreneurship will be rewarded if market principles are allowed to do their work. Consumers should not be taxed through Capacity Charges imposed by institutions hanging on to 20th Century models.
Improving Ontario’s energy systems could prove tricky. A principled, holistic approach that focuses on customers can show the way. By adopting these principles, the Ontario government could usher in improvements that would provide lasting benefit and improve our economic competitiveness.