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Ontario cuts industrial energy rates to boost job creation

Companies that invest $250 million in the province will be eligible for a 30% rate cut.


June 13, 2012
by The Canadian Press

TORONTO: Large industries looking to expand or set up shop in Ontario will be able to qualify for lower electricity prices starting next year, the province’s energy minister Chris Bentley has announced.

Eligible companies could qualify for a reduced electricity rate if they create new jobs and bring new investment to Ontario.

“The connection between jobs and the incentive is at the heart of this program,” Bentley said in an interview. “They have to create extra jobs and the incentive only lasts as long as the extra jobs last.”

It’s not a new industrial hydro rate for all companies that the opposition parties have been asking for to stop firms from leaving for neighbouring jurisdictions with lower electricity prices.

Instead, companies that make a minimum investment of $250 million will be eligible for long-term contracts at the wholesale market price, a reduction of about 30% from current rates.

The program won’t add any costs for other hydro ratepayers because the government will use excess electricity that it currently exports, said Bentley.

“The demand following the worldwide recession has left us with extra and we’re putting that extra to work,” he said. “Instead of exporting it, we are using the extra and making it available to Ontario businesses that either want to create new (jobs) or expand their employment.”

The lower rates will make it easier for large industries to expand and encourage other companies to locate in Ontario, creating badly needed jobs in the process.

“We want to make sure you land that extra line of production here, we want to make sure you open up the mill in Northern Ontario rather than in the States or somewhere else, and to provide you with an additional incentive to do that,” said Bentley.

However, the opposition parties called the program a “band-aid” that fails to address the Liberals’ failures on the energy file, although the Tories blame wind power while the NDP blame costly nuclear energy.

“What it really is is an indictment of the minister’s own energy plan,” said Progressive Conservative energy critic Vic Fedeli. “They started off with the lowest energy prices in North America and now we’re at the second highest, and as a result we’ve lost 300,000 manufacturing jobs.”

The new program for large industrial expansions won’t offset the huge costs of building new nuclear and gas-fired power plants, warned the NDP.

“Occasionally offering a better deal to get companies to locate in Ontario doesn’t address the fundamental problem, which is they’re running the system badly and it’s making it difficult for people to pay their bills and for companies to keep their doors open,” said NDP energy critic Peter Tabuns.

“Our system is costing us more and more, it’s got a huge amount of surplus power and instead of dealing with the fundamental problem, the minister is announcing this band-aid.”

Ontario has about 150 tera watt hours of generating capacity and uses about 140 tera watt hours, and industrial users will be able to tap into a percentage of that excess capacity. A terawatt is equal to one million megawatts.

“This program will be available for up to five terawatt hours,” said Bentley. “We’re going to take a look at it, see how it’s being used and if we need to adjust the level we will as long as it doesn’t increase costs for existing families and businesses.”

Companies in southern Ontario currently pay 75 dollars per megawatt hour, while large users in northern Ontario pay 55 dollars a megawatt hour under the northern industrial electricity rate program.

The new program will lower the rate for qualified southern Ontario companies to the same rate as the north, and existing industries in the north can apply for the new incentive as well if they expand.

©The Canadian Press