AMPCO’s latest benchmarking analysis compares Ontario’s industrial rates with those in other provinces in Canada as well as selected US markets. Our analysis shows that Ontario has the highest industrial rates in Canada and one of the highest industrial rates in North America. The disparity in electricity rates continues to grow as global fossil fuel prices plummet.
Delivered Cost of Power to Industry, Ontario and Selected provinces
AMPCO estimated delivered rates for a typical industrial customer in 2015 in Alberta, British Columbia, Manitoba, New Brunswick and Quebec to benchmark equivalent rates for industrial customers in Ontario.
Industrial customers in Ontario face the highest delivered cost of power among the provinces. A transmission-connected Class A customer paid over $80 in the delivered cost of power in 2015. Ontario Class A customers paid over $20 per megawatt hour more than New Brunswick, the province with the next highest delivered cost of power. Class A customers connected to a distribution company pay distribution delivery rates in addition to the costs included in our benchmarking.
Costs for Class B customers continue to increase with 2015 hitting over $120 per megawatt hour. Class B customers additionally pay distribution delivery rates on top of these costs.
Delivered Cost of Power to Industry, Ontario and US Markets
The cost of power in Ontario for large and small industrial customers remains in the top pricing tier for industrial electricity prices when compared with US markets.
AMPCO estimated the cost of power for a typical industrial customer in US markets: New York, New England (including 6 states), the Midwest (including 15 states), markets served by the PJM System Operator (including 13 states and the District of Columbia), and the Electric Reliability Council of Texas.
Ontario’s industrial rates continue to be among the highest in comparison to the US markets. The US South Region sports the highest electricity rates in North America and Ontario's Class B customers have the second highest.
By way of contrast, significant commitments to new generation supply made over the last decade have resulted in Ontario having more than adequate energy supply to stabilize electricity prices. The marginal cost of electricity (i.e., the cost of fuel as represented by the Hourly Ontario Energy Price) in Ontario is lower than most other jurisdictions. However, the increased costs of contracted and regulated generation in the Global Adjustment and increasing delivery rates charged by transmission and distribution utilities will continue to drive rates up for the foreseeable future.
Nevertheless, Ontario still faces future challenges. Energy demand has fallen significantly, declining by 7 per cent in Ontario over the last decade. Increased fixed costs and declining demand are driving significant projected increases in electricity rates for industry over the next several years. The incoming cap and trade program and the refurbishment of Ontario’s nuclear power plants are also expected to place additional pressures on market costs. The Ontario government, in its most recent Long-Term Energy Plan, flags industrial rates will increase by 30 per cent by 2018.