Adam White, President of AMPCO, blogs about the latest trends in energy markets and advocates for energy policy that will ensure an affordable and reliable electricity system for Ontario.

November 2015

Ontario's Manufacturing Industry: Benchmarking Electricity Prices

In my last post, I provided a brief overview of the state of Ontario’s manufacturing sector – where it stands, where it’s going, and what government and industry should do to build on its strengths and mitigate its weaknesses. This week, I want to focus in on one of the challenges facing Ontario’s large industrials – namely, the impact of rising electricity prices on business competitiveness.

How do Ontario’s industrial rates measure up to those of other comparable jurisdictions? AMPCO publishes an annual benchmarking report measuring Ontario’s industrial electricity rates against select Canadian provinces and American markets. Our analysis shows Ontario has the highest industrial rates in Canada and one of the highest industrial rates in North America. The disparity in electricity rates between Ontario’s Class A customers and the rest of Canada’s electricity markets will only continue to grow as global fossil fuel prices plummet.

In last year’s benchmarking report, our research showed Ontario had the highest industrial rates in North America. While New York and New England electricity markets have superseded Ontario for the highest industrial rates in North America, Ontario still is amongst the highest.

For Ontario, a large reason for skyrocketing electricity prices is the province actually faces a power surplus and pays other jurisdictions (at a loss for Ontario) to take the power it does not need. Increased fixed costs and declining demand are driving significant projected increases in Ontario electricity rates for industry over the next several years.

For those industries who have already found every possible efficiency in their energy use, next-level government policies should be aimed at maximizing Ontario’s surplus power and investing in energy innovation As electricity costs rise, industry is forced out of necessity to find efficiencies and cut down on energy use to remain competitive.

You can read the rest of our benchmarking analysis here


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