Toronto: The Ontario Energy Association (OEA) released a report August 25 produced by Power Advisory LLC that argues Ontario could reduce rate pressure on existing customers by introducing policies to increase electricity load.
The study, Policies to Incent Load Growth to Reduce Electricity Costs for Existing Ontario Customers, found that a 5 TWh increase in overall demand could have reduced the per unit cost for all customers by 3% in 2019.
As Power Advisory observes in the report, “Given the structure of Ontario’s electricity system, reductions in electricity load lead to rate increases for electricity ratepayers, as system fixed costs are spread over fewer kilowatt hours. Between 2005 and 2009, Ontario saw a significant reduction in load as a result of a decline in Ontario’s manufacturing base. This reduction in load resulted in rate increases for remaining ratepayers, particularly given system capacity was increasing at the same time.”
The suggestions in the report include:
• A program that provides a duration-limited (e.g. 1-3 years) rate incentive for customers that create either new demand through investments in new facilities in Ontario or increase current levels of electricity consumption through investments in existing facilities.
• A reduced demand charge that generates new demand in Ontario or increase current levels of electricity consumption.
• Low-cost allocations of energy that better utilize the province’s surplus generation.
“COVID-19 presents a good opportunity for Ontario to examine its current electricity policies related to load growth. During this time, our province has a chance to reflect on whether it has the tools it needs to optimize load growth for the benefit of existing ratepayers,” said Vince Brescia, CEO of the Ontario Energy Association.
The OEA report examining current load growth policies and recommendations on reducing costs for electricity customers can be found by visiting www.energyontario.ca.