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Utilities Problem

Problem

Ontario Electrical grids generate more electricity than Ontarians need. Since 2009, Ontario has given away $6 billion in surplus electricity to the U.S., while the rate for off-peak electricity here has risen by 150 per cent. The auditor general of Ontario estimates that the province has already lost close to $2 billion on such exports. Data from the Independent Electricity System Operator (IESO) shows Ontario now loses, on average $24,000 per operating hour on such sales, totaling $200 million annually. (Source: Salar Mehrad,P. Eng., MBA).

Why there is surplus energy in Ontario

At night and on weekends, Ontario nuclear reactors produce more power than we need. Since nuclear reactors cannot reduce their output during off-peak hours, we have to export their surplus production to our American neighbours at very low prices. In fact, we often have to pay them to consume our excess nuclear production (Source: Salar Mehrad, P. Eng., MBA). Policy changes were aimed at eliminating coal plants and significantly reducing carbon dioxide emissions, improving lighting, appliance and insulation efficiency standards, peak demand reduction, energy conservation programs, and refurbishing nuclear units. Ontario’s Policies led to an 80% reduction in CO2 emissions by 2016 when compared to 1990 levels – this is way ahead of the 2050 international goal. All this, coupled with the 2008 recession reducing demand growth resulted in significant excess capacity. So much excess capacity that surplus electricity is exported at incredibly low rates of about 1.6 cents per kWh in 2016 (Source: OSPE).

Ontario High Electrical Energy Prices

Ontarians pay more for power than any other province in Canada. This is a result of many policy changes made over the last 10 years. (Source: Salar Mehrad, P. Eng., MBA).

How we got here

Essentially, the quick answer to this is: policy changes, upgrading infrastructure, and signing fixed long term agreements with private energy companies. The two cancelled gas plants did drive up rates a bit, it’s not very significant in the grand scheme of things. (Source: Salar Mehrad, P. Eng., MBA).

Ontario Surplus Electricity - 2016

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