December 15, 2016   Ms…

December 15, 2016

 

Ms. Andrea Pastori

 

Cabinet Liaison and Strategic Policy Coordinator

 

Ministry of Energy

 

Strategic, Network and Agency Policy Division

 

Strategic Policy and Analytics Branch

 

77 Grenville Street, 6th Floor

 

Toronto Ontario

 

M7A 2C1

 

Re: EBR Registry Number 012-8840

 

Dear Ms. Pastori:

 

On behalf of our 42,000 small- and medium-sized member businesses in Ontario representing approximately 500,000 employees, we welcome the opportunity to comment on the government’s Long-Term Energy Plan.

 

As the province’s economic engine, small- and medium-sized businesses account for 98 per cent of all Canadian businesses and employ 87.3 per cent of Ontarians.

 

Electricity rates are a key component to keeping Ontario’s businesses competitive in a global economy. High hydro costs mean small businesses have fewer resources to create jobs, invest in their businesses, and contribute to the economic growth of the province. According to CFIB’s Business Barometer®, energy costs have been a top cost constraint for Ontario’s small businesses over the past three years. If costs continue to increase without additional and more significant and impactful relief measures, Ontario’s hiring, business investments and economic health will suffer.

 

Eliminate Time-of-Use Pricing for Small Business

 

Ontario’s small business owners have been overwhelmingly unable to adjust their consumption habits based on time-of-day usage since the Smart Meter program was introduced. Small business owners are dependent on the habits of their clientele and their regular hours to survive – a pizza maker cannot be expected to fire up the ovens at 3:00 a.m. when customers come in at noon. Because of this dependency, time-of-use pricing is viewed as a tax on business hours.

 

We recommend the elimination of time-of-use rates for small businesses and the implementation of a tiered-rate system where the first 3,000 kWh are billed at a lower rate.

 

Accelerate the Elimination of the Debt Retirement Charge from Commercial Bills

 

The Ontario government eliminated the Debt Retirement Charge from residential bills effective January 1, 2016; however, the charge remains on small business bills and isn’t due to be removed until March 31, 2018. In 2011, the Auditor General noted that the Debt Retirement Charge was intended to pay off $7.8 billion in debt. In 2013, the Auditor General reported that $10.6 billion in Debt Retirement Charge fees had been collected.

 

The Debt Retirement Charge accounts for approximately 2-5 per cent of a small business hydro bill.

 

We recommend that the government accelerate the removal of the Debt Retirement Charge to no later than April 1, 2017 (i.e., at least one year sooner than planned).

 

Develop a Clear Plan to Eliminate the Global Adjustment Fee

 

The Global Adjustment fee was introduced to cover the difference in the cost of the government’s contractually agreed pricing with Ontario’s energy producers, and the market price of electricity. The purpose of the fee is virtually unknown among small businesses, hidden in the time-of-use rates on the majority of small business bills

 

Per the Auditor General’s 2015 report, Ontarians have paid $37 billion towards the Global Adjustment since 2006, and stand to pay another $133 billion by 2032. It accounts for up to 77 per cent of hydro usage fees on consumers’ bills.

 

The Global Adjustment should not be accepted as a long-term or permanent fixture in Ontario’s energy system. As such, we recommend that the government develop, and make public, a plan to eliminate the Global Adjustment fee from consumer bills at the earliest possible date, and regularly report on its progress towards eliminating this fee.

 

We believe that the government can accomplish this through a variety of measures, including: •Placing a moratorium on all new energy contracts until additional supply, if any, is needed; •Allowing current contracts that are well above market value to expire without renewal; •Reviewing conservation programs paid with Global Adjustment fees to determine efficiencies; and •Instituting a new competitive process for energy generation contracts that focuses on procuring the lowest possible energy prices for Ontarians.

 

We commend the government for taking the first steps in this process by suspending the next phase of renewable energy contracts, which would have generated 1,000 megawatts of energy that the province does not need. We recommend that the government reassess all planned new energy generation that has yet to be undertaken to determine whether the energy is needed, in an effort to keep system costs down.

 

We further recommend that the government begin the process of creating a clear plan to eliminate the Global Adjustment fee by increasing billing transparency and including the Global Adjustment fee on all bills, including Regulated Price Plan (RPP) or “time-of-use” billing.

 

Thank you again for the opportunity to comment on the government’s Long-Term Energy Plan.

 

Sincerely,

 

Julie Kwiecinski                Ryan Mallough

 

Director of Provincial Affairs, OntarioPolicy Analyst, Ontario

 

[Original Comment ID: 206961]