Blog Post

Minister Chiarelli Deflects Chamber of Commerce Electricity Market Recommendations

A recent report from the Ontario Chamber of Commerce raises concerns about the impacts of rising electricity costs on Ontario businesses. The report sets out five recommendations to assist in reducing the increases in electricity costs. The recommendations, which the report says are "viable options to ensure that our electricity costs are competitive" include:

  • Increasing the transparency of electricity pricing and cost drivers, particularly in relation to generation costs and the average cost of electricity (including the Global Adjustment)
  • Retaining the Debt Retirement Charge (DRC) on residential customer bills until it is retired [In a prior post, we discussed the timing and implications of the removal of the DRC and the Clean Energy Benefit from residential customer bills]
  • Incenting the voluntary consolidation of LDCs
  • Moving away from centralized procurement of electricity generation, in favour of capacity markets [This is another topic that we have discussed in a prior post ]
  • Making better use of smart meter data for means such as shaping policy, forecasting demand, assessing asset and grid maintenance requirements and expanding customer segmentation

The Chamber of Commerce report received considerable media attention (for example, the Toronto Star, The Globe and Mail and the Timmons Times), which focused on the negative implications of rising electricity costs for Ontario businesses.

The public response from Ontario's Minister of Energy, Bob Chiarelli, was swift, in the form of a letter published in a number of newspapers, along with a statement issued by the Ministry of Energy. Minister Chiarelli's response focused on the Chamber of Commerce proposal to retain the DRC on residential bills. The Minister indicated removing the DRC will save residential customers an average of $70 per year (but did not mention the impacts of terminating the Clean Energy Benefit at the same time, which will cause residential bills to increase). Minister Chiarelli indicated that removing the DRC is an important step for reducing energy costs for Ontario families that will not be changed to benefit business customers. The Minister did not directly address the other Chamber of Commerce recommendations. Instead, the Minister's response spoke of current programs, initiatives and conservation opportunities to assist businesses, and about the benefits of a modernized, cleaner electricity system.