News & Updates

Repeal of the Green Energy Act

Oct 2, 2018

Ontario’s Government has introduced legislation to repeal the Green Energy Act. This initiative is in line with other actions it has taken to try and reign in electricity prices in Ontario. While this will not directly impact many businesses, it may have indirect implications. For businesses that currently participate in the Feed-In-Tariff (FIT) or were looking to participate, those incentives and contracts will be coming under increased scrutiny, with the Government already acting to cancel new energy projects under the Green Energy Act and FIT. For the average business in Ontario, this decision is promoted as necessary to ultimately achieve the Government’s goal of a 12 per cent reduction in hydro rates. Within the last few years the Government has committed to several long-term contracts for large scale energy projects including nuclear power.  The large scale power projects will contribute to the slow and steady increase of hydro rates.  Therefore, it is unclear as of yet how much this legislation will change current hydro rates as many contracts have 20-year terms, however by stopping future contracts the hydro rates may have been effectively frozen. 

Our outlook is that hydro rates will remain relatively flat for the short-term as the Government looks to reduce costs. We remain cautious about rates decreasing, as contracts that are already in place will likely remain and keep rates where they are today. Currently we are seeing slightly lower Global Adjustment (GA) rates compared to last year, however they are well within average GA rates for the past few years.

For more information on Ontario's hydro policy and our hydro management strategy you can reach us here.

 

Sources: Ontario Newsroom

Ontario Cap & Trade

Sep 12, 2018

Next month, Ontarians will see a change on their utility bills: no more Cap & Trade. The 3.3 ¢/m3 fee that has been applied to utility bills since January 2018 will be removed as of October 1st. The removal of the Cap & Trade program is good news for Canadian businesses. A medium sized company, using 1 million cubic meters a year of natural gas, will see a $33,000 decrease on their yearly costs.

The Auditor General, after conducting an audit of the program, indicated that the cap-and-trade system would have cost Ontario consumers and businesses $8 billion. She went on to say that the carbon pricing program would likely show reductions in emissions by the province of only 3% by 2020. This compared to the emissions reduction target of 15% below 1990 levels that has been set for 2 years from now.

The Federal government has indicated that if the province does not have its own carbon tax in place by September 1st, a date that has now passed by, it will implement its own carbon tax of $20/tonne CO2, effective January 1st, 2019. Premier Ford has indicated that he will fight Ottawa in court over the federally implemented tax. Manitoba, a province hoping to go the same route, has been told by independent legal counsel that the Supreme Court would likely side with the Feds on the ruling.

So what does this mean for Ontario businesses come 2019? Will a mandatory federal carbon tax be implemented, or will it have to pass through the court system first? For more information regarding how the ending of the Cap & Trade program will affect your business, please feel free to contact us.

 

Articles referenced in this post:

Ontario Newsroom 1 2  Global News CBC

The End of the Debt Retirement Charge

Mar 21, 2018

  The Debt Retirement Charge (DRC) on business and industrial hydro bills in Ontario will be ending after 16 long years. This charge came into effect in 2002 to combat stranded debt from the 1999 breakup of Ontario Hydro and is a flat rate of 0.70 cents/kWh. While there are several ways that the stranded debt is being paid down, electricity consumers have paid over 13 billion dollars as of 2016 through the DRC. The Ontario Government has committed to reduce electricity costs, and as part of that promise has decided to remove the DRC from hydro bills effective April 1st, 2018. While this is good news for consumers in the short-term, as their hydro bills will decrease, the future of electricity rates is still unclear. With the Government's intervention to cut and fix hydro rates, we will see debt continue to increase. While this new debt is not ‘stranded’, it will still need to be paid back at some point in the future.

 

Sources: Ministry of Finance & Ontario Electricity Financial Corporation

Ontario’s Push for Electric Vehicles Continues with More Incentives

Feb 9, 2018

   Ontario has been planning for an explosion in electric vehicle (EV) sales, that has been slow to materialize, so they are adding fuel to the fire.  The Government has been rolling out incentive programs over the past few years to try and increase (EV) adoption.  Existing programs included funding for the purchase of an EV and the purchasing and installing of a charging station in residential homes.  These incentives have been popular, but they have not been enough to see widespread adoption.  Many concerns still exist such as range anxiety, long charging times, and a wait and see approach to the new technology.

In order to promote Ontario as a green economy, and further the Government's climate action goals, they are revealing more funding for EVs.  This time targeted at businesses.  On top of existing incentives to buy electric vehicles, the Government has announced funding for charging station in workplaces. Depending on the number of employees, workplaces will be eligible for 2 or more charging stations. This incentive comes just after the Government announced changes to the Ontario Building Code that require some future developments to include electric vehicle charging stations, including residential and commercial provisions.  Lastly the government is rolling out funding for the purchase of electric semi trucks, which was announced coincidentally with Tesla's release of their electric semi.

All of these incentives are available to residents and businesses looking to take the leap and purchase an EV. 

 

A Friendly Reminder to Audit Your Bills

Dec 27, 2017

Happy Holidays from CESi. 

 

As we head into 2018, we would like to remind everyone to take the time to review your billing and ensure you're not only in the proper rate classes but also being charged the correct rates. 

Every company can make mistakes. Some mistakes can be small enough to not register as a concern and some can be much much larger. Take the case of the "decimal point" error in this woman's recent bill.

http://www.goerie.com/news/20171226/erie-woman-receives-284-billion-electric-bill

Obviously, this is a case where the cost was in no way reasonable, but more often than not we can see small billing errors result in hundreds or thousands of dollars that many clients are paying without even registering as mistakes.

As our clients' audit numbers from 2017 for performance and profitability we would like to remind everyone that taking the time to review billing can be a major step in ensuring strong bottom line numbers for 2018.

Contact us for an honest, independent outlook on your current billing and contracts. You might be surprised at what is being left on the table! 



Ontario`s Cap and Trade November Auction Results

Dec 11, 2017

  On November 29th, 2017, Ontario held the fourth Cap and Trade Auction of the year. Earlier auctions have shown mixed results with participants showing hesitation in buying Future 2020 Allowances. This hesitation was due to uncertainty in the new program. By the third auction in September, that uncertainty vanished, as all 25 million plus Current 2017 Vintage Allowances, as well as all 3 million plus Future Allowances, were sold. This change in opinion may have come from confidence in the program as it continued into its 3rd auction combined with a strong Federal and Provincial stance on Greenhouse Gas emissions and an increasing societal shift towards environmental sustainability.

In the fourth auction, Current Allowances were sold at $17.38, which was the floor price set by Ontario, While the Future Allowances sold for $18.89, which was $1.51 over the floor price. Also, Future Allowances sold out, while only 83% of Current Allowances were sold.  This reflects a slight change in perception in the auction, which historically has always sold all of the Current Allowances above the floor price.   Ontario’s commitment to join Quebec and California’s joint Cap and Trade Auction may have buyers holding off on purchasing Current Allowances, while at the same time increasing their purchases of future allowances since it seems like the Cap and Trade Auction will continue, and prices are likely to increase. 

The Government of Ontario has not wasted any time in reinvesting the proceeds from the Cap and Trade. On August 30th, 2017, Ontario announced $377 million in programs and rebates to help residents and businesses save money and fight climate change, on top of its previous funding announcements. The Cap and Trade Auction is expected to increase residents’ bills by approx. $13 per month and an even higher increase can be expected for businesses in Ontario. However, with Ontario reinvesting in energy efficiency and reduction, now is the time to consult with a Certified Energy Manager to see what options are available for your business and to get in on these government programs to reap the rewards of these auctions.

Contact Canadian Energy Strategies Inc for information or to book a meeting with an in-house Certified Energy Manager.

The full auction report can be found here.

Ontario Ministry of Energy is Taking More Control Back from The Ontario Energy Board

Nov 29, 2017

  The Ontario Energy Board is the Province’s independent energy regulator and their role is to "make decisions and ensure that consumers are treated fairly and that the energy sector is reliable and sustainable".  Part of their role was to set electricity rates to ensure that the rates being charged covered the cost of electricity generated.  In the past this pricing was based on a competitive wholesale markets, and is now blended with the increase in provincially sponsored contracts for renewable energy.  This role however is being limited further with the incoming Fair Hydro Plan Act, which gives the Ministry of Energy, and specifically the Minister, the ability to set electricity rates.  This eliminates the independent and unbiased setting of electricity rates, and could potentially lead to politically motivated rates.  It also allows for potentially shifting the costs from one group of consumers onto others, although there is no indication that this will happen. 

 

 

Links:  Ottawa Citizen, OEB 

CHP Projects to No Longer be Funded Under the CFF and IAP

Nov 2, 2017

    The Government of Ontario has released a statement, through the 2017 Long Term Energy Plan (LTEP), that it will no longer provide funding for Combined Heat and Power (CHP) projects that burn fossil fuels.  The funding was coming from the Conservation First Framework (CFF) and the Industrial Accelerator Program (IAP).  Originally, CHP systems were touted as a way to reduce grid demand by generating electricity on-site.  CHP systems typically burn oil or natural gas, and due to the Government’s push to reduce Greenhouse Gas Emissions even further, they have decided to pull funding for CHP systems that burn fossil fuels, effective July 1st, 2018. 

The Government did remind businesses that funding is still available for other projects, such as waste energy recovery, renewable energy, and energy storage systems.  The opportunity is still out there to reduce demand and reliance on the grid, however the Government is pushing for those opportunities to move away from the burning of fossil fuels. 

Currently there are opportunities still available for CHP systems that burn non-fossil fuel gasses, such as biogas from waste.  Economically, CHPs may still be viable for your business without any Government funding, due to their lower cost electricity production and the potential reduced Global Adjustment charges if you are a Class A hydro customer.  If you are looking into CHPs, on-site generation, or storage, there is a wide variety of options and technology available.  As we progress battery storage systems will become more economical, provide grid reliability, and on-site electricity, and it seems the Governments next push will be in that direction. 

Our team at CESi has been navigating many of our customers through the analysis and feasibility of CHP or peak shifting projects and have the expertise to help all our clients save on their energy spend. Call or email (sales@ces-energy.com) for further information. 

Links: LTEP

Ontario Unveils the 2017 Long-Term Energy Plan

Oct 30, 2017

  The Ontario Ministry of Energy released the 2017 Long-Term Energy Plan (LTEP), titled Delivering Fariness and Choice, on October 26th.  The 2017 LTEP has a strong focus on providing Ontarians the choice on how they use electricity, promoting conservation first, and a continued push towards renewable and non-GHG emitting sources of generation. 

For Industrial customers, there is not a whole lot in the LTEP that will impact them.  The largest and most substantial potential change is how Class B customers will be charged Global Adjustment (GA).  Currently GA is charged to these consumers as a flat rate $/kWh.  The government is looking into potentially charging GA on a Time-of-Use basis, which they state will save some companies money and promote conservation.  This shift would essentially put Class B industrial users in the same boat as residential consumers, meaning that using electricity mid-day will cost more than off-peak hours.  Although the program makes sense, since electricity is cheaper in off-peak hours the associated GA should reflect that as well, it does mean that many Class B consumers will be charged more if they typically consume energy on-peak. 

Other notable changes for industrial users include a renewed commitment to energy conservation.  This statement is a welcome fact for customers who are putting money and resources into energy efficiency and conservation programs.  The statement included a continuation of the Industrial Conservation Initiative, with no news on whether the 500kW minimum will change, increased exploration into ways to provide assistance to mid-sized industry, and increased program offerings through the Green Ontario Fund.

Another change, one that is less welcome, is the statement that starting July 1st, 2018, CHP systems that use fossil fuels will no longer be eligible for incentives. CHP systems were gaining recognition as a way to ensure electricity reliability by generating electricity on-site.  In particular, critical facilities, such as hospitals, were just starting to adopt CHP systems.  Although the government is scrapping funding for CHP systems, the LTEP is looking at renewables and battery storage as options, and funding for those projects may be available. 

Lastly, we will look at the electricity price outlook for large industrial consumers.  The chart below can be found in the 2017 LTEP.

The two important things to note are that electricity prices are going to increase, and that the fine print of this chart means that it does not reflect most industrial users’ electricity pricing. This chart was created using a transmission-connected facility who is a part of the Industrial Conservation Initiative.  Transmission-connected companies total 59 in Ontario.  While these companies are large users of electricity, they do not represent the majority of industrial users in Ontario.  Many of these large users have the means to have a dedicated in-house energy management team.  This allows them to most effectively take advantage of government programs, such as the ICI and the Demand Response Auction, secure funding for projects, and identify energy reduction opportunities. 

However, the average industrial user does not have a dedicated energy manager, they may not meet the threshold for ICI or the Demand Response Auction, and may not have the capital required for efficiency upgrades.  These consumers are the ones most impacted by changes in electricity rates, however the LTEP does not outline what their current or forecast costs are.  For the average industrial consumer an external energy management team such as the one at Canadian Energy Strategies, provides the most cost-effective means to understand their usage and achieve savings.

Links: 2017 LTEP

Ontario’s Manufacturing Sector Attempting to Survive Rising Electricity Costs

Oct 23, 2017

    A recent study by the Fraser Institute has found links between Ontario’s rising electricity prices and a drop in manufacturing sector jobs.  It outlined that Ontario has the highest hydro rates in Canada, as well as some of the highest costs in North America.  Ontario’s electricity costs are also among the fastest growing, rising 48% in Toronto, from 2010 to 2016.  With the manufacturing sector being a crucial part of Ontario’s economy, as well as accounting for 40% of Canada’s exports, the industry is a strong one that has proven resilient to economic challenges.  However that industry has also started showing signs of stress over the last decade.

The Fraser Institute has noted that Ontario’s manufacturing sector has recovered slower than neighboring jurisdictions from the last recession, and its share of the GDP has decreased over the last decade while in other jurisdictions it is rising.  This data shows that factors such as global demand, exchange rates, and technology cannot solely account for the decline.  The study has specifically pointed at Ontario’s high electricity costs as a direct cause behind this decline placing 64% of the blame on those costs.  That 64% represents approximately 75,000 jobs lost as a result of the electricity prices.

The study also looked into the role that policy had in electricity prices and job losses.  The Government of Ontario’s green energy policy push has created jobs in the green tech industry, however, the study claims many of those are temporary and 1.8 jobs were lost for every green job created.  The Government has continued to back its decisions to push for a greener economy and, to its credit, coal has been phased out, smog has been reduced, and Ontario is one of the leaders in green infrastructure.  These positive changes have come at a cost which is reflected in the hydro rates as well as job losses. 

Overall Ontario’s manufacturing sector has been struggling and lagging behind.  Companies are closing doors and jobs are being lost.  However, there are still many businesses that are still doing well and employing hundreds of thousands of Ontarians.  Businesses that strive to improve and invest in new technology can reduce their electricity costs and lessen the burden of Ontario’s high hydro rates.  There are many opportunities to reduce electricity costs, and many of which can be partially funded through government funding.  In order for Ontario’s companies to thrive in this market, they need to be ahead of the curve in regards to energy management, and a Certified Energy Manager, such as those at Canadian Energy Strategies is the first step in the right direction.

Links: Fraser Institute