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