And they may have collected tens of millions in additional payments by “double dipping” on overly generous conservation incentive programs.
That’s the conclusion of the province’s electricity market watchdog, the market surveillance panel.
While the panel ascribes no wrongdoing — big businesses are simply obeying the market rules — the panel says it’s not clear whether there’s any broad benefit in giving big users a break at the expense of small consumers.
What is clear, says the panel, is that households and small businesses are paying about 4 per cent more on the energy portion of their hydro bill.
Meanwhile the province’s biggest industrial power users are paying 1.3 cents a kilowatt hour less — a saving of about 17 per cent.
Energy Minister Chris Bentley said the current rules are intended to slash power use during peak periods, which benefits all consumers.
But he said the panel’s analysis is welcome because: “Bottom line is, a program has to work.”
Conservative energy critic Vic Fedeli was harsher.
“This is really an admission of how badly they’ve structured the electricity sector,” he said.
At the root of the cost shift is an arcane electricity fee called the “global adjustment” or GA. It appears as a separate line on the bills of customers who buy their power from retailers, but is rolled into the price for customers on the regulated price plan.
The GA lumps together the cost of all electricity that doesn’t trade on the open market.
For example, Bruce Power, the province’s biggest private generator, sells its power by contract, outside the market. Much of Ontario Power Generation’s production is also sold outside the market, and is most wind and solar power.
The GA sector is big, and growing: Last year, the market handled $4.5 billion in power sales, while the global adjustment covered $5.3 billion.
So who pays the GA?
Under the old rules, it was carved up strictly on usage. If you used 1 per cent of Ontario’s power, you paid 1 per cent of the GA.
But last year, after lobbying from big power consumers, the “High Five” system was introduced.
Now, the share of the GA paid by big industrial users is based on how much power they used during the five periods of highest demand during the year.
Some companies are able to anticipate peak demand periods, and reduce their power use significantly during the crucial hours.
The result: They slash their share of the GA year-round. Households and smaller businesses — who are not part of the High Five system — make up the difference.
There’s a second twist: Some of the big industries also participate in incentive programs offered by the Ontario Power Authority to slash consumption during peak periods.
The panel says they’re being rewarded twice for the same thing, and this “double dipping” may have cost the system another $59 million last year.
Are there any benefits to the new system?
The panel is unsure.
One rationale for basing industries’ bills on peak usage is that it encourages big power consumers to cut back consumption during periods of very high demand.
That reduces the need to build costly generating stations and transmission lines that are used only a few days a year.
But the panel says it can’t yet be sure if those benefits have really followed. It says it will continue to study the question.
Bentley noted that Ontario’s peak demand has been reduced by 700 megawatts under the new rules:
“Our initial information is that it’s working well,” he said.
But he said both the panel and the energy ministry will look more closely at the programs to make sure they are functioning as intended.
Fedeli of the Conservatives said the problem is not just how the GA is shared, but its massive size, which he said is driving businesses out of the province.
Peter Tabuns, energy critic for the New Democratic Party, said more study is needed to see if the program is reducing peak demand.
“But I certainly think the double-dipping is not justifiable,” he said.
A spokeswoman for the Independent Electricity System Operator, which introduced the new market rule, said the panel’s analysis may have overlooked factors offsetting the big cost shift, but said no numbers are available to quantify it.
Original Article
Source: Star
Author: John Spears
No comments:
Post a Comment