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Why are Energy Prices Rising?

Oct 31, 2013

(Image: "Ontario electricity rates going up Nov. 1" via CBC)

When the Ontario Energy Board announced that the price of electricity is rising Nov 1, it was easy to predict that some would blame renewable energy. An opinion piece printed yesterday in the Financial Post written by Bruce Sharp was a direct attack specifically on solar energy, entitled "Blame Solar for Sky High Ontario Power Bills."

Is solar really to blame for the 0.05 cent increase per kilowatt hour? Surely a lot of people will read this article and accept it as fact.  In the event your neighbour quotes Bruce Sharp at the next dinner party, you may want to have some facts straight. 

According to the CBC, the Ontario Energy Board stated three main reasons for the hike. 

Three reasons for rate increase: 

  1. Higher price of natural gas, which accounts for 15 per cent of Ontario's electricity generation.
  2. The method of setting prices for six-month periods according to estimates of what it will cost to generate electricity during that time. Cost estimates for earlier this year were too high, leading to rates being higher than they should have been.
  3. Growing share of energy coming from more expensive renewable sources.

CanSIA Response: 

John Gorman, president of the Canadian Solar Industry Association (CanSIA) published a letter to the editor of the Financial Post today, correcting some of Sharp's key points. Gorman also highlights that solar is a longer term investment, that the up front cost can be high but the fuel is free, never rising, never fluctuating. It performs best during peak demand hours, filling the gaps during the most expensive billing period. 

The key point was that solar is being developed today to prepare us for the energy needs of the future. Today, solar prices are decreasing rapidly, and investment now makes sense economically and environmentally. 

The new rates starting tomorrow are as follows: 

7.2 cents/kwh from 7 p.m. to 7 a.m.
12.9 c/kwh from 7 a.m. to 11 a.m.
10.9 c/kwh from 11 a.m. to 5 p.m.
12.9 c/kwh from 5 p.m. to 7 p.m.

Read the full letter to the editor from CanSIA.