Ontario’s Liberal government, under near-constant criticism for climbing electricity costs, has decided the time is almost nigh to sacrifice some sacred cows.

In a speech to the Empire Club of Canada in Toronto on Monday, Energy Minister Glenn Thibeault envisioned more choice for both government and consumer in the electricity system. The specifics are fuzzy at this point, but the minister said only a few doors remain closed, such as revisiting costly nuclear reactor rebuilds.

All of these proposals will be filtered through the government’s long-term energy planning process, which is currently underway, with a new strategy to be finalized for next year. During that process, consideration will be given to reforming how the government procures power from energy companies (with perhaps less pickiness over the sources, such as wind or solar), how the province’s electricity market functions (with the potential for more competition) and how consumers can pay to keep the lights on (with different billing options a possibility).

“We’ve been doing the same thing as a sector for over a hundred years,” Thibeault told reporters after his speech. “And I think it’s time for the sector to evolve and I’m sure the consumers would demand that type of change as well.”

Thibeault noted telecommunications companies have been forced to offer more flexible phone, cable and Internet services, but that electricity utilities are still offering up the same old, same old. At times, he used lingo that seemed to invite an Uber-ization of the electricity system, although he noted the government and the sector have already sunk a lot into the status quo.

Thibeault, though, said it was hard to believe someone who lives in a Mississauga condo has the same power-pricing plan as a retired couple living in a Sudbury bungalow.

“These consumers can opt for different telephone, cable and Internet services tailored to their personal circumstances and preferences — and yet, they remain on effectively the same retail price plan for home electricity consumption,” Thibeault said. “We can cling to a decades-old utility model; or we can offer consumers the exciting new products and services they expect and deserve. We can embrace change, and at the same time take care to preserve the strengths of Ontario’s system. But we must acknowledge that this evolution will be disruptive and dynamic in its process.”

Thibeault said he was happy that the Ontario Energy Board, which regulates the electricity industry, has begun a project that encourages some experimentation with the province's Regulated Price Plan for hydro rates, which contains the time-of-use pricing levels.

Thibeault’s newfound openness also follows Premier Kathleen Wynne's apology for not paying enough attention to rising electricity rates, and as the Liberal government prepares to usher in a new 8-per-cent rebate for household hydro bills to reduce costs. Thibeault has said repeatedly he will try to sniff out additional savings for customers, big or small.

The opposition’s response: Sure, minister.

“They’re not transparent and they continue to double down on their mistake,” said Progressive Conservative Leader Patrick Brown after Monday’s question period. “Too little, too late, and their apology’s fake when they don’t change any of their policies.”

Brown, like the NDP, has called for the Liberal government to end its sale of a majority stake in Hydro One. He also said the government must stop selling off surplus electricity at a loss to other provinces and states, and should restore municipal planning rights to the power grid.

Moreover, a new report from the Ontario Association of Food Banks, released Monday, found food banks are still seeing a high level of use after the 2008-09 recession, due in part to rising hydro rates. This comes in the wake of Premier Wynne declaring that it is "unacceptable" for Ontarians to have to choose between paying rent or paying their hydro bill.

"Hydro rates are out of control. You’re pushing families and seniors into poverty," said NDP MPP Percy Hatfield during question period. "This government just isn’t doing enough to help people who are struggling and falling further behind on their hydro bills."

But, pending the outcome of the government’s long-term energy plan consultation, Thibeault said there’s a lot on the table — “anything that we can do to continue to help customers to reduce their rates and keep the great system that we currently have,” he said.

“Driven by the introduction of new, disruptive technologies, as well as increased customer awareness, the traditional electricity utility’s 'customer-commodity' dynamic is poised for a major, and a needed, upheaval,” Thibeault claimed during his speech. “In fact, looking at current trends, consumers will demand it.

“As we consider the impact of net metering, personal home storage and increased electric-vehicle penetration into the marketplace, the traditional ‘poles and wires’ business will need to adapt to offer better products to those customers,” he added. “And those who do not ought to face increased competition from new entrants, nimble service providers and perhaps even other [local distribution companies].”

The government is also rethinking its own procurement practices. The first step is losing one’s religion, Thibeault said, which may extend to the Liberals' faith in green energy. Costs tied to the government's big green-power projects have been steep, and the Liberals recently decided to do away with the second round of their Large Renewable Procurement process.

“Too often we have sought to impose strict requirements on the system operator,” said Thibeault. “Rather, as we seek to undertake future procurements, we should be focused on outcomes, rather than contracting with specific technologies. Moving to become technology-agnostic will provide new opportunities for innovation and modernization. We must unleash the electricity sector and our system operator to find the appropriate mix to fulfil a capacity auction would that ensure ratepayers receive the best possible prices.”

Switching to an auction-style system to procure electricity capacity — by putting out how much power capacity the government wants, and letting companies and others bid for the rights — could offer up another $300 million in annual savings, Thibeault noted. That said, the government is not abandoning multibillion-dollar nuclear power plant refurbishments, nor is it dropping its moratorium on offshore wind projects until all the science is in, despite its apparent popularity, Thibeault clarified.

In addition to tinkering with procurement methods, the government and the Independent Electricity System Operator are reviewing how they can breathe new life into the market. Again, that said, the electricity system can only be shaken up so hard, Thibeault conceded. The government has already signed an entire slate of 20-year power-producing contracts with various private-sector companies for solar, wind and other sources of electricity.

“Ontario’s hybrid electricity sector contains a mix of competitive, contracted and even rate-regulated generation resources,” he added. “With the vast majority of our supply mix secured, we acknowledge future capacity procurements will be seeking to secure supply on the margins.”

To contact the reporter on this story:
gzochodne@qpbriefing.com
416-212-5913
Twitter: @geoffzochodne

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