Support for free market opportunities to address high electricity prices

Enable opportunities for Ontario businesses and residents to better manage electricity costs through virtual net-metering. 

Issue

Electricity prices in Ontario are the highest in the country, undercutting the competitiveness of businesses in the province and reducing the attractiveness of the province as a destination for investment. It is the responsibility of the Government of Ontario to explore opportunities for businesses and residents to obtain relief from these pressures.

 

Background

Between 2008 and 2015, due to a myriad of factors, electricity prices in Ontario rose by 71%, outpacing the growth of Ontario’s economy by a factor greater than four1. Its impact on businesses has been well-documented by this chamber. This resolution will attempt to provide a constructive free-market solution to this challenge – virtual net metering.

Virtual net metering is a billing arrangement which allows multiple homeowners or businesses to participate in the same net metered electricity generation system and share the output from a single facility that is not physically connected to their property (or their meter). Under this arrangement, the electricity generated from a single project creates bill credits which can be used by one or more participating customers to account for a portion of their total electricity needs.

The supplier is partnered with the local utility to ensure the monthly energy (kWh) produced by the project is netted off of the participants’ electricity bill proportionally based on their level of ownership in the project. As many of these projects deploy electricity generation that produces power at peak-demand times, this will allow subscribers to take advantage of the ‘peaking’ nature of the ‘time-of-use’ period, which will significantly reduce their electricity bills.

The move to deregulate the electricity grid in Ontario was the correct one, but the province has yet to truly harness the potential of the free market opportunities that will provide businesses in Ontario with the open, fair, and competitive electricity options that will enable lower prices and long-term resiliency of the grid.

 

Recommendations

  • Commit to continue with Time-of-Use pricing and investigate opportunities to enable ratepayers in the province to enter in to virtual net metering arrangement under a time-of-use/production pricing scheme.
  • Amend O Reg 541/05 (the Net Metering Regulation) to allow for virtual net metering.

 

References

  1. Jackson, Taylor, et. al., Evaluating Electricity Price Growth in Ontario. The Fraser Institute, 2017


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