The Ontario LDCs (Local Distribution Companies) have verified that Cap-and-Trade charges will be removed from customer bills. However, the timing is still unclear. The LDCs are working with the OEB (Ontario Energy Board) and government to determine how Cap-and-Trade is being wound down and when charges will be removed.
The LDCs are also reminding customers that incentive programs for improving energy efficiency and cost savings are still available.
Enbridge and Union Gas have been under common ownership since February 27, 2017. Full amalgamation of the two companies including rate-setting and staffing will happen over time. There is some debate over the length of time for the amalgamation and integration framework. The Ontario Energy Board suggests six years while the utilities prefer ten years.
The OEB’s objectives for the facilitation of the merger have been stated as follows:
The existing Cap and Trade program in Ontario has been cancelled. However, the Federal government still has a national plan for a carbon tax. With the elimination of the Provincial program, Ontario will need to decide on another plan or likely be subjected to the Federal carbon tax backstop effective January 1, 2019.
The backstop is intended for any province that does not have its own program in place. The program ensures that Canada can meet its emission commitments. In 2015 Canada agreed to set national targets to cut GHG (greenhouse gas emissions).
Canada’s sustainability goals were established under the Paris agreement on climate change and in the Pan-Canadian Framework on Clean Growth and Climate Change.
The country has committed to reduce its economy-wide emissions 30 per cent below 2005 levels by 2030 and 80 per cent by 2050.
The CEO of Hydro One and the entire board is resigning. A new board will be created which will be made up of four members nominated by the province and six institutional investors. The new board will select Hydro One’s next CEO.
Hydro One is Ontario’s largest electricity transmission and distribution utility. It is one of five current entities that previously made up Ontario Hydro. After a sale of shares in November 2015, the utility is now 47.4% owned by the provincial government. Beyond Ontario, Hydro One has plans to expand to the U.S. with a multi billion-dollar transaction to acquire energy company Avista. The board shake up puts the acquisition at risk.
Each quarter Enbridge and Union Gas apply to the Ontario Energy Board (OEB) to change their natural gas delivery and commodity rates. The purpose is to be more reflective of true market rates. Through a process known as QRAM (Quarterly Rate Adjustment Mechanism), the utilities present evidence to the OEB that support a rate change for the next three months based on past and future performance. Typically, the OEB accepts and approves the supporting evidence quickly and the new rates are applied to the next billing period.
For the third quarter of 2018, the OEB was unable to approve the rate adjustment proposed by Enbridge and Union Gas – no explanation was given for the delay. Instead, the OEB accepted a proposal from the utilities to NOT adjust rates for the third quarter, and to defer the setting of the new rates to the fall. This may result in a higher Utility Gas Price Adjustment on winter natural gas bills.
The rate change delay may be related to the cap-and-trade cost that every natural gas user in Ontario began to pay as of January 1, 2017. Currently a charge of about 3.5 cents per cubic meter is buried in the delivery line item on your utility bill. The Ontario Energy Board reviews and approves cap-and-trade costs as well as commodity, transportation, storage and delivery charges.
oeb natural gas rates and your bill
Ontario has begun to dismantle the province’s cap-and-trade system by prohibiting all trading of emission allowances. Ontario, Quebec and California were to participate in a third joint auction on August 14th. The change leaves businesses involved in the cap-and-trade program with uncertainty.
The cancellation will have major ramifications for the federal government, which plans to implement a carbon tax in provinces where there is none. On Tuesday afternoon, the federal government was already criticizing the change of direction in Ontario.
Contracts and orders that have already been signed will be honoured. There will be an “orderly wind-down” of GreenON programs funded by cap-and-trade, including incentives for homeowners to make their homes more energy efficient and for motorists to switch to electric vehicles.
A heat wave continues to hit eastern and southern Ontario this week. On July 1st the humidex hit over 47 in Ottawa. (The humidex is an index number that combines heat and humidity and is used by Canadian meteorologists to describe how hot the weather feels to the average person) Demand in Ontario is expected to peak at over 23,000 megawatts (MW) on July 5th. Although we have not seen demand this high over the last few years, peak demand was over 27,000 MW a decade ago.
For companies on Class A, be aware that there is a high likelihood that more than one of the five highest peaks occurring in early July. The first two months into the new peak ICI season have shown us that there is an additional 200-400 MW involved and that ICI curtailment is starting earlier in the day.
Energy is one of the most talked about issues in the upcoming Ontario election. Fifteen years of poor decisions started in an atmosphere of near panic in the aftermath of the 2003 blackout. Since then there has been minimal capital investment on Ontario’s electricity system. Add to that the cancellation of gas-fired power plants, sale of Hydro One, and the Fair Hydro Plan, we can see that Ontario is making decisions with enormous long-term economic and environmental consequences based on short-term political considerations.
Mark Winfield, writing for Policy Options, suggests the province needs to engage in a meaningful, independent, public review of its long-term electricity needs and options in terms of cost-effectiveness, resilience and sustainability. All options — nuclear plant refurbishments, hydro imports from Quebec, additional renewables and conservation, and distributed generation and storage — need to be on the table. Such a review offers the only option for building some sort of lasting consensus around the system’s future direction and putting an end to the practice of managing the system to meet short-term political goals.
http://policyoptions.irpp.org/magazines/may-2018/ontarios-hydro-unwelcome-truths/
The Canadian Press attempts to answer some of the questions surrounding electricity in Ontario. The news article published May 16th begins with a quick summary of the transition from now-defunct Ontario Hydro to a hodgepodge of entities that control different components of the electricity system: power generation, transmission, and regulation.
Questions such as “Why have rates gone up?” “How does Ontario compare to other jurisdictions?” and “Why is hydro so politically charged?” are explored.
May 2018 is the first month of a new Base Period which runs from May 1, 2018 through to April 30, 2019. All customers must opt-in/opt-out of the ICI (Industrial Conservation Initiative) program by June 15th, 2018. The process is different for larger users (peak demand greater than 5 MW) and lower qualifying users (peak demand greater than 500 kW) All customers on the ICI program will be billed the global adjustment based on the most recent Base Period beginning July 1, 2018.
http://www.ieso.ca/sector-participants/settlements/global-adjustment-class-a-eligibility
The IESO held a webinar on April 5, 2018 to provide information about LDC responsibilities, customer eligibility, registration, settlement details, and key dates. This 40-page slide presentation is an informative summary for customers considering the ICI program and can be found on the IESO website.