Ontario customers paid $52.8 million last month to subsidize electricity in the US and Quebec

Tom Adams

By Don Butler, Postmedia News  Windsor Star 

Ontario producers sold a record amount of electricity to neighbouring jurisdictions in December. But if you think that’s good news, think again.

What it really means is that Ontario has so much surplus power, it has to unload it at whatever price it can get. And lately, market prices have been well below what Ontario residents pay for the same electricity.

Because wholesale electricity prices are in the basement, “we’re losing money on every kilowatt hour that crosses the border,” says energy consultant Tom Adams. He calculates that Ontario customers paid $52.8 million last month to subsidize electricity users in the United States and Quebec.

There was so much surplus electricity flooding the market, Ontario generators even had to pay users as much as 13 cents a kilowatt hour to take surplus power off their hands at times.

Typically, those negative prices only apply to a few isolated hours. But on New Year’s Day, the hourly Ontario energy price for the whole day was negative, averaging -$20.29 per megawatt hour — the lowest daily average since records began.

As a result, Ontario power generators paid $1.46 million to external markets to rid themselves of power on Jan. 1, according to the province’s Independent Electricity System Operator.

In theory, Ontario businesses and residents also benefit from low or negative wholesale power rates.

But those savings are offset by something called the global adjustment charge.

Global adjustment, formerly known as the provincial benefit, accounts for the difference between the spot market price and the minimum rates paid to regulated and contracted electricity generators.

Those rates vary widely, depending on the generation source. But right now, they’re higher — sometimes much higher — than the wholesale price, which averaged 3.79 cents per kilowatt hour last year.

9 thoughts on “Ontario customers paid $52.8 million last month to subsidize electricity in the US and Quebec

  1. Interesting that on Jan 1st wind power was quite productive in Ontario – we paid producers 13.5 cents per KWh and (based on this article) we had to pay other jurisdictions an additional 2 cents per KWh to take it off our hands (because it was all surplus). This is a perversion of rational economics.

  2. My very first thought after reading this is: Why can’t WE Ontario Hydro consumers get a few days a month of FREE HYDRO when there is such surpluses that actually cost US money to export?

    Wouldn’t that be the more “prudent and honourable” thing to do for the “hydro poor” citizens of Ontario?

    Oh silly me! The very words “prudent and honourable” don’t ever cross the lips of the “Pollyanna’s” at Queens Park!

  3. I thought that when supply was high and demand low, the consumer pays LESS!

    Only in Ontario does the consumer PAY MORE!

    Thanks Dalton!

    B.B.W

  4. In other words, we’re paying our neighbours to take the excess generation off our hands. If you think it’s bad now, wait till they put an extra 10,000 MW on the grid from IWTs. The Liberals will be praying that the wind never blows.

  5. Speaking of wealth transfer, this will become a vicious circle as Ontario keeps ratcheting up power costs. Hundreds of jobs recently left Timmins, Ontario for Quebec when Xstrata closed their Timmins metallurgical site and moved production to Quebec. Processing ore is energy intensive, and power is significantly cheaper in Quebec, so that’s where the jobs went.

  6. McGuinty is right on target for the “de-industrialzation” of Ontario, just like Agenda 21 dictates. His new job?……..working for the U..N with the rest of the “dictatorial elitists” who consider themselves the “rulers of the world!”

  7. The only thing that is green about the wind turbines is the money.

  8. When selling excess wind power another on-demand power source is on-line to stabilize the amount of power exported. The variable wind power is not sold in isolation. Additional operation of an on-demand peaking source is an added cost of having wind on the grid when curtailment would be cheaper.

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