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The hidden cost of going green

Ottawa Business Journal |Peter Kovessy |March 8, 2010
CanadaJobs and Economy

Landlord Bill Sioulas thought he'd be paying less for hydro after cutting his consumption by almost 20 per cent. ...Expecting big savings, Mr. Sioulas says he was shocked to open his hydro bill and find a skyrocketing provincial fee had eroded the payoff of his conservation efforts.


Large users hit with ‘impossible to budget for' fee hike

Landlord Bill Sioulas thought he'd be paying less for hydro after cutting his consumption by almost 20 per cent.

The regional director of Conundrum Capital Corp. changed the lighting and upgraded the rooftops on many of the commercial properties he manages.

The investment paid off, as Mr. Sioulas drew 1.8 million fewer kilowatt hours at 15 of his light industrial and suburban office buildings last year.

Expecting big savings, Mr. Sioulas says he was shocked to open his hydro bill and find a skyrocketing provincial fee had eroded the payoff of his conservation efforts.

Labelled a "provincial benefit," the line item is charged to large power users and customers who've …

... more [truncated due to possible copyright]

Large users hit with ‘impossible to budget for' fee hike

Landlord Bill Sioulas thought he'd be paying less for hydro after cutting his consumption by almost 20 per cent.

The regional director of Conundrum Capital Corp. changed the lighting and upgraded the rooftops on many of the commercial properties he manages.

The investment paid off, as Mr. Sioulas drew 1.8 million fewer kilowatt hours at 15 of his light industrial and suburban office buildings last year.

Expecting big savings, Mr. Sioulas says he was shocked to open his hydro bill and find a skyrocketing provincial fee had eroded the payoff of his conservation efforts.

Labelled a "provincial benefit," the line item is charged to large power users and customers who've signed contracts with electricity retailers.

It's used to pay private and other non-utility power generators that are growing in number as the government offers generous incentives for green power producers.

In Mr Sioulas's case, the provincial benefit on those 15 buildings added up to a little more than $45,237 in 2008. A year later, he says it climbed to $239,428, an increase of 429 per cent. "How do I budget for this next year?" he asks. "It doesn't make any sense."

The provincial benefit actually lived up to its name in 2005 when market electricity prices were higher. That year, users received an average of 1.11 cents per kilowatt-hour.

But since the spring of 2006, the provincial benefit has been "a real kick in the teeth" to large users and retail electricity contract customers, says Pembroke-area MPP John Yakabuski, the energy critic for the Ontario Progressive Conservatives.

He says the increased number of contracted private renewable energy generators is causing the provincial benefit to climb.

It now stands at 2.63 cents/kWh, compared to 0.95 cents/kWh a year earlier.

To encourage more renewable power production, the Liberal government is offering generators long-term contracts with high feed-in tariffs.

"It turns out they're costing a fortune," says Mr. Yakabuski. He adds the government should be upfront about the cost of its feed-in tariff program, rather than "hiding it in a clandestine way that the average consumer doesn't understand."

Ottawa's Building Owners and Managers' Association plans to issue an industry bulletin to make its members more aware of the issue, says executive director Dean Karakasis.

"It's surprised everyone (and) ... is impossible to budget for," he adds.

On top of the escalating provincial benefit burden, Mr. Karakasis says large electricity users in Ontario will take another hit this summer when the harmonized sales tax takes effect.

WHOSE BENEFIT?

What is it?

A billing adjustment tacked onto the price of each kilowatt-hour that reflects the differences between the spot market price and the rates paid to regulated and contracted generators, such as private green energy producers. This means its value may be positive or negative, depending on price fluctuations in the spot market.

Who's affected?

Customers who have signed a contract with a licensed electricity retailer and large users (>250,000 kWh/month).

How much is it?

It has fluctuated from a low of -2 cents/kWh in October 2005 to a high of 4.33 cents/kWh in August 2009. It currently sits at 2.63 cents/kWh.


Source:http://www.obj.ca/Local/2010-…

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