Nuclear advocates have blamed renewable energy for driving up Ontario's electricity rates. A new report by the Ontario Energy Board tells a different story: Nuclear has been responsible for 45% of recent increases on your electricity bill. Meanwhile, the impact of renewables on your electricity bill has been minor – about 6%.
A report released last week by the Ontario Energy Board’s Market Surveillance Panel details what has caused increases to the “Global Adjustment” on your electricity bill. The Global Adjustment (GA) is the difference between spot market electricity prices and the contracted price paid to various electricity producers in Ontario.
The GA thus collects more money from electricity consumers to pay generators if electricity prices fall below contracted prices. In recent years the GA has grown dramatically and Ontarians have felt it on their electricity bills. In 2011, the GA collected from electricity consumers was about $5.3 billion.
Critiques of green energy have continually blamed green energy for increases in the GA. And they are partially correct. The government has established programs, such as the Green Energy Act, that do pay renewable operators more than market electricity prices.
However, what critiques of green energy typically don’t mention is how dirty energy has actually been the principal cause of increasing electricity prices.
The graph below from Market Surveillance Panel shows that the main contributor to increases in the GA is nuclear power.
Indeed, the report notes that: “The major factors that led to the increase in 2009 were a significant decrease in wholesale electricity price and a higher regulated price paid to OPG” (Ontario Power Generation) for running its aging nuclear reactors at Pickering and Darlington.
We should expect higher nuclear costs will continue to increase the Global Adjustment and your electricity bill.
Later this Spring, the Ontario Energy Board will review the rates paid to OPG for the electricity produced by its reactors. I expect OPG will request yet again for more money to keep its aging reactors running.
And after years of delay, Bruce Power will also start up two reactors at the Bruce A nuclear station. In 2005, the McGuinty government signed a deal to pay Bruce Power well above the current price for electricity. This too will drive up the Global Adjustment.
So yes, renewable energy has contributed to increases in the Global Adjustment by a mere 6%. And this will increase in the years to come as more renewables comes online.
Luckily for consumers, however, the Green Energy Act is also designed to reduce prices paid for new wind and solar installations as prices drop due to innovation in the industry. And the government reduced prices paid for renewables earlier this year.
Green energy costs need to be put in context. It is the increasing cost of running Ontario’s aging reactors that has been the principal cause of electricity price in recent years. Of course, given nuclear power’s history of cost over-runs this should be no surprise.