Ontario’s Fair Hydro Plan

The Fair Hydro Plan 

Seeks to mitigate the rising cost of electricity in  Ontario.
 
Key Details of the Announcement
 
Enhancing Competitiveness for Small Manufacturers and Industrials
Due to our ongoing advocacy work, the OCC is pleased to see that the Fair Hydro Plan will expand the Industrial Conservation Initiative (ICI) extending eligibility to small manufacturers and industrials with an average peak demand of over 500 kilowatts.
Refinancing the Global Adjustment (GA)  
The proposed plan will refinance the costs associated with the Global Adjustment (GA), providing immediate relief to consumers by ‘smoothing out’ the payment of energy contracts over a longer time period.  The Ontario government predicts that this refinancing will achieve an average of 17% savings for the individual ratepayer (25% when including the previously announced 8% HST rebate).  The government intends to introduce a legislation that would, if passed enable the Independent Electricity Operator (IESO) and Ontario Power Generation (OPG) to refinance the GA over a longer period of time, ultimately lowering the cost paid by consumers.  Under current forecasts, the immediate reduction in the GA would be approximately $2.5 billion per year on average over the first 10 years, with annual interest costs not exceeding $1.4 billion.
Helping Vulnerable Consumers
The Fair Hydro Plan includes initiatives to help Ontario’s most vulnerable consumers.   The province plans to pass legislation to enable these new measures.  Together these new initiatives will cost the government up to $2.5 billion over the next three years to be funded through provincial revenue.  These initiatives include:
 
Broadening Rural or Remote Electricity Rate Protection (RRRP)
Currently, the RRRP provides a rate subsidy to rural/remote customers who are faced with higher distribution costs compared to urban areas.  The new program will increase the number of qualifying customers from approximately 350,000 customers to 800,000 customers.
Our Position
The OCC network has repeatedly heard from Ontario’s business community that energy rates are unsustainable. In fact 51% of businesses ranked energy concerns among their top three policy priorities.
Once implemented, Ontario’s Fair Hydro Plan will bring immediate relief to the business community by “smoothing” the GA rate over a longer time period and tying rate increases to inflation over the next four years.  While this will alleviate challenges associated with the costs of electricity in the near-term, the Ontario Chamber Network advocates for further amendments to the province’s energy strategy in order to ensure the long-term sustainability of our energy system.   Later this year, the OCC will release a report recommending further enhancements to the long-term sustainability of the energy sector.
 
What’s Next
As part of the Fair Hydro Plan, the OCC will work with the Minister of Energy to deliver a targeted outreach campaign to help business better understand and participate in provincial programs such as the ICI.  In spring 2017, the government is expected to release it’s Long-Term Energy Plan.  The OCC will continue to advocate for the reduction of input costs on businesses and looks forward to working with the government to deliver on its energy priorities.  In addition, we encourage the government to continue to find ways to update provincial legislation in a way that supports Ontario’s economic growth.
Background: During Question Period at Queen’s Park on March 3, 2017, the advocacy efforts of the Ontario Chamber of Commerce network and last year’s Small Business Too Big To Ignore Campaign were front and centre.  When speaking about the government’s recently announced Fair Hydro Plan, Minister of Economic Development and Growth Brad Duguid, explicitly acknowledged the OCC network’s work during this campaign, particularly emphasizing how it highlighted concerns of rising electricity prices throughout the small business community.
 
Protecting Our Economic Relationship with the United States
Like you, we are concerned about what the new administration in Washington means for Canada-U.S. relations in general and for business in particular. We all know examples of businesses that have put investment plans on hold until the picture becomes clearer.
Protecting and enhancing Canada’s relationship with the United States is a very high priority for the Canadian Chamber. Since the presidential election, we have been ramping up our efforts. So far, we:
  •  Met the Prime Minister, the Minister of Foreign Affairs, the Finance Minister and other members of Cabinet, as well as the Leader of the Opposition.
  • Hosted a visit to Ottawa by the President of the U.S. Chamber of Commerce, Tom Donohue.
  • Met the top officials in the trade department and the Prime Minister’s Office responsible for Canada-U.S. relations.
  • Convened our International Policy Committee to determine priority sectors and begin work on specific policy advisories.
  • Began discussions with regional groups of local chambers of commerce.
  • Brought together sector associations to share intelligence and work together on a campaign to promote the relationship.
This is just the beginning.Today, we are sharing with you our new strategy,  Shaping the Future of Canada-U.S. Trade, which outlines the actions we will be taking to promote the advantages of NAFTA and bilateral trade.

As you will see in the strategy document, we will soon be launching a campaign, in concert with our membership, to reach out to U.S. businesses and lawmakers to enlist their support for maintaining and enhancing the world’s most successful international partnership.

Working closely with the Canadian government, we will help coordinate and equip our membership to work across the border in as many ways possible, to engage with American businesses and encourage policies that strengthen our mutually beneficial ties.

In order to be as efficient as possible in our planning, we ask that you please complete this brief survey so that we can get a good understanding of your ties with your U.S. partners.

Armed with this knowledge and with your help, we will roll out a proactive and efficient strategy, ensuring we build the foundations of the next 150 years of Canadian business success.