The power to kill us... or help us

Expensive i ndustrial electricity prices in Ontario are killing our industry’s competitiveness. Does a funeral for Ontario industry seem premature? Perhaps. But ask the steelworker who was downsized, the miner whose ore is now mined offshore or the autoworker who is concerned about future investment in his or her plant. They might disagree.

The Ontario government’s Long-Term Energy Plan was released a few weeks ago. It states that Ontario’s industrial electricity rates are lower than the average price in the Great Lakes region. This is simply not correct. Pricing data do not support the statement. In fact, they contradict it. But saying so waves away a difficult problem. It is easier to deny something than to deal with it.

The provincial government’s Fair Hydro Plan, rolled out earlier this year, is intended to reduce electricity bills for residential customers by 25 per cent. Unfortunately, almost none of it applies to large industrial customers, who continue to watch their bills increase and their competitiveness and ability to attract capital decrease. An industrial Fair Hydro Plan would help to preserve and create jobs and would grow the economy.

Between 2012 and 2016, Ontario’s cost of industrial power increased between 30 and 40 per cent. We pay more for electricity than they do in Quebec, Manitoba, New York or Texas — in some cases, more than twice as much.

Paying twice as much for electricity makes it hard to compete. Many large Ontario industrial firms operate in a global market where their product is a commodity: the price they get paid for their product is determined by the world market. They can’t pass a higher cost along because the market simply won’t pay for it — buyers will get it from someone else who has lower costs. Maybe some people consider that to be the industry’s problem. They might think intellectual capital and a knowledge- based economy are the way of the 21st century. They don’t realize that Ontario industry is, in fact, very much high-tech.

But another problem is how industries in Ontario are supposed to attract much-needed capital investment to their facilities. Consider this: if you were a board member of an electricity- intensive industrial operation that had facilities in Ontario and the U. S., where would you invest your next upgrades or new facilities? Both offer good supply chains. Both have strong l abour f orces. But one charges twice what the other does for power. And when that investment money goes south, the jobs go with it. Every at-risk industry has upstream suppliers, downstream customers, and retail applications, all of which will be impacted. Industry reaches pretty far through the Ontario economy — far enough that its absence will touch everyone in the province.

Ontarians need to spare a thought for how to better position our large industrials for success, including t hrough additional programs targeted at addressing industrial electricity prices. That’s not a silver bullet: it’s just short- term assistance. Longer- term fixes mean repairing the electricity market, but that is years off. Ontario’s large industrial electricity pricing problem is at a critical point and requires prompt action now.

ALMOST NONE OF THE FAIR HYDRO PLAN APPLIES TO INDUSTRIAL CUSTOMERS WHO CONTINUE TO WATCH THEIR BILLS INCREASE.