Soaring energy prices making Ontario look dim for manufacturers – by Adam Radwanski (Globe and Mail – March 19, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

For businesses in Brockville, the attempt to lure them over the border wasn’t new. But the pitch was. Earlier this winter, manufacturers in the Eastern Ontario community received a letter reminding them that their province’s industrial electricity rates were projected to rise by 33 per cent over the next five years, and 55 per cent by 2032.

“As a hedge against these increases,” it suggested, “setting up an operation just across the border in St. Lawrence County, New York, may be a competitive strategy you should consider.”

Such overtures, if not in written form then made more casually, are becoming increasingly common in Ontario. While they may not find immediate takers, they are emblematic of the mounting economic threat from an energy-cost trajectory that – following a series of questionable policy decisions – the province now seems powerless to do much about.

Owing mostly to a combination of overdue investments in infrastructure, phasing out coal and an ill-fated gamble on green energy, soaring power rates have already greatly increased the cost of doing business in Ontario. That’s particularly true for those in the troubled manufacturing sector.

In a report last month, the Association of Major Power Consumers of Ontario (AMPCO) alleged that the province now has “the highest industrial rates in North America”; per that report, prices are currently 37 per cent higher than in neighbouring New York for the province’s biggest industrial users, and 68 per cent higher for smaller ones.

Adding insult to injury is that, because an excess of energy supply has come online at a time of decreased demand, Ontario is currently selling surplus power to New York and other neighbours at a steeply discounted rate. While that may play only a marginal role in enabling them to offer lower prices to consumers, it adds to frustration on this side of the border – not so much with those taking advantage, as with perceived mismanagement of the province’s energy market that has given them the opportunity to do so.

“It’s not anything to do with them – they’re capitalizing on an opportunity,” said Brockville Chamber of Commerce executive director Anne MacDonald about St. Lawrence County. “It’s more about the hike in electricity costs.”

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