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The Ontario Chamber of Commerce this week released the findings of an unprecedented consultation with its members and the results are painfully clear: soaring electricity prices are killing business in Ontario. One in 20 Ontario businesses now expect to shut their doors in the next five years due to electricity costs, and nearly 40 per cent report that electricity costs have already forced them to delay or cancel investment decisions.
The Chamber acknowledges that the larger policy picture from Queen’s Park is grim, with plans for cap-and-trade, higher minimum wages, rising workplace safety premiums and a new government-run pension system. But their report, Empowering Ontario, focuses above all on soaring electricity costs, a problem unique to Ontario that is directly traceable to a decade of foolish policy decisions.
The Chamber is to be applauded for taking on this issue. Many Ontario businesses have tried to shield themselves by seeking beggar-thy-neighbour gimmicks that merely shift their costs onto others, resulting in a less efficient and transparent pricing system. For instance the Chamber slams the Class A/B rate split that benefits large consumers by redirecting some of their costs onto households and small businesses.
Perhaps Ontario business leaders are finally realizing that moving their deck chairs to the high side of a sinking ship is not a long-term solution. With the Ontario Liberal government this week preening on the global climate stage at the Climate Summit of the Americas in Toronto, doubling down on its costly green agenda, the business community needs to face up to the bigger picture.
Based partly on a 2014 study we did for the Fraser Institute, the report explains that Ontario levies a (soaring) non-market surcharge on electricity called the Global Adjustment (GA), which funds above-market revenue commitments to power generators and the cost of conservation programs.
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