by SUSAN MANN
The Ontario Federation of Agriculture agrees with an organization representing the province’s businesses that electricity rates are way too high but the two organizations part company on how to deal with the soaring prices.
Federation president Don McCabe says the Ontario Chamber of Commerce’s recent report highlights the need for a farm or industrial rate for the province’s farming businesses.
“We still continue to work towards that goal,” he says, noting the federation contributed information to the Chamber’s report.
The Chamber isn’t in favour of a special rate for various sectors, says Andrea Holmes, senior policy analyst. “In this report we tried to stay away from niche ratepayer programs. We wanted to focus on creating system-wide cost savings.”
The Chamber released its report Wednesday calling on the government to address businesses’ rising electricity costs. The report is called Empowering Ontario: Constraining Costs and Staying Competitive in the Electricity Market.
Since 2013, electricity rates in Ontario have risen by 16 per cent and will increase a further 13 per cent over the next five years, the report says.
A survey of the Chamber’s 60,000 members found that one in 20 businesses will close in the next five years due to high electricity costs. The Chamber consistently hears “the price of electricity is undermining members’ capacity to grow, hire new workers and attract investment,” Chamber president and CEO Allan O’Dette says in a news release.
McCabe says he understands why the Chamber would say it wants electricity rates lowered for businesses overall. But the federation “doesn’t represent all businesses. We represent the farming sector and we want to see a lower farm or industrial electricity rate for our sector.”
Under current approvals by the Ontario Energy Board, downtown Toronto rates will be about 12.5 cents per kilowatt for electricity while for rural Ontario the rate will be 20 cents per kilowatt, McCabe says. “That’s because of distribution costs and added costs that have been placed in the system through various sorts of regulations.”
With electricity rates at 20 cents per kilowatt, farmers will be taking a hard look at their bill and decide, “whether or not it’s time to go off the grid. Maybe they can produce power cheaper,” he says.
Holmes says the Chamber’s report doesn’t specifically address farming. However “we are very cognizant of those energy intensive sectors that might use more electricity than others. Lowering system costs, which is what the report sets out to do, would help all ratepayers, particularly farming or other energy-intensive sectors.”
Small and medium-sized businesses are the most heavily impacted by rising electricity costs, she says. Small businesses can’t shift their usage to times of day when power is cheaper. Medium sized businesses often aren’t eligible for programs offered for large industrial users, she says.
The report makes several recommendations. They include:
- Increasing transparency of electricity pricing and the drivers of system costs. Shining a light on the components of electricity bills plus what contributes to the rising rates will hopefully lead to better decision making in the future, Holmes says.
- Keeping the debt retirement charge on residential bills until the entire debt has been retired. The government is removing charge as of Jan. 1, 2016. Holmes says the current debt is more than $7 billion and the government’s projection is it will be paid off by 2017/18. The Chamber is concerned that removing the charge from residential bills will result in industrial ratepayers having to pay the bulk of the debt.
- Provide incentives for local distribution companies to voluntarily consolidate.
- Move away from the central electricity procurement model.
- Use smart meters to their full potential by collecting data provide-wide and using the information to increase forecasting or offer different rate plans for different ratepayers.
The government has rejected the Chamber’s call to keep the debt retirement charge in place for residences. But “we understand how important it is to help businesses in Ontario address energy costs,” says Dan Moulton by email. He’s the spokesman for Ontario Energy Minister Bob Chiarelli. “We will seek to reduce costs through conservation initiatives and prudent system planning” along with programs designed to reduce businesses’ electricity costs. BF
Comments
Let's see, farm groups want government to come up with a band aid fix that government created in the first place.
Unfortunately, the exemptions demanded (and often received) by farm groups do little more than fuel the flames of so-called "agricultural exceptionalism" - a concept farmers misconstrue to do all sorts of goofy things never intended in the first place.
For example, the biggest problem with the OFA's request is defintional - if farmers get a lower rate, oodles of non-farmers will suddenly claim to be farmers and thereby defeat the original purpose of the exemption.
Stephen Thompson, Clinton ON
Precisely. I'll even go farther. Is there any acceptance among farmers that the windmills and solar panels spread across Ontario's farms have anything to do with the electricity rates that are causing so much personal grief and driving away businesses in this province? Or, do those who profit (or want to) from the madness acquire some sort of willful blindness that excuses them?
Do they ever stop to think about their contribution to this provinces sad economic state of affairs? Do they worry about the future of our younger generations, or are they simply uncaring about our provinces recent credit downgrade and the cause?
I don't have a turbine or solar and chose not too sign turbine lease. Reasoning was that on farms were previous generations signed lease for hydro towers,gas lines,railroad,ect. did something that has affected every generation since and into the future . Those old extinct turbines with there 100's of meters of cement foundations,roadways will be on your farm forever . Years ago when Ontario Hydro wanted too ad a new tower line the farmers cried about taking away land,farming around them and in the end there biggest question was "How much money can I get" . At the very least OFA or someone should make wind farm areas be a communal pay for all in the aera and then let landowner either sell a piece too wind farm or recieve rents for the land and driveway. If its so good and profitable why is Samsung not just buying up big chunks of land and getting the whole pie .
We want higher prices for the power farmers sell than (we) as farmers want to pay. Stop all new fit contracts and limit lower priced power to 500kw hours per month, per household.
When property owners with turbines reaping over $10g per year for doing diddly-squat, while at the same time did not have to invest any money, are we really surprised that rates are increasing?
Raube Beuerman
Electric power, something everyone needs and now its getting priced too a point were even some families with electric heat will struggle too pay there bills as it is one thing that just has went out of control. For farms (or small business) we need a turbine/solar/generator combination that could supply power were its needed and be off the grid. The way the Liberal Gov't has been running the province becoming Amish is looking better every day.
Several things stand out in this article.
The first is the attitude that farms deserve "special" treatment...farmers always seem to forget they are such a voting minority, and the provincial government is broke.
The second is the idea that leaving the debt retirement on residence would somehow pay off the debt. As I understand it, the debt has been paid off but the gov't spent that money elsewhere. Why on earth would they ever use that money to pay off the hydro debt this time?
The third thing is that hydro rates have only gone up 16% since 2013? I don't know where that figure comes from but I know the cheque we write each month has more than doubled in spite of doing pretty well everything we can to cut back on usage and avoid peak times.
We have decided it is time to look into at least partially getting off the grid...and I'm not even thinking of wind and solar...the gov't has proven to me that the technology is not there yet. "4% of the power for 20% of the cost". I don't need a calculator to figure that one out.
D. Linton
You didn t have to be an expert to see this coming, get used to it folks, the future is here now and its not going to change. When you have a Corp like Samsung leasing farmland at prices to good to turn down, well,, someone has to pay for it.
Back in 2009, before I had taken the time to educate myself about investing, I had applied for, and received, a microfit contract with a so-called return on investment of about 10%
I ended up opting out of that contract, even though I could have stayed in, due to the fact I felt I could obtain superior long term results without the legislated ability to take from taxpayers and ratepayers.
When I told the solar company fellow this he actually laughed out loud. No big surprise.
Recently I added CU(Canadian utilities) to my portfolio. This stock is trading at close to 52 week lows, has earnings multiples of 15 and currently pays a 3.19% dividend.
CU has a yearly dividend growth rate of 8%, meaning that when the 20 year microfit contracts expire, I'll be receiving close to a 10% yield on money invested now.
More importantly, the shares of CU are an appreciating asset, while solar panels are not.
The reality is that while I agree hydro costs are too high, many farmers look like fools complaining about hydro costs, while at the same time purchasing land that trades at 50-1 earnings and making no money, instead of purchasing said utility stock at 15-1 earnings and making money.
Raube Beuerman
In spite of starting out correctly in the 1880's with Niagara Fall and Ontario's Hydro-electric Power Commission, subsequent Ontario governments went the wrong way for our electrical power supplies.
Today, hydro-electric power from moving water costs about $0.03 per kw-hr to generate (the lowest available cost), wind turbines are about $0.12/kw-hr, photo-voltaic is about $0.55/kw-hr, photo-voltaic with batteries for continuous power supply off-grid is about $1.20/kw-hr, and internal combustion engine-generators are about $2.00/kw-hr.
Nuclear, coal, and most natural gas co-gen plants operate at just 30% efficiency for OPG. The other 70% of the fuel energy is lost into the Great Lakes or the air as waste heat. Alternatively, we could have designed these systems a little different to achieve 91% energy cycle efficiency and got our electricity at 1/3 the cost we are forced to pay today.
Dow Chemical in Sarnia, starting in the 1970's, had run their co-gen gas turbines for more than 2 decades at 75%+ cycle efficiency. Today, the available technology is even better, but we rarely use it.
CANDU nuclear power plants only use 0.75% of the nuclear energy in the fuel pellets, then 99.25% of that fuel pellet nuclear energy is declared as "spent fuel" that has to be stored for 300,000 years as nuclear waste (ie. nuclear swimming pools, and then Bruce Nuclear underground storage?). Add to that the risk of Three Mile Island, Chernobyl, and Fukushima. Add to that the 200% cost over-runs to build a new nuclear power station. Add to that the depreciation loss when the nuclear plant is destroyed halfway through its planned life expectancy by negligence in operation or maintenance that corrodes the key components, or poor quality construction. Add to that the rapidly escalating yellow cake fuel costs, and the dwindling supply of high grade uranium ore. Doesn't seem like nuclear will save us.
However, in North America today (including Ontario), only 5% of all the potential hydro-electric sites have been tapped, 95% are virgin sites (or old pioneer sites that have fallen into dis-use). This doesn't mean building dams everywhere, it means "run of river" which has minimal capital costs and minimal ecological impact.
For residential homes, domestic hot water (eg. for showers, dishes, etc.) is about 25% of the home's total energy consumption. Solar water heating has free, renewable fuel (ie. the sun), is about 75% efficient on a year-round basis, and Dr. David Suzuki says it's the #1 thing that homeowners can do to help the planet. I do, but how many other homes in Canada have solar water heating?
Municipal waste produces methane in landfills, and methane is 35 times more potent than CO2 for greenhouse gasses. As an alternative to landfills, 30 years ago Dr. Bill Jewell at Cornell University developed technology where municipal garbage can be easily and cheaply digested to produce methane that is used to power engines that make electricity and heat (for district heating &/or cooling of buildings), and the digestion biomass leftovers make topsoil for the use of farmers or gardeners. Hundreds of these systems have been built and continue to run all around the world. How many does Canada have? None that I know of.
However, I am investigating the use Dr. Jewell's technology with the chicken and goat manure on my farm to make heat and electricity for my farm. How about you?
There are choices and options. Unfortunately, Ontario's past choices have saddled us with huge debts and high costs.
Today, Ontario has a $13 Billion/yr deficit. Ontario's credit rating was just downgraded this week, mainly because we have a poor (or no) plan to resolve our deficit, nor our debt, and our economy is suffering greatly due to governmental mis-management. Ontario is now on the same financial glide path as Greece, we're just 10 years behind them.
Unless we change our ways, what happens to Greece today will happen more and more to Ontario just 10 short years from now; provided Ontario doesn't financially crash and burn even sooner.
Glenn Black
Small Flock Poultry Farmers of Canada
Just last night I had a conversation with a rep that just happens to have Ontario's largest land fill in his municipality . You are correct about methane being the best and cheapest . The Ontario Liberals now say we do not need more power so that site is not even being thought of in the future but wind is still full steam ahead . Makes sense no !
It is just so wrong for people as yourself to keep blaming things on the past and more so past government mistakes . ..we will be worse off than Greece in the near future .
Editor: Comment modified
I feel sick for what has and is happening in Ontario as once we were a properous Province and now young generation has to leave too find good jobs, mfg. ect. just shuns Ontario and then you have Toronto the center of the universe
Over 7,000 digesters are at work on German farms alone! Canadian farms could become energy independent too.
A few farms and others have already built multi-million $ cylindrical digesters made out of concrete, copied from sewage treatment plant systems. These antiquated technologies are restrictive, expensive, high maintenance, and range from hard to impossible to make an economic business case to justify building.
Alternatively, you can use simple, easy, and cheap technology that can be quickly built, easily maintained, and highly profitable on-farm. That is the technology developed by Dr. Jewell at Cornell University, then copied all around the world.
Glenn Black
Small Flock Poultry Farmers of Canada
Glad others are finding out about digesters.
Many Canadian farmers are already energy self-sufficient with small scale tech or selling energy back to the grid with large scale tech.
The first digester in Ontario was built in the previous century!
There are about a hundred operating and many have been featured in BF or other publications.
Great to see that you've done your homework and are well aware of the energy options out there Glenn. As a slight correction to your numbers, solar PV is much cheaper than you've reflected. The price of PV continues to plummet which brings it to a more competitive option. For a net metered approach farmers are paying upwards of $.24/kWh including tax and delivery.
We've installed a system that when you offset the cost of electricity with solar the system pays for itself just under 10 years. Add the tax savings and it brings it down even further (often less than 8 years). The best part is the tax savings are at the front end (providing immediate financial relief to the farm) $.55/kWh seems a bit high and expect you're working off of numbers that could potentially be even only one year old.
Co-Gen is another option for large farms and another technology we are providing. Cash positive in year 1.
There are options out there as you say and we can't rely on government to do the right thing for us, especially our current Provincial government.
Options are out there. Cost effective options. You just have to look, be wise and do your homework.
Michael Howe
Solar installations are, if I undestand correctly, in Class 43.2 for Capital Cost Allowance purposes which entitles them to a 50% CCA rate - however, CCA can't be used to create or increase a loss, thereby making Mr. Howe's claim that there are, or even can be, tax savings with solar power installations somewhat fishy.
In addition, Mr. Howe's claim of a less-than-ten-year payback for solar is also fishy - one of my clients has a 4-year-old solar panel which generated about $11,000 in income during 2014, but which cost him about $6,200 in interest and about $8,200 in repairs for a cash operating loss of about $3,500.
Therefore, Mr. Howe isn't completely wrong when he claims that solar can provide tax savings at the "front end" of a solar installation - but it's just not the sort of tax savings solar power system vendors like to admit.
Stephen Thompson, Clinton ON
Stephen,
This is precisely why I'm involved in this forum. You're automatically referring to FIT which is a revenue generator NOT a cost avoidance tool like net metering. The tax act is applied but the outcome is different. We usually have to direct an accountant in clarifying this because they too fall into the same trap. Once they understand how Net metering works they will verify it.
If you're sincere in wanting to really understand it contact me directly and I will back it all up.
Some Solar systems have cost more for repairs than income generated.
Numerous studies have been made on dairy, beef, cow-calf, grain, poultry, pork, etc. about the energy inputs (nat. gas, fuel oil, diesel fuel, electricity, etc.) and the energy uses (heat, fuel, motive, etc.).
In almost all cases, a typical farm has an excess of naturally occurring energy sources, without need to puirchase energy inputs.
Of course, some new technologies may be needed to store, convert the available energy source to the ones that are needed.
Glenn Black
Small Flock POultry Farmers of Canada
So begs the question as to what are your surpluses on your typical farm ?
OFA is looking for a new researcher for the energy file . You might be a good fit there .
In response to "So Begs the Question" http://betterfarming.com/comment/16542#comment-16542
The secret to self-sustaining and affordable energy is to use or convert a problem into an asset.
Animals get hot, humid, and subjected to irritating and harmful off-gasses in barns during the summer. That is a problem that usually results in the installation of expensive ventilation systems that add to the farmer's debt, maintenance costs to keep working, and man-hrs to operate and repair.
Alternatively, that need for ventilation can be turned from a problem into an energy source to help the farm's energy supplies.
The same applies to manure, straw, dead animal disposal, waste feeds, silvaculture byproducts, wash waters, human waste (night soils), and many others.
For me, on my farm, I have the following energy sources: poultry bedding and manure, goat bedding and manure, residential composting toilet night soils and compost tea, woodlot wood, solar energy, etc.
As an example of what can be done, my first chicken coop has a radiant floor heating system for chicks, and/or winter heating for layers. It is powered by a propane water heater salvaged from a trailer, and a PV solar electrical panel to run the recirculation pump. That coop originally used about 120 lbs of propane per year of non-renewable fossil fuels.
After I installed 2" of thermal insulation and steel siding on the coop's exterior walls, the coop went through -40 deg C weather without needing any propane.
My second chicken coop that I designed also has radiant floor heating, fresh air intake heating, and natural convection air flow ventilation systems, and operates with the sun (solar water heating collectors, and PV solar electricity panels) and poultry body heat as the only energy supplies needed. It can operate in ambient weather conditions from -60 deg C to +40 deg C, when located at 45 degrees North latitude (Northern Ontario).
Glenn Black
Small Flock Poultry Farmers of Canada
I've just completed a case study for a farmer that installed solar in a net metering scenario. Payback will be under 8 years (Free electricity afterward) with a significant tax savings up front that will give you some immediate breathing room. The province won't likely want to give a break to farmers as there are options out there but you just have to look for them. If you're interested I can help you do the same for you. We are in the process of setting up some financing options as well through established farming credit resources.
If you're a really large farm we have other technology that will really reduce your overall costs cash positive in year one if solar isn't right for you.
Michael Howe
Too many proposals touted to have a 8 year payback turn out to also have an 8 year life expectancy - therefore, it's hard to be enthused about anything promoted on payback.
Stephen Thompson, Clinton ON
Stephen, I respect your skepticism but must say that modules have a life expectancy far beyond their warrantied 25 years. There are modules in the field still working well at 40 years. Solar is not new technology, it's just improved and the price is now much cheaper.
This is why we did the case study. Install, measure, record and report.
I see a lot of posts about farmers complaining about soaring costs but no one taking me up on a proven approach with immediate financial relief without government assistance. Let me do an assessment on your electricity usage and carry out the due diligence. Walking away discrediting it without actually investigating it does nothing for you or your peers.
I challenge anyone to see for themselves. The numbers work, they are real and it's for long term benefit.
Michael Howe
"Without government assistance" is a very weasely way to sneak around the fact that Hydro users are massively subsidizing solar by government mandate.
"Without government assistance" is a sleight-of-hand phrase quite-popular with farmers - for example, supply management has used it for over forty years to "sneak around" the fact that a 200% tariff barrier is the ultimate form of government assistance.
Solar is, alas, just the latest demonstration of the ability of farmers to use highly-selective interpretations of the meaning of the term "government assistance" when it suits their purpose to do so.
Stephen Thompson, Clinton ON
Welcom. You seem to be fairly new to this forum. As you have seen, the place is dominated by a few trolls who always know more about any subject than everyone else. Don't waste any effort engaging them. I now see them as they are and just find them alternately funny or sad. Regular readers won't take their bait.
Thanks for the comment, and yes I'm new. We seem to be working more and more with farmers to help them leverage the available technology to find true savings for electricity. The article caught my eye as it's so relevant to what I do everyday in solar. There're no gimmick to what we've been doing. A case study is a case study. You can't argue real numbers we have from-a-farmer, not a corporation.
Just trying to get the word out that there are REAL viable solutions available to find IMMEDIATE financial relief while keeping your independence.
The problem I see is that the company I work for is the only one that has figured out the tax and financing angles that make the numbers work for net metering. The remainder of the industry will shuffle you immediately into the FIT program which really doesn't resolve the issue farmers are being faced with.
I live in the Holland Marsh area and have a lot of friends who are farmers. I have great respect for them and they typically see financial opportunity better than non-farmers. Unfortunately right now they can't see past FIT, hence me trying to get the word out through the forum.
If you do a search on my name and "solar" you'll find me. If you wish to find out more how I can immediately help a farmer contact me. I can provide REAL numbers for YOUR operation and how best to find savings. Once identified - you make the call if it's right for you. I challenge anyone to say no after they see the real numbers which are backed by your accountant.
Regards,
Michael Howe
Much like the article in the National Post today wherein 2 female political activists accused a male of harassment on twitter due to the fact that he "dared to disagree with the two young feminists and political activists", those of us who identify ourselves on this site and point out the problems with legislative privilege and such can relate.
BTW, much like the anonymous poster above, one of the young political activists remained anonymous while directing her hateful tweets at the accused male.
Raube Beuerman
In response to "Its All About The Money"
A typical 1.0 MWatt commercial wind turbine has a cement base that is good for 100 years (or longer). The towers last about 50 years, the gearbox lasts about 25 years. The blades are supposed to last 25 years too, but are often exchanged every 1 to 5 years due to the rapidly improving blade designs that are worth changing so as to get the maximum power from the same wind.
When someone is deciding where they put a turbine, it's a 100 year decision on the economics. The wind on your lot is often the same or similar to the lot next door, or the next concession over. Because of this, the wind turbine owner can choose you, or the lots anywhere near you. The turbine owners' flexibility means loss of exclusivity in bargaining power for you.
If you want to do some hard bargaining, you may end up like Mrs Edith Macefield in Seattle Washington who held out while all other neighbours sold to a mall developer. The mall was built all around her one remaining house (see https://upload.wikimedia.org/wikipedia/commons/thumb/e/ea/Edith_Macefiel... )
Why buy the cow when someone will sell you just the milk (which is what you really want) at a far cheaper price?
Glenn Black
Small Flock Poultry Farmers of Canada
Too many land-owners ignore the fact that they, the land-owners, are ultimately legally responsible for environmental and other issues involving the turbines.
There is nothing preventing any wind turbine company from saying to any farmer in year 15 - "Sorry, but that was then, this is now, we're outta here, the turbine is yours to look after and take down".
Stephen Thompson, Clinton ON
Don't forget that these companies have first right of refusal to purchase the farms that the turbines sit on and also any others that have signed agreements or are taking hush money . Who will own the farm land in the future .
Wind turbine companies cut many corners. Some have a shady past Stephen Webster blyth ont.
Veresen energy, which as I understand is the energy company behind the wind project south of me currently pays a dividend of 99.5 cents/year and their share price is $15.50 for a yield just shy of 6%
If my info is correct, current microfit offers are 40 cents.
I'm not sure what a tracker costs these days, but I'll use a number of $60'000
Yearly dividend on that amount would equal $3871.00
I'm not sure what the monthly income would be from a 40 cent tracker, maybe someone could provide that.
One key difference to note is that in 20 years, even if Veresen's shares only increase with inflation of 2%, your $60'000 will be worth over $89'000
Not to mention, that shares held within a TFSA, are capital gains exempt.
What will your tracker be worth in 20 years?
Disclosure: I do not own this stock and anytime I make mention of stocks, it is just food for thought. I am not pumping any particular stock. Do your own homework.
Raube Beuerman
Raube - You're forgetting that tracker technology will last far past the 20 year contract. Solar modules have been operating in the field for more than 40 years successfully and at 90% of their Standard Test Condition rating.
Once the FIT contract is over the tracker can be used for net metering. This will offset their electricity usage of the farm which equates to approximately $25k of savings for the following five years. (Note, the modules will still be in their warranty period as will most inverters). Savings will continue for many years to follow.
If you're a farmer reaching the tail end of your career then I agree, find another method but if you're handing the farm down to the next family member then it makes complete sense. The program was designed to kick off this type of technology into the mainstream and make it accessible for everyone. If you choose not to take advantage of it that's your prerogative but ultimately everyone's objectives are unique in accordance to their own situation.
Michael Howe
How big does ones hydro bill need to be before net metering is worthwhile?
BTW, this is good debate and thanks for identifying yourself on this forum.
Raube Beuerman
The qualifier is simply if you're a revenue generating farm and you use electricity. It can be done with a small system or a very large system. If you're a higher revenue farm there is even greater benefit since the tax writeoff bracket is higher which brings your payback even shorter.
For those that are not sure of sizing, a small farm will use around 18000kWh's per year. That's roughly what a 10kW system will generate. Payback based on the tax bracket will be anywhere from 8 years or less. (Assuming only a 2.5% increase of electricity price year to year, I'm thinking it will be higher which means an even shorter payback).
I've run models on 10 kW systems to 150 kW systems. They all make sense to go to net metering. Farmers really need this as it's a viable option.
Michael Howe
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