Surveys highlight soaring energy costs

Tuesday, October 16, 2012

by SUSAN MANN

Soaring hydro costs are impacting Ontario farmers’ operations in a big way, according to a survey by Progressive Conservative agriculture critic Ernie Hardeman.

The Oxford MPP says 97 per cent of the more than 500 farmers who have so far responded to his online survey said they had been affected by increasing hydro costs. More than 60 per cent said the impact has been significant.

Hardeman says one southwestern Ontario grain farmer responding to his survey was contemplating going off the electricity grid entirely and installing equipment to generate power “because they couldn’t afford to pay the rates.”

The Ontario Progressive Conservative caucus launched the survey of Ontario farmers in the summer to identify challenges producers are facing and what government can do to strengthen the agricultural industry.

Ontario Federation of Agriculture president Mark Wales says he’s not surprised by Hardeman’s findings. Plamen Petkov, Canadian Federation of Independent Business director of provincial affairs for Ontario, says sampling of their agribusiness members resulted in a similar level of concern. The CFIB represents small and medium-sized businesses.

Petkov says 77 per cent of the respondents to the organization’s latest survey of their agribusiness members, which includes farmers and small to medium-sized agribusiness operations, indicated that the main cost pressures to their enterprises were fuel and energy, such as hydro. The survey results were released two weeks ago.

Fuel and energy costs are by far the top cost pressures on agribusinesses in the province, he says. “This is not the first time we’re seeing this. It’s certainly very troubling because 77 per cent is a big number.”

The CFIB has 2,800 agribusiness members in Ontario, which includes farmers and agribusiness companies, such as seed suppliers.

Petkov says escalating hydro costs puts additional pressure on running the business and the farming operation. The small and medium sized farms and agribusiness members of CFIB have a limited budget “and if your main costs are going up obviously your profitability goes down.”

Wales says rate increases, the introduction of smart metres, the shift to different rates for different times of the day and transmission increases are among the factors contributing to escalating hydro costs. Farmers’ main concern, he says, is ensuring “cost effective hydro delivery service to our farms.”

What good value means, however, is subjective, he adds. For farmers with stray current problems or power outages, their viewpoint is going to be totally different than someone without those difficulties.

Hardeman notes government documents forecast that hydro costs are going to increase 46 per cent over the next five years, primarily due to green energy. The costs associated with the relocation of two gas-fired electricity plants will increase hydro costs further.

Hardeman says part of the problem is the government pays too much for electricity that people generate as part of green energy projects. The government needs to be more conscious of the policies it’s adopting that “drive up this hydro cost,” he says. In addition the government needs to consider that the end cost is important and not just how electricity is being generated.

“Government shouldn’t be signing on to these projects that are producing unaffordable hydro all under the guise that they’re harnessing Mother Nature,” he notes.

Energy Ministry spokesperson Jennifer Kett says by email renewable energy projects through the Green Energy Act accounted for only about one per cent of a typical consumer’s bill in 2011.

Kett explains that during the past nine years the government has been rebuilding Ontario’s electricity system, including modernizing infrastructure, reducing the province’s reliance on coal to produce electricity and increasing the use of renewable energy. The government’s long-term approach has required significant financial investment but “the results are paying off,” she says, noting “we’ve cleaned up the air and created thousands of clean energy jobs.” In addition, they’ve rebuilt or added more than 7,500 kilometres of transmission infrastructure and added or renewed more than 10,000 megawatts of new generation, which is enough to power two million homes.

She says they know these important investments have required significant financial commitments. That’s why the government introduced the Clean Energy Benefit that takes 10 per cent off electricity bills for the first 3,000 kilowatts of energy used each month.

The Ontario Power Authority also offers conservation programs for the agricultural sector, she adds.

Petkov says the government needs to acknowledge offsetting high energy costs is becoming burdensome for agribusinesses “and from there basically what we need is people getting together and finding a few solutions.” BF