LOWERING ELECTRICITY PRICES IN ONTARIO

  Ontario’s implementation of the Green Energy Act (GEA) has resulted in high electricity costs across the province. The centerpiece of the act includes a schedule of subsidized electricity purchase contracts called Feed-in-Tariffs (FITs), that provide long-term guarantees of above-market rates to generators of renewable sources (wind, solar, bio-energy, and some hydro).
  In order to fund FIT contracts and other system costs that are not recovered from wholesale electricity market earnings (including the costs of conservation programs, gas-capacity expansion, and nuclear-power refurbishment programs), Ontario levied a surcharge on electricity prices called the Global Adjustment (GA). Between 2008 and 2017, the GA grew from under one cent per kWh to about 10 cents, causing a drastic increase in electricity prices. Therefore, the key to lowering electricity prices in Ontario is to reduce the GA.
  In this study, we break the GA down into its components to better understand the cause of the drastic increase and thereby provide some specific recommendations on how to lower electricity costs.