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Regional electricity price being sought

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The Northwestern Ontario Municipal Association is calling on the Ontario government to adopt a regional electricity price for Northwestern Ontario as a means to attract new industry while reducing the cost of energy in the region.

“[The] NOMA board and most residents of the northwest believe strongly that they should receive the benefit of the low-cost hydroelectric generation scattered throughout the region rather than being forced to pay the higher blended price applied to the entire province,” said NOMA president Wendy Landry.

“That is why the NOMA board endorsed the proposal by the Common Voice Northwest Energy Task Force in support of a regional pricing system.”

The province's Independent Electrical System Operator (IESO) commenced a review of the method by which Ontario structures wholesale electricity rates and included in that review the consideration of a zonal or regional pricing regime.

This review commenced in the spring and wrapped up at the end of November.

The Common Voice Northwest Energy Task Force spent the summer examining the concept of a zonal price, including working with the IESO and an independent third-party consulting organization—the Posterity Group—to understand the ramifications of a regional price on Northwestern Ontario.

The task force report found that electrical customers in the northwest could see their electrical bill reduced by 20 percent if regional pricing was implemented.

However, the task force, along with NOMA, have outlined a number of key conditions they want met before any implementation of a regional pricing system in Northwestern Ontario.

The following are the conditions:

  • zonal pricing should include hydroelectric generation being priced at cost plus a reasonable return on the shareholder's equity;
  • the zonal price for Northwestern Ontario should be based on a blending or averaging of the actual cost of acquiring electricity for the region;
  • blended zonal price should be based on annual costs;
  • load growth itself should not be allowed to force up the blended zonal price;
  • where the existing contracts require a rate per kW/h greater than what the blended zonal price is, the IESO/OEB should find a mechanism that will offset the difference in the rate (if no offset is available, the holders of those contracts should be so advised and notice given that at the end of the existing contract, they should bear in mind the blended zonal rate);
  • residential and small business consumers must directly benefit from a blended zonal price for Northwestern Ontario (the Ontario Energy Board requirement that Local Distribution Companies (LDCs) must charge the province-wide RPP prices to residential and small business customers should be replaced with permission for the LDCs to adjust their residential and small commercial rates to pass through the benefit of a blended zonal price to their ratepayers);
  • after five years of the application of a blended zonal price that a formal analysis and review occur; and,
  • in addition, should the blended zonal price rise to the point where it matches the average price across the rest of Ontario, a formal review of the concept should occur in order to identify ways in which the pricing structure can be reduced for Northwestern Ontario.

Copies of the reports can be obtained from www.commonvoicenorthwest.com under the NEWS tab.

“We wanted to be sure that regional pricing was actually beneficial for the northwest," said Landry. ”This is why we included a number of conditions in our support.

“We look forward to the response of the IESO and the government of Ontario,” she concluded.

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