Aegent Energy Advisors Inc.

Aegent Energy Advisors Inc.

August 30, 2005 14:00 ET

Ontario Electricity Consumers Face Huge Price Shock Next Year

Proactive measures urged for large energy users Attention: Business/Financial Editor, Energy Editor, News Editor, Government/Political Affairs Editor TORONTO, ONTARIO--(CCNMatthews - Aug. 30, 2005) - Ontarians should brace themselves for millions of dollars in electricity price increases next year, warns leading Toronto-based energy consultant Aegent Energy Advisors Inc.

The government's Regulated Price Plan - the province's plan to provide price stability and predictability to about half of Ontario's electricity consumers - has already accumulated a $ 200 million budget overrun. And by the end of March next year, Aegent expects that number could easily top $ 400 million. They also point out that the scheduled April 30, 2006 end-date of the price-protection mechanism on some of Ontario Power Generation's output will only compound the price shock.

The result is that Ontario electricity consumers currently on the Regulated Price Plan could face a 22 % price increase next year.

"Typical residential customers using 1000 kilowatt-hours of electricity every month will see their home bills balloon by about $ 250 next year. But larger Regulated Price Plan customers will be the hardest hit," forewarns Aegent Senior Consultant, Bruce Sharp. "Ontario's municipalities, schools, hospitals and farmers need to take steps now to protect themselves," he says, adding, "Fortunately there are things these users can do to save money this year and manage the additional price risk they face next year".

Customers not on the Regulated Price Plan won't be in for such a shock, mainly because they are already paying the high prices. "However," continues Sharp, "the price-protection mechanisms currently in place are not that well understood. The disappearance of the Ontario Power Generation rebate will still increase costs for these consumers by about 10 % and they will face the same added price risk. Most of them are not aware of this".

Many consumers in the Regulated Price Plan have a false sense of security, believing the price of their energy to be capped by the plan. In reality, the price for energy set by the plan (5¢ per kWh up to 750 kWh in a month and 5.8¢ beyond that) was based on an estimate of costs for this year. "The current price is only a down payment - the rest of the bill comes due next year," observed Sharp. The misperception that the Regulated Price Plan provides price protection may inadvertently have added to the demand for electricity, and therefore to the high prices we've seen this summer. One industry source has estimated that consumer complacency about price and usage has allowed peak demand to be as much as 400 megawatts higher than what it might have been if consumers saw true price signals. "The financial impact of this is huge. Extreme electricity prices made worse, for example by the careless use of air conditioners by price-insensitive consumers, add to the economic burden faced by all users across the province. It threatens jobs in the pulp and paper mills, mines, and auto manufacturers."

Aegent Energy Advisors Inc. is an independent energy consulting organization providing full-service solutions that help large volume energy buyers reduce the costs, manage the risks, and resolve the complexities of their electricity and natural gas purchases.

Aegent is working with a number of Ontario school boards, municipalities and agricultural businesses on electricity cost and risk management initiatives that to date have helped them save an estimated $ 10 million.
IN: ENERGY, POLITICS

Contact Information

  • Bruce Sharp, Senior Consultant, Aegent Energy Advisors Inc.
    Primary Phone: 416-622-9449 ext. 112
    Secondary Phone: 416-576-0193
    E-mail: bsharp@aegent.ca