By Parker Gallant
According to the Globe and Mail, Ontario Premier Kathleen Wynne says her province “is ready to shield Canada from the economic tsunami caused by declining oil prices and a sinking dollar.”
Ms. Wynnes comments came after an RBC report estimated the fall in oil prices will actually help the Canadian economy by boosting household purchasing power by $8.9 billion this year. With annual Ontario gasoline consumption of 16.4 billion litres, a permanent slide in the price of about 25 cents (from $1.20 a litre to 95 cents a litre) should translate to about $4-billion annually in the hands of Ontario consumers.
Premier Wynne went on to say: “I dont wish for low oil prices and a low dollar for Alberta,” she said. “But at the same time, we want our manufacturing sector to rebound. So if that [low oil price] helps, then thats a good thing.”
If lower oil prices are a good thing, what can the premier say about the higher electricity prices she is responsible for? Ms. Wynne cannot have it both ways. The cut in gasoline prices, in fact, will only replace a portion of the cash the Liberal governments Green Energy & Green Economy Act (GEA) annually extracts from consumers on their electricity bills. If one goes back to 2009 when the GEA was passed into law and compare the price of electricity with todays prices, the hit to Ontarios ratepayers (including manufacturers) is about $4.5 billion per year.
In billing terms the cost of electricity in Ontario has risen from 8 cents per kilowatt hour (kWh) in 2009 to 11.3 cents in 2014. For 2015, the cost per kWh will average 12 cents.
Energy Minister Bob Chiarelli has said electricity prices are set to rise a further 11 per cent in the next two years, as reported in a Dec 2, 2013, article in the National Post.
Since Ms. Wynne now agrees that lower energy costs are good for consumers and manufacturers, then she is in a position to do for electricity what the world market has done for gasoline. She can repeal the Green Energy Act, cancel wind and solar contracts, and bring back lower electricity costs.
Imagine the benefits in jobs and growth if Ontario could have lower energy costs across the board. If lower gasoline prices will spur economic activity, so will lower electricity prices.
Parker Gallant is a former Canadian banker and is vice-president of Wind Concerns Ontario.