By Tom Collins
VANKLEEK HILL — Ontario farmers will not admit defeat when it comes to fighting rising hydro prices, but many believe there’s nothing they can do.
A year ago, high hydro bills dominated discussion among farmers.
One year later, electricity prices are just one of many issues including MPAC property tax assessments, the federal government’s changes to taxing businesses and the perennial favourite, the weather.
Some farmers say the issue of electricity prices died down after the Wynne government blinked and cut electricity bills by 25 per cent. Ontario Premier Kathleen Wynne had to do something. She had an 11 per cent favourability rating in some polls in February and there’s an election next June.
In monthly polls by Campaign Research, she’s hovered from an approval rating of 16 per cent to 19 per cent from April to November. The Liberal party as a whole saw an immediate spike in poll numbers after the 25 per cent hydro decrease announcement, but almost as fast, fell back to an approval rating of 31 to 32 per cent.
“She did well on that buy-off program,” said Ontario Landowners Association president Tom Black. “They’re (provincial government) not worried about the farmers. They’re worried about the millions in the cities.”
The electricity price-cut only keeps prices down for a few years. To pay for it, the Ontario government refinanced $28 billion in their loans for building and refurbishing power plants that will add another $14 billion in interest costs over 30 years.
The provincial government’s 2017 Long-Term Energy Plan, released in October, showed the average residential electricity bill will increase from $127 a month this year to $181 a month in 2027 and about $200 a month by 2030. That’s a whopping 57.5 per cent increase in the next 13 years.
The 25 per cent cut only applies to the electricity-used portion of the bill. The global adjustment rate and the delivery charge, generally the highest costs on an electricity bill, aren’t affected. Peter Archer, of Maizeing Acres, tweeted a photo of his hydro bill in September that showed he used $632.81 of electricity, but was charged $4,063.33 for global adjustment and $9,684.93 for delivery. Taxes and other charges brought the final bill to $16,676.79.
Many farmers are annoyed.
“Everybody ranted and raved, and the Ontario Liberal government came out with a program to help poor people in Toronto and didn’t look at big business in Ontario,” said Kevin Wilson of Wilson Farms Elevators at Vankleek Hill. “You and I both know the agricultural voice is not going to steer the direction of this election. It was a vote-buying technique on behalf of Kathleen Wynne. Somebody has a house in Toronto, where a large support of where the Ontario majority or minority government determination comes from, and for them, 15 to 25 per cent savings on their hydro bill is money in the bank.”
Wilson’s annual electricity costs rose from $31,552 to $52,400 in back-to-back years. High yields the last couple of years meant the elevator used more electricity for grain dryers, grain legs and conveyors belts, but Wilson said the price per tonne of electricity also grew significantly.
Wilson’s next elevator expansion will use a diesel generator instead of hooking the new elevator to the electricity grid.
“I’d rather buy diesel fuel and pay some maintenance cost on a generator than pay the hydro,” he said.
Vancouver-based think-tank Fraser Institute’s study in October said Ontario electricity rates are among the fastest growing in North America and have cost Ontario more than 74,000 manufacturing jobs since 2008. The report said large industrial consumers in Toronto and Ottawa pay almost three times more than consumers in Montreal and Calgary and almost twice as much as those in Vancouver.
Many businesses have left Ontario and numerous out-of-province companies (including U.S. companies) chose other jurisdictions because of high Ontario electricity prices. For example, Western Ontario greenhouse Mucci Farms is building 60 acres of greenhouses in Ohio. When Mucci Farms wanted to build a third 12-acre strawberry greenhouse in Ontario, the province agreed to a pilot project that sees the expansion in Ontario at reduced electricity costs. (See page A24)
That pilot project has irked some business owners.
“We can’t have a two-tier system here,” said Wilson. “We need a fair marketplace for everybody. If the provincial government can afford to make a pilot project to give a fair hydro rate to a greenhouse to create jobs, why wouldn’t they nurture the jobs that are here already and make sure they are on good footing?”
Avonmore dairy farmer Jim Wert’s hydro bill bucked the trend as his monthly bill dropped from almost $3,000 to $1,800. However, he also began hydro-saving measures, including replacing lights with LED lights, installing variable speed drives on some of the barn’s ventilation systems to maximize power according to wind velocity, and running some heavy motors during off-peak hours.
Wert said the government knew it had to do something with an upcoming election and pressure from urban residents to decrease hydro bills.
“They addressed the immediate issues, but what has it created down the road?” he asked. “Was it an astute move politically? Yes. Was it an astute move business-wise? Any time you extend your capitalization on anything further than what its shelf life may be, it’s dangerous territory. We’ve now leveraged our grandchildren with our decisions, but that’s politics. And the number one rule is they want to get elected.”
Ontario Federation of Agriculture president Keith Currie said electricity prices are still top of mind and the OFA is still pushing for feasible hydro rates. He said when the government cut electricity bills by 25 per cent, it also reduced the distribution charge. Depending on service type and location, some customers have seen the distribution charge decrease by as much as 60 per cent.
Currie said the association is still pushing for the expansion of natural gas in rural areas, at one-third the price of electricity, but that hasn’t gained much traction with the government.
“The average rural household would save $2,500 to $3,000 a year if they convert from hydro to natural gas,” he said.