The Ontario Market: a (very) brief history
By the early-1990s, Ontario’s energy grid faced dire reliability and economic concerns.
Many of the nuclear generation plants powering the province had been built in the 1970s and were starting to prematurely show their age, declining in efficiency and reliability.
More recently-built nuclear stations had riddled Ontario Hydro (Ontario’s then publicly-owned and lone electric utility) with enormous debt.
In 1992, the situation worsened when a downturn in the Canadian economy and falling demand caused electricity rates in the province to rise by 40%.
The following year, the Ontario government stepped in, freezing energy prices. They would remain frozen for the next 10 years.
In 1999, Ontario’s energy market took its initial steps into deregulation. That April, Ontario Hydro was restructured into five separate companies, including the Independent Market Operator (later named the Independent Electricity System Operator or IESO, which still serves as Ontario’s grid operator today.)
On August 14th, 2003 the lights went out across Ontario when the Northeast Blackout caused more than 50 million people in southeastern Canada and eight northeastern states to lose power for two days.
It was the largest blackout in North American history.
One year after the blackout, the Ontario Power Authority (OPA) was established and immediately tasked with assessing the long-term adequacy of the grid’s resources. The OPA, which would eventually merge with the IESO in 2012, was also mandated with removing coal from the province’s supply mix.
In an attempt to stimulate private investment in new generation beginning in 2005, Ontario began offering long-term, fixed-price contracts at above-market rates to new generators.
To cover the difference between electricity’s market rate and the contractually higher rates being paid to new generators, Ontario introduced the Global Adjustment in 2006. That same year, the Renewable Energy Standard Offer was established, offering fixed-rate 20-year feed-in tariffs (FITs) for solar, hydro-electric, wind, and biomass renewable projects.
The Green Energy Act was passed in 2009 with the aim of attracting new investment, creating green jobs and providing Ontario with clean, renewable energy.
To help consumers shoulder the costs of Ontario’s transition to a greener, modern electricity system, the government introduced the Ontario Clean Energy Benefit (OCEB) in 2010. The benefit provided eligible consumers a 10% rebate on applicable electricity charges and taxes.
The OCEB ended in 2015. That fall, the Ontario Energy Board raised electricity prices, burdening Ontario ratepayers with electricity bills that were among the highest in Canada.
In 2018, while campaigning for the Progressive Conservative party, current Ontario Premier Doug Ford promised to reduce energy prices in Ontario by 12%.
As of this writing, Premier Ford has yet to present an official energy plan outlining an approach to keeping his campaign promise. The provincial government has announced the cancellation of 758 renewable energy contracts awarded by the previous assembly.
What does this history tell us about the Ontario energy future? We examine that question in this article about the future of Global Adjustment in the province.
This post was excerpted from the 2019 State of Demand-Side Energy Management in North America, a market-by-market analysis of the issues and trends the experts at CPower feel organizations like yours need to know to make better decisions about your energy use and spend.
CPower has taken the pain out of painstaking detail, leaving a comprehensive but easy-to-understand bed of insights and ideas to help you make sense of demand-side energy’s quickly-evolving landscape.
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