Ontario Electricity Rates Market Forecast

Where are Ontario's already sky-high electricity rates headed? The below-noted facts speak for themselves:
  • $25 billion nuclear refurbishment (10 out of 19 nuclear reactors): nuclear-generated electricity accounts for approximately 60.1% of Ontario's electricity supply mix. The last nuclear refurbishment began in or around 1997 at an approximate cost of $5 to $8 billion. The Ontario Financial Accountability Office projects that the cost of nuclear-generated electricity (currently at around $80.7MWh) will peak in 2027 at around $95.4/MWh. 
Nuclear accounts for approximately 60.1% of Ontario's electricity supply mix

The Ontario Financial Accountability Office projects a sharp increase in the cost of nuclear-generated electricity until at least 2027.
  • Complete phase-out of coal-generated electricity: during the 1997 nuclear refurbishment, Ontario Hydro relied on its 5 coal-fired generation facilities, which at the time accounted for approximately 25% of the province's electricity supply mix, to make-up for the shortage of electricity sources.  The ensuing doubling of GHG emissions and increase in smog and acid rain lead all political platforms in 2003 to commit to a complete phase-out of coal-generated electricity, which was eventually accomplished by Dalton McGuinty's liberal government. The implications for today are that Ontario can no longer rely on coal-generated electricity while refurbishing its nuclear reactors. This begs the question, where will Ontario find 
Ontario can and no longer relies on coal-generated electricity due to environmental concerns.

  • Cancellation of the Green Energy Act and 750+ renewable energy projects: while the short term effect may cause downward pressures on electricity prices the long term effect is to deprive Ontario of clean and low-cost electricity sources.
  • $152 million exit penalty and transactional costs (e.g. negotiations) for failed Avista acquisition by Hydro One (referring to the firing of Hydro One's CEO, Washington State Regulators cited "political interference" as the reason for blocking the deal).
In addition to the above-noted facts, it is appropriate and reasonable to take into consideration the following three factors:
  • An average population growth of 6.6%;
  • An average GDP growth of approximately 2.6%;
  • A steady increase in global temperatures.
Combined, and despite severe contractions in Ontario's electricity supply, it is reasonable to assume a steady increase in Ontario's electricity demand. The result is a growing gap between electricity supply-demand, and sharp increases in Ontario electricity rates. 

SourceOntario Financial Accountability Office, Nuclear Refurbishment Report.
Source: Legislative Assembly of Ontario, Bill 34, Green Energy Repeal Act.
Source: Government of Ontario, The End of Coal.
SourceBloomberg, Hydro One's Avista Deal Rejected