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Tuesday, July 19, 2011

Ontarians are overpaying for electricity

A report from the C.D. Howe Institute says Ontarians are paying more then they need to for electricity costs, which have skyrocketed in the last few years. They propose some solutions.

The full report is available here.

After years of looming power shortages,Ontario faces instead a periodic problem of excess electricity 
supply at the same time that new generation capacity is being added. Since Ontario government 
agencies that purchase power have long-term, fixed-price contracts with many electricity generators,

Ontario consumers pay for electricity produced by some generators even when that electricity has little value, particularly during periods of high wind production and low demand. 

To deal with temporary oversupply, we recommend paying the generators who operate under existing fixed-price contracts to reduce output, when doing so would save money for the system as a whole. The premise of our recommendation is the creation of market incentives that would make existing producers more flexible, at the least possible cost. 

For the long term, the province should create financial incentives for constructing flexible generation capacity.

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