Higher Electricity Pricing Needed

Worth A Look, Energy, Frontier Centre

OTTAWA – Provincial and territorial governments should charge domestic businesses and consumers more for their electricity to encourage energy conservation and investment in new energy sources to ensure an adequate supply of power in the future, Toronto-Dominion Bank warned yesterday.

All provinces have an adequate supply of electricity but most are encountering problems keeping up with demand, or soon will, it says in a report.

“The challenges don’t stop at merely scouting out new sources of supply, but investing heavily in transmission and distribution infrastructure.”

Above all, provincial and territorial governments need to encourage conservation by raising prices to eliminate the current gaps that persist between what it costs to produce electricity and what Canadians are charged for it, it said.

“Addressing these hefty challenges on the supply and electricity infrastructure fronts will be necessary to ensure that Canadians continue to enjoy a reliable electricity system down the road,” said TD economist Derek Burleton.

But that won’t be cheap, it warns, citing one estimate of $150-billion in needed investment over the next two decades, or $7.5-billion a year.

To help cover those costs, it suggests governments open the door more to private-sector involvement in the generation and transmission of power.

“And, here, we’re not just talking about private ownership of assets, but in areas where it makes sense, governments partnering with the private sector to design, build, operate, and/or finance projects,” Mr. Burleton said.

Most governments have been moving in the right direction toward achieving the goal of ensuring adequate power supplies, such as developing strategies to tap into new supplies of so-called clean energy, it said.

It cited, as an example, Ontario’s interest in renewable and gas-fired projects, and it’s exploring the idea of working with Manitoba and Newfoundland and Labrador, to develop hydroelectric projects in their regions.

Raising prices would initially reduce competitiveness of domestic firms but would force them to become more efficient, attract investment in new generation capacity and help avert a full-blown power crisis in future, it said.