Electric shocker: Power prices set to rise sharply

The price of electricity, already triggering shock from consumers and businesses in many parts of Canada, will rise rapidly through the end of the decade, according to an analysis by CBC News.

A study of provincial utilities' power-purchase agreements and financial statements indicates the average cost per kilowatt-hour countrywide will rise more than 50 per cent by 2020.

And as provinces introduce staggered time-of-day pricing, seniors and other ratepayers on fixed incomes will suffer a double hit to their wallets, advocates say.

"Electricity prices have run up very substantially since 2003, but the increases that we’ve seen so far are just a warm-up for what we’re likely to see over the next four or five years," said Tom Adams, an energy analyst and former head of Energy Probe.

The average Canadian household currently pays about $100 a month, before taxes, for electricity — though the provincial range is wide, from $68.75 in Montreal to $161 in Charlottetown.

Between now and 2020, however, more than 100 new power plants are slated to be built and thousands of kilometres of new transmission lines  erected. The costs will be borne by consumers, and the average household electricity bill will rise  to more than $150. (Since 2000, by comparison, electricity rates have only nudged up 12 per cent after adjusting for inflation.)

'Enough is enough'

Customers in B.C. and Ontario are already feeling the pinch. BC Hydro raised its rates 7.3 per cent last year and has announced it will seek an additional 30 per cent hike over the next three years. The Ontario government declared last fall that the province's rates will rise 46 per cent by 2015.

"Well, my first reaction is there’s nothing you can do about it, but there’s something I can do about it. I can turn off the lights, and that’s what I did," said Arnold Hull, a retired teacher and a board member of the Council for London Seniors in London, Ont.

For nine years, Hull shone two spotlights every night on a public walkway next to his house because the city refused to install any illumination. Then last year, his average power bill surged from $76 a month to $100 — while his pension benefits inched up $240 for all of 2010. "I said enough is enough, I’m not lighting that anymore." 

Hull said he's taken a host of other conservation measures, like replacing incandescent light bulbs with compact fluorescents, replacing every window and door with less drafty ones, and retrofitting his home's insulation.

The Ontario government says that such steps can reduce the average household's bill up to 30 per cent.

But as a pensioner, married to a retiree also on a fixed income, Hull's still worried, particularly about what will happen when they're switched to time-of-day pricing.

Ontario is one of several provinces to install "smart"  electricity meters on households. They promote better resource use by billing customers extra for energy consumed during peak daytime hours, however it means added financial pain for those who have little choice but to stay home on weekdays.

"Why should I be penalized because I have a disability that keeps me at home?" said Kevin Kinsella, a 45-year-old from Ottawa who has cerebral palsy and no colon or spleen. "It's three in the afternoon, and I just had a shower because home support workers work nine to five. I have to do a lot of extra laundry because of my disability, and basically I have to do the laundry when I have to do it — quite often, during the day."

'There are certain kinds of costs that hit fixed-income and low-income people the most, and one of those things is energy costs.' —Susan Eng, CARP

Kinsella said the monthly electricity bill for him and his wife is $300, up from $200 in recent years — and their smart-metering hasn't even been turned on yet. Living on a disability benefit, he's already had to make cutbacks.

"What gets hit is on my medical supplies. I stretch things out longer than I should, my skin gets irritated, things like, that," he said. "And I shouldn’t, but sometimes my food budget gets hit. For the last week of the month, you’re eating almost nothing."

It's a predicament faced across the country by people with low or fixed incomes, said Susan Eng, vice-president of advocacy for CARP, the national association for people aged 50-plus.

"There are certain kinds of costs that hit fixed-income and low-income people the most, and one of those things is energy costs, which are not discretionary," she said. "So it means that they are faced with huge costs, no increase in income supplements, and no discretion to turn the heat down."

Cheap power a thing of the past

Canada's electricity prices  have historically been low — among the cheapest in the 34-member OECD — because the majority of the country's power comes from hydroelectric plants that were built and paid off years ago.

But those power plants are aging and no longer able to meet the country's needs, with the National Energy Board predicting power consumption will rise 23 per cent by 2020.

Regardless of fuel type, the new plants being built, plus the copper- and aluminum-heavy transmission lines to reach them, will cost a lot more, for which ratepayers are footing the bill.

The average price for a kilowatt-hour of power in St. John's, for example, is 11 cents. New electricity from the planned Lower Churchill hydro development will come in at 14.3 ¢/kWh, the provincial government predicts.

The gap is even starker in Quebec, where the current biggest hydro project, a series of dams on the Romaine River north of the Gulf of St. Lawrence, is anticipated to produce power at a cost of 6.4 ¢/kWh — or more than three times the price of electrons from the province's currently installed generators.

Add to that Ontario biogas plants that get paid up to 19.5 ¢/kWh and rooftop solar power systems  making 80 ¢/kWh, plus a proposal to pay small-scale Nova Scotia wind farms 50 ¢/kWh. A 2009 MIT study found new nuclear plants cost twice as much to build as they did only eight years ago. Coal-fired plants, once a cheap source of energy based on an abundant fuel, cost far more because of emissions restrictions.

Altogether, it seems to mean inexorable price hikes for a commodity that's already 30 per cent more expensive than in 1990, after adjusting for inflation.

"This is not a surprise. No one anywhere is saying, 'Gee, I didn’t think that would happen,' " said John Bennett, executive director of the environmental group Sierra Club of Canada.

Governments knew they would need to make critical, costly investments in the grid, Bennett said. But what they didn't do, he said, was put in place enough programs to help people in need pay their bills or cut their usage through conservation and subsidized home retrofits.

"Allowing the electricity rates to actually pay for the cost of electricity is the right thing to do. Tactically, it’s incompetent to raise them without making sure that those who have difficulty paying are taken care of," he said. "We should have programs in place so that we don't have people turning off the heat or not buying food or not paying the rent."