Toronto has highest electricity bills among major Canadian cities
Ontarians are all too familiar with the rising cost of electricity. They see it on their hydro bills every month. But what’s often been lacking in the public and policy debates, however, are the specifics of just how much hydro prices have increased and how Ontario’s electricity bills now compare to other cities across Canada.
In a recent study, we analysed electricity prices across Canada since 2008, to provide some context for Ontarians.
According to data from Statistics Canada, from 2008 to 2016 electricity prices in Ontario grew by 71 per cent—the fastest growth of any Canadian province—compared to just 34 per cent in Canada. This means Ontario’s electricity price increases were more than double the national average.
Consequently, Toronto and Ottawa now have the highest average monthly electricity bills when compared to other major cities across the country.
To get a sense of how much more Ontarians pay compared to the rest of the country, consider a comparison of monthly electricity bills between Toronto and Montreal, Canada’s two largest cities. In 2016, the estimated average monthly electricity bill (including taxes) for Torontonians was $201—or roughly $2,400 for the year. Residents of Montreal only paid an estimated $83 per month or $1,000 per year. That’s an extra $1,400 a year that Montrealers can spend on other priorities because of lower electricity prices.
Torontonians also paid an estimated $1,000 more per year for electricity than residents in Vancouver and Calgary. (And Albertans actually saw their bills decrease in recent years.)
Another way to understand how higher electricity bills might impact the finances of Ontario households is to compare the growth in electricity prices with the growth of per capita disposable income—that’s income left over after taxes have been paid.
In this regard, electricity prices in Ontario increased two-and-a-half times faster than household disposable income between 2010 and 2015, meaning that Ontarians contribute greater shares of their income to their electricity expenses.
So, while it’s clear that Ontario’s electricity prices have grown dramatically and that this growth is not the norm across Canada, the question still remains—what’s behind the price increases?
A large part of the blame rests on poor policy choices at Queen’s Park. One such policy has been the government’s poorly structured long-term contracts for renewable energy generation (wind, solar, etc.). These contracts place ever-increasing costs on consumers, while renewables accounted for only 6.8 per cent of electricity generation in 2016.
The province’s phase-out of coal-fired electricity has also proved costly and unnecessary. Indeed, noted environmental economist Ross McKitrick found that Ontario could have achieved the same environmental benefits of the phase-out (at one-tenth the cost) by simply completing the retrofitting of Ontario’s coal-fired plants.
Another issue is the imbalance between the supply and demand of electricity in the province. When the province’s energy generation exceeds demand, it must be exported—quite often at a loss—leaving Ontario ratepayers to cover the difference.
And that’s just the beginning. Other policy choices including costly cancellations of natural gas plants and necessary investments in transmission and distribution also add to the province’s rising electricity costs.
In the end, what’s most unfortunate is the toll the rising bills take on Ontario families. Should electricity prices keep rising, the trade-offs families have to make will become increasingly difficult to manage.