First skyrocketing electricity– now cap-and-trade

By MPP Toby Barrett

A year-and-a-half ago, the Ontario Chamber of Commerce warned Premier Wynne that five per cent of businesses will either shut their doors or move out of Ontario because of the rising cost of energy.

Regrettably, the business environment has now further deteriorated with large and unpredictable global adjustment charges on electricity, and the arrival this year of the cap-and-trade tax.

Case in point would be Maple Leaf Foods, Canada’s leading retailer of packaged meats and an employer of 5,100 people. During pre-budget hearings, Maple Leaf told the committee the company’s electricity bill increased last year by 18 per cent to $19.7 million across all of its Ontario plants.

Given the increase in electricity costs, Vice-President Rory McAlpine explained Maple Leaf calculated its potential electricity costs if it were to move to other jurisdictions. The potential annual savings ranged from $7.5 million to $12.8 million a year – as follows:

Jurisdiction             $ Millions                % Savings

Manitoba                 $12.865                   65%

Alberta                     $11.857                   60%

Quebec                     $9.940                      50%

New York                $9.233                      47%

Michigan                  $7.685                      39%

Saskatchewan        $7.525                      38%

Many companies point to the global adjustment as a reason for unprecedented bills. The global adjustment charge is the term the Ontario government uses to describe the amount added on industry bills to cover the above-market rates the government negotiated for industrial wind turbines and solar panels.

One Haldimand-Norfolk manufacturing plant manager is concerned about his facility’s future after receiving a global adjustment charge of over $100,000. While the company paid $13,060 for electricity last November, the global adjustment fee for that usage was an astounding $107,698. They’re worried their branch plant will be shut down and the jobs relocated to the United States.

Norm Beal, CEO of Food and Beverage Ontario, testifed during pre-budget committee hearings, “I can tell you that a year ago, I’d get a call maybe once a month from a small-to-medium-sized company saying they were concerned about electricity rates. Now that’s happening at least once or twice a day. I’m getting comments now all the time that, ‘You know what? We’ve had enough. We’re starting to look at the alternatives south of the border’.”

Now, the cap-and-trade tax is here. According to Paul Clipsham, of the Canadian Manufacturers and Exporters, “Investment in manufacturing is largely driven by after-tax cash flow and, in Ontario, the cap-and-trade program adds costs and uncertainty that could reduce cash flow and impede further progress towards Ontario’s GHG reduction targets.”

And this from Gerry Macartney of the London Chamber of Commerce, “We’re very concerned about what the addition of cap-and-trade is going to do to our competitiveness. At best, cap-and-trade right now is ill-timed. We have yet to see from the government what costs are going to be associated sector by sector, and we think that’s ill-fated. If we don’t know what impact those costs are going to have on our sectors, how can we proceed?”

For years we’ve been dealing with skyrocketing electricity on residential bills, now we hear employers blindsided by global adjustment charges for electricity are suffocating under cap and trade costs for other sources of energy.