Professor: Richard King
Date: DEC 28, 2017
Specialization: Energy and Infrastructure Law Table of Contents
Abstract 1
1. Introduction 2
2 History of Electricity Prices Across Ontario 3
3 Electricity Pricing Mechanism based on Ontario Regulatory System Act 7
4 Reasons Underlying the Increased Cost of Electricity Generation 11
4.1 Elimination of Coal-Based Generators and Termination of the Contracts 11
4.2 Long-term and costly contracts with renewable energy sources 12
4.3 Inadequate audition of organizations involved with the Ontario hydro market 13
4.4 Generation vs. load demand 14
5 Ontario Hydro Rate Cut program 15
6 Discussion on potential solution for mitigate the pricing structure challenges 16
6.1 Offering the
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In addition, the government hydro rate cut plan, “Ontario’s Fair Hydro Plan” for low income families, the 8 percent reduction of HST on electricity for all consumers under a new energy act (Amendment the Ontario Energy Board Act, 1998 with respect to electricity pricing , Ontario, 2016), as well as the additional 17 percent reduction in electricity fees, which is speculated to result in an extra 25 billion dollars in interest charges will be discussed.
Further, this paper will include a discussion on potential solutions and opportunities to mitigate the pricing structure.
1. Introduction
Presently, Ontario has one of the highest electricity costs in North America (Hydro Quebec, 2016). This trend started when the government decided to transition into a modern, smart, and stable network. To achieve this, more generating plants were built to deliver more high-quality electricity to consumers. Following these changes, there was a shift towards using green energy, which involved development of solar panels and wind systems. Of course, these initiatives were based on anticipated load on the system which was expected to rise as per long-term planning. Following the recession in 2008, the industry was not as hot as it was forecasted, leading to decreased demand for electricity. Therefore, there were many contracts and projects that were in the process of approval and were voided by the government in response to the recession. Despite this, the
Hallington Utilities Services is first introduced as a utility that distributes electrical power to customers in the municipality of Hallington. In the mid-1990s, the Ontario government decided it should move to deregulate the electrical power market because residents and businesses in Ontario were drastically overpaying for services and were considered the third-highest electricity generation rates in Canada, with no choice of suppliers. HUS was reorganized. It now responded to a Board of Directors. This Board adopted the vision: Excellence in customer
In 2007, Canada’s industries saved 2.1 billion U.S. dollars of energy costs (2007). All these numbers show Canada’s efforts in general public utilities.
For instance, there are generic principles of pricing of desired net income, competitive position, and market structure. According to (Cleverly, Song, & Cleverly, 2011), every business must generate enough revenue through its sales of products and services to sustain its operations and provide for the replacement of its physical assets as well as provide a return to its investors. Partners Healthcare System and among other organizations must recognize levels of pricing, so inadequate pricing doesn’t accumulate to lead to business disaster.
Manitoba Hydro is Manitoba’s major energy utility provider, serving 561,869 electric customers and 274,817 natural gas customers throughout the province (2). Manitoba Hydro provides services that run from exporting electricity worldwide, to providing customers with tips on how to save money on their electricity bills. Hydro provides services such as Power Smart technologies, which help to reduce a client 's energy consumption while reducing their environmental impact. Manitoba Hydro is a large believer in protecting the environment. Environmental protection was seen with their large-scale capital projects such as environmental protection and monitoring programs, climate change initiatives, energy efficiency initiatives, and environmental research and development (2). Manitoba Hydro became a crown corporation in 1961 through the Manitoba Hydro Act; the utility was governed by the Manitoba Hydro-Electric Board (17). Manitoba Hydro controlled the gas and electric consumptions within Manitoba except Winnipeg Hydro. In 2002, an acquisition occurred meaning that Manitoba Hydro now owns Winnipeg Hydro. Today Manitoba Hydro is a major energy utility providing the lowest electricity rates in Canada. We operate 15 hydroelectric facilities on the Saskatchewan, Winnipeg, Burntwood, Laurie and Nelson rivers, two thermal and four diesel generating stations (1).
With renewable sources and energy conservation becoming more prominent, there is a lower electricity usage. Many energy utilities are starting to take a hit because most of their income comes from customer charges. Companies have started to phase out charging customers based on electric usage and have switched to a fixed monthly fees that are at least $25 more per month. It is believed that companies should increase their fees by 1% every year to maintain the grid but since profit is decreasing, they are looking into a much higher fee. Vice President of the Edison Foundation, Lisa Wood, told the Wall Street Journal that there needs to be more money put into the electricity grid because of how complex it has
It is cold here! For 8 months out of the year, our low temperatures don't get out of the 40's at night, making for cold rooms and cold houses.
Alternative solutions: We studied four different alternatives: cost +, EVC, price differentiation and contingency pricing.
Consolidated has a few problems with their inventory control. They have a purchasing agent doing periodic checks of their inventory without reviewing their history and the demand. The lack of a computer inventory system is another problem that Consolidated must address. To design a system for consolidated the company needs to make some changes to its structure and organization.
Diverse and multi-faceted, the Canadian business market is one of the strongest functioning mixed market economies in the world. Within the Canadian economy, the oil and gas sector stands as one of the largest and most influential sectors. The oil and gas industry is unique as it affects almost every person and sector of the economy worldwide, whether it is through commodity or material input costs. In Canada, this growing industry could allow for the country to be the one of the “biggest energy producers in the world” leading to a massive paradigm shift globally.
The current government has lost 300,000 manufacturing jobs while adding 300,000 new gov’t jobs. Unwilling Hosts for Turbines
According to the case study written by Jurek, Bras, Guldberg, D’Arcy, Oh, and Biller, energy costs were steadily rising and were predicted to continue this trend going into the future. At the same time, utility companies were beginning to implement Smart Grid technologies to increase the efficiency of energy distribution. One resulting program to emerge from
Canada has the potential to be a “sustainable energy superpower” due to the vast amount of resources it contains. It has a large landmass and diversified geography which can be used to produce renewable energy from such resources; watermill, wind, biomass, solar, geothermal, and ocean energy. Renewable energy is energy obtained from natural resources that are able to be naturally replenished within a human lifespan (Natural Resource Canada, 2014). Currently, fossil fuel burning is the major source of energy in Canada and although it can be re-used, the process is so long that it is considered to be non-renewable. Also, fossil fuel burning for coal, natural gas, and petroleum gas pollutes the environment with greenhouse gases on a large scale, causing global warming. Non-renewable energy is taken from sources that re available on Earth in limited quantity, likely vanishing within fifty to sixty years from today (Conserve Energy Future, 2014). Thus, it is important for Canada to invest their money on resorting to more environmentally friendly and renewable ways to make electricity. Being a developed country, Canada has the financial stability to purchase the technologies over time in order to produce renewable energy. In addition, many organizations and the government have taken a step to educate the society about issues regarding energy usage, and to create programs which conserve energy for the future. In the future generations, Canada will be able to generate sufficient
Briefly describe the pricing structure that is used with this product and explain the benefits of this method.
In contrast, some believe that renewable energy is a key factor involved in helping the economy to grow. Many jobs are created in the manufacturing and running of renewable energy plants. The renewable energy and energy efficiency technologies created 8.5 million new jobs and $970 billion in revenue in the year 2006 (Langwith, “Renewable Energy is Economically”). The American Solar Energy Society says by 2030 it could generate up to $4.5 trillion in revenue for the U.S and create 40 million new jobs. This would represent one in every four jobs (Langwith, “Renewable Energy is Economically”). This shows how vital it is to get renewable energy companies in the U.S. It is important to build a stable economy again and do it all while helping the environment.
Today’s highly competitive business world forces companies to create different tactics and relatively rely on multiple pricing strategies to conduct business.