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# Windsor Policy & Solutions Forum Energy Costs - How to Address Higher Power Costs - PowerPoint PPT Presentation

Windsor Policy & Solutions Forum Energy Costs - How to Address Higher Power Costs. Bruce Sharp, P. Eng. Director, Electricity Aegent Energy Advisors Inc. [email protected] , 416.622.9449.112. May 15, 2014. In a nutshell. Getting it all wrong Picture is not pretty Costs largely fixed

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### Windsor Policy & Solutions ForumEnergy Costs - How to Address Higher Power Costs

Bruce Sharp, P. Eng.

Director, Electricity

Aegent Energy Advisors Inc.

[email protected], 416.622.9449.112

May 15, 2014

• Getting it all wrong

• Picture is not pretty

• Costs largely fixed

• Lowering = transferring

• Make electricity consumers – not taxpayers – pay for electricity

• Make consumers pay the true cost of the electricity they use

• Maintain culture of conservation

• Depoliticize electricity policy

• Commodity = spot price + Global Adjustment (“GA”)

• 2013:

• Spot price (arithmetic average) = \$ 24.98/MWh

• GA, Class A (average) = \$ 33.19/MWh

• GA, Class B = \$ 59.24/MWh

• % of total costs:

• Total commodity cost = HOEP + GA Class B

• (assumes zero load growth)

• Capital-intensive

• Chunky

• Inertia

• Overbuild

• Bias

• Balloon effect

• Shift to taxpayers

• Ontario Clean Energy Benefit

• Provincial portion of HST

• Shift to other ratepayers

• Debt Retirement Charge

• Conservation

• Cost allocation

• See “costs largely fixed”

• If costs 95% fixed:

• EEG is green-only version of Ontario Global Adjustment

• 2014: € 62.4/MWh

• Industrial policy decision

• Significant avoidance (90%) at average load of ≳114 kW (also, electricity cost ≥ 14% of value added)

• Intensity requirement can have unintended consequence

• GA avoidance

• Class A/B

• Since January 1, 2011

• Demand-based allocation of GA costs

• 5,000 kW threshold, moving down to 3,000 kW

• 2013: Average 39% reduction in GA charge

• In theory, avoids investment

• Benefit can be derived by doing nothing

• Price signal ≳ 2 x generation alternative

• Do:

• Conserve - and more than the other guy

• Ratepayer transfers: be transparent, recognize their impact

• Don’t:

• Transfer costs to taxpayers

• Have price signals inconsistent with other options