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OFA: Give More 'Power' To Farmers

Sep 27, 2010


By Don McCabe, Vice President,Ontario Federation of Agriculture

Farming needs power.  Reliable, adequate supply, reasonably-priced power. So it is not surprising that farmers tell us about their frustration with rising hydro bills.

Rate increases occurred in May and HST went in effect July 1.

So how is your bill calculated?

Now hydro costs 12.7 cents a kWh on farms in the Hydro One service area.  This consists of 7.5 cents for the power (or 59% of the total); distribution is 26%, 5% for transmission, 1% to pay for the rural rate assistance program, 6% towards the old hydro debt, and the final 4% for the Ontario Power Authority, Ontario Energy Board and the System Operator.  Now add a monthly service fee of $27.88 and HST as of July 1. 

Hydro is mainly fixed costs and interest. But there are also costs of line maintenance and tree trimming for 140,000 km of line, that are real and urgent.  So there has to be a balance between service needs and costs.

Are these ‘fair’ rates for hydro? Yes and no.  Ontario had frozen rates for 11 years and then moved to a market for price discovery.  We have base power from nuclear sources, but shortages of peak power.  The difference being that peak power is more expensive than base, because as the name implies it is required at peak demand like hot summer afternoons over a steady base of constant power.

In Ontario, consumers who use over 150,000 kWh per year must purchase their power on a contract. Farms are exempt from this and can buy power on the regulated rate plan explained above regardless of volume. OFA secured this privilege for farmers when it became clear that the market for power was erratic.

Also, farmers have a choice to buy power from energy retailers like Ag Energy Cooperative.  The choice of how you get your power is yours.  OFA worked to get the opportunities.

Homes where there are fewer than 25 customers per kilometre of line qualify for the Rural and Remote Rate Assistance of $15 per month cut in service charges. Most Ontario farms qualify, as do over 100,000 other rural homes.

The problem of higher cost power in the future can only be addressed in the long term by paying off the old debts and building a modest surplus of reliable, reasonably-priced peak power. For example, farm sourced biomass is now lower cost than natural gas power. OFA will help make farm power part of the future solution by providing information to the provincial power plan consultations recently announced.

OFA continues to build and secure opportunities for renewable energy from all sources on farms after being very active in lobbying for the Green Energy and Green Economy Act.  Some farmers are and will make their own power using renewable sources such as solar, wind, water, biodiesel, biomass or biogas.

So OFA lobbied hard and appreciates in August, the McGuinty Government honouring the original microFIT rates for 16,000 plus people; many of them farmers bringing investment to rural Ontario.

Recently, the Ministry of Energy gave direction to Ontario Power Generation to move toward forest biomass energy generation to replace coal-fired at the Atikokan Generating Station in Northern Ontario. Currently the OFA is working on a three-year research plan to develop agricultural biomass on a larger scale for the Nanticoke and Lambton Generating Stations in the south. The research will be used to assist farmers in testing agronomic practices to grow fuel for generating electricity for Ontario Power Generation or local, district units.

Yes, green energy is more costly than Ontario coal fired power.  But it is cleaner and renewable, the money stays in Ontario, and it does not contribute to lung disease or smog like coal.  It can help secure farm income when other farm commodities have unpredictable or declining markets.  Also, most green energy is lower cost than imported, peak period, coal power from the USA.

Ontario has an opportunity for its economy and its environment unfolding now.  Ontario is one of the few places with enough resources to provide a substantial part of energy from green sources.  Ontario farms will buffer Ontario consumers against the worst parts of coming energy changes. For these opportunities to work well, it must work for farmers too.

OFA is working to ensure green energy opportunities are there for farmers, while keeping your hydro bill in check - now and in the future.

Source: Ontario Federation of Agriculture