Good article – from a different perspective than I’ve looked at the issue. Exporting at low prices (which hasn’t been much of an issue thus far in 2014) is only a symptom of a problem.
Better something than nothing – but best not to be purchasing, at high cost, supply that can’t be consumed in Ontario, but only dumped on export markets at lower cost.
The Ontario NDP recently claimed that Ontario subsidizes exports of electricity to New York and Michigan. The NDP even claims that the subsidization of electricity exports costs Ontario $1-billion a year. Fortunately for Ontario ratepayers, this is simply not true. Those who claim that Ontario subsidizes electricity exports fail to understand both basic economics and how the Ontario electricity sector actually works.
Since 2005, power investments made on behalf of Ontarians have been supported by contracts or regulated prices, with the excess of the cost over the energy market price recovered from consumers through a mechanism called the Global Adjustment. Although higher than otherwise because of environmental policies or industrial policies embedded into electricity procurement, the costs were incurred primarily for the benefit of Ontario residents. None of the infrastructure and other costs financed by the Global Adjustment…
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