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Energy Minister Bob Chiarelli likes to crow about how much money Ontario is making when it sells its surplus power. The truth is something far different, even in Mr Chiarelli’s millions-equal-Tim-Hortons-coffees world of mathematics.

Scott Stinson: Ontario powers up electricity exports but taxpayers see little benefit

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Scott Stinson | January 9, 2014 6:58 PM ET
More from Scott Stinson | @scott_stinson

Jurisdictions that import electricity from Ontario pay close to the wholesale market price but consumers in the province pay much more.

Tyler Anderson/National Post
Jurisdictions that import electricity from Ontario pay close to the wholesale market price but consumers in the province pay much more.

At a time when Ontario has seen its manufacturing industry crater, the province has found that it can still do a booming business with one type of export: electricity.

Unfortunately for ratepayers, the business model is a little unsound. If energy were doughnuts, Ontario would still be expanding its dough supply, while sending ever more trucks full of discounted day-olds to places like Michigan, Minnesota and Quebec.

The province’s Independent Electricity System Operator on Wednesday released its year-in-review of the province’s energy data. Most of the numbers were as expected, with wind energy an increasing part of the supply mix, coal a decreasing part of it and nuclear energy remaining the backbone of the grid.

Energy exports, meanwhile, “rose to 18.3 TWh,” which is an awful lot of electricity: enough to power 300 billion 60-watt bulbs for an hour. The province’s exports have been on a steady upward trend; the 2013 total is a notable jump from 14.6 TWh in 2012 and from 12.9 TWh in 2011, according to figures released by the IESO last year. Exports have increased by almost 50% over that two-year period.

This would be a welcome development if the province and its ratepayers — which is to say, you — received a return for our electricity that was equal to, or ideally above, the amount that was paid to produce it.

But it does not. Jurisdictions that import electricity from Ontario pay something close to the wholesale market price of electricity, a number that changes hour by hour and is dependent on factors too numerous to list here. For 2013 the average wholesale price was between 2.5¢/kWh and 3¢/kWh. The cost paid to produce that electricity, again using the IESO’s own numbers, is on average about 8.5¢/kWh, or about four times the wholesale price.

Consumers pay, again depending on a host of factors, something much closer to the larger number, because built into the cost of our electricity is everything from capital investment to executive salaries to the payout for when gas plants are cancelled in the middle of election campaigns.

This trend, where Ontario ships excess electricity to its neighbours at steep discounts, is not new. In 2011, the province’s Auditor-General noted in a report that “the price Ontarians pay for electricity and the price it charges its export customers … have in recent years been moving in opposite directions.”

Read the full story here.