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Here is a precis of an analysis of the Ontario government’s conservation efforts prepared by local economist Robert Lyman, based on research by Parker Gallant.

Here are the numbers.

In 2009, local electricity distribution companies in Ontario provided 124,206,032 megawatt-hours (MWh) for 4,748,577 households, a monthly average of 2,180 kilowatt hours (kWh).

In 2013, they provided 125,306,563 MWh for 4,944,488 households, a monthly average of 2,112 kWh. Average consumption fell by 3.3%, or 875 kilowatts annually between 2009 and 2013. For the average home, that is a monthly reduction from 800 kWh to 774 kWh (317 kWh per year).

In 2009, the cost of a kWh of electricity delivered averaged 6.15 cents and the “commodity” cost (just the electricity portion) for the full year was $590. By reducing annual consumption by 317 kWh, the savings should have been $19.50.

In 2013, the commodity cost had risen to 9.2 cents per kWh, or $854 per year. Not only did the $19.50 savings disappear, but also, the average household paid an additional $264 annually. That represents an additional cost to all ratepayers in the province of $1.2 billion annually. That does not include the $2 billion cost of installing smart meters.

The average household would have had to reduce its annual consumption by 33%, or 3,200 kWh, in order to have simply matched its cost for electricity consumption in 2009.

The Independent Electricity Systems Operator (IESO) is required to maintain an operating reserve of generating capacity of between 1,300 and 1,600 MW for contingencies. Since 2009 the available surplus has been between 4,000 MW and 5,900 MW. The IESO expects these surpluses will continue until at least the later part of this decade. Thus, while the official rationale for smart meters, time-of-use pricing and “conservation” programs is to avoid the addition of expensive new generation capacity, the province has continued to add that capacity even in the face of a substantial surplus.

What’s next? Current Energy Minister Bob Chiarelli has set new targets for both reductions in peak demand and “conservation” in his long-term energy plan. The target set for reducing peak demand is 10% (2,400 MW by 2025) and for “conservation” is 16% (30 TWh) by 2032. These will be combined with continuing large additions in industrial wind turbine and solar power generators at substantial premiums above most current generation. As a result, despite the lower consumption, ratepayers will be expected to dig deeper into their pockets.

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