In the fall of 2016, Ontario and Quebec entered into an electricity trade agreement with the purported goal of expanded interprovincial trade and collaboration and to generate savings for ratepayers.
It didn’t quite work out that way.
While the public details on the deal are slim, the energy portion of this deal will increase electricity costs to Ontarians, not decrease them, at a time when Ontario ratepayers have been promised rate relief by their government.
This deal is causing Ontario to pay a premium when, alternatively, the Ontario electricity markets and carbon pricing, if left alone, would achieve the same results at a lower cost.
The agreement appears to be politically motivated, to create optics that will resonate with voters, but at the expense of actually increasing costs for Ontarians.
The agreement addresses two independent elements.
First, Quebec seeks to purchase electrical generation capacity from Ontario in the winter when it needs it most. Second, Ontario seeks electricity energy trade provisions with Quebec to reduce natural gas-fired electricity generation.
In announcing the benefits of the deal, the Ontario government bundled these two elements together, with both governments declining to make public the specific financial commitments that will ultimately impact electricity ratepayers.