Energy costs having serious impact on the North’s economy

Federation of Northern Ontario Municipalities
News Release

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The rising Canadian dollar, high and rising electricity prices and fuel prices are having a negative economic impact for Northern Ontario industry and their associated communities.

When asked recently about the most recent round of mill closures, inter and intra-provincial competition for mining processing and the need to attract new industries to Northern Ontario, Al Spacek, President of the Federation of Northern Ontario Municipalities (FONOM), stated

“Rising electricity and fuel costs are affecting industrial, commercial, small business and residential users in Northern Ontario. These problems are the result of a complex set of policy changes made over time.

President Spacek went on to say, “We in the North understand that electricity is key to the development of our resource-based economy. Our economy centres on the transmission, distribution and pricing of all forms
of energy. These elements give us the ability to attract and retain industry. The main barrier to the growth of the North’s economy at this time is the availability of electricity where it is needed and at a competitive price over the long term.”

Spacek then quoted a report done by the Northern Ontario Large Urban Mayors*

*(NOLUM) that states “The energy intensity of business in Northern Ontario is significant: 10 – 40% of operating costs. Further, the overall consumption of electricity in Northern Ontario is 80% business and 20% consumers. Therefore, Northern energy costs and the energy economy are much more significant than in Southern Ontario.”

Spacek noted “One of the largest impediments to the development of sufficient electricity generation is the lack of transmission capacity throughout the province to carry the energy to market. It would be a great help to the people of Northern Ontario if the government would develop the necessary transmission infrastructure to facilitate electricity generation development. Just as the highway network, owned and operated by government, facilitates the movement of goods, an expanded electricity highway would enable electricity producers to move their product to market. Government needs to be more active in the electricity transmission sector.”

From a recent FONOM brief to the Ontario Government “Ontario is now an importer of electricity from neighbouring jurisdictions to meet peak demands. Quebec and Manitoba are examples of jurisdictions that benefit
significantly from exports. Price, transmission and distribution of electricity has made it very difficult for Northeastern Ontario to compete with Quebec and Northwestern Ontario to compete with Manitoba where companies are being offered long term supply contracts at much lower rates.”

Spacek notes “While FONOM members appreciate the current 25% reduction in industrial hydro electric rates for a period of three (3) years, we would like government to reconsider and extend the three-year time period for this rate reduction. We feel that three years is not long enough to ensure Northern Ontario’s competitiveness. A prime case for building good will would be a commitment from provincial leaders regarding what they would do to ensure Cliff Resources builds a refinery to process their chromite mined in the ‘Ring of Fire’ area in Northern Ontario.”

In concluding his discussion on energy pricing, Spacek observed “The Province’s Long Term Energy Plan must be addressed in an Integrated Pan-Northern Power System Plan in order to attract new mines, forestry operations and manufacturing facilities, as well as improve the quality of life and standard of living in Northern Ontario. Value added processing of all resources is critical for the long-term sustainability of many communities and the people of the Northeast part of Ontario. These issues must be overcome by the Province, working with local levels of government.”

“And don’t get me started on the unfair price of gas at the pumps,” noted Spacek. “We have little or no public transit and don’t have the resources to develop public transit. People here need their cars to get to work, health care and other activities. Most of our goods traffic is by transport using the highway system, yet we often have to pay over 10 cents a litre more than people in Southern Ontario do, who have more transportation
options. Something has to be done about the inequity in costs of energy – both hydro and fuel - between Northern and Southern Ontario”.

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