Better Understanding HOEP and Ontario’s Long-Term Energy Plan (“LTEP”)

by | Dec 13, 2017 | Energy Feature

On October 26th this year, the Government of Ontario released the 2017 Long-Term Energy Plan (“LTEP”). Titled “Delivering Fairness and Choice”, the LTEP focuses on “innovation, electricity affordability and modernization of the electricity sector” in the province. Those are worthy goals, but recent controversy in the energy sector in Ontario has some wondering whether the LTEP will be as effective as anticipated.

According to the CBC, it’s never been so cheap to produce electricity in Canada. Low-cost wind and solar, and low natural gas prices have resulted in “bargain prices” that should have equaled savings for Canadian energy consumers.

Instead, Canadian customers have had to pay what some see as far more than their share for power production techniques that created more energy than the current economy can utilize, the CBC reported.

Because the province produces more power than is necessary, the remainder is sold to the United States and neighboring provinces, according to Radio Canada International. So, while Canada produced more energy than ever, in the past year, electricity rates went up instead of lowering.

Experts from the Ontario Society of Professional Engineers told Radio Canada International that instead of exporting the excess energy at a loss, the rates should be lowered for consumers in the province.

To better understand what’s going on with the Ontario energy market, one has to understand HOEP and how electricity costs are handled in the province. First, the wholesale price of electricity is determined in real-time by the IESO. The IESO is the Independent Electricity System Operator (IESO), a government body that manages power, plans for future energy needs, and works on conservation and more efficient energy solutions in Ontario.

The IESO determines the hourly Ontario energy price (HOEP), which is charged to large consumers that take part in the market, in addition to “local distribution companies (LDCs) who recover it from the subset of customers that pay the market price,” according to the IESO.

The LTEP is meant to help reduce energy prices, which would impact the HOEP, and work to increase consumer protection and better regulate private companies, who some feel don’t pay their fair share in the current market. It’s also meant to work toward conservation and “green energy” goals.

But past management by the IESO, which has led to high costs for public consumers despite a healthy supply of energy, has left some consumers wary of whether the LTEP will actually improve factors like the HOEP or their general energy costs in the end, even under new management.

Meanwhile, with increased energy costs, energy management firms, like Ontario’s Active Business Services, have been formed specifically to help Ontario businesses better manage energy use and their costs.

The Ontario government claims that the LTEP will “cut costs across the electricity sector.” But just how effective the plan will be when it comes to actual savings for customers in Ontario remains to be seen.

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