Wallets hit hard in heat

Sultry August weather hiked power costs 18.3%

Toronto Sun - Saturday, September 21, 2002
by Maryanna Lewyckyj

An August heatwave scorched household budgets in Ontario, as electricity prices jumped 18.3% compared to July.

On a year-over-year basis, prices in Ontario's newly opened electricity market were up a whopping 32.9% compared to August 2001, according to Statistics Canada.

"The people of Ontario have had their pockets picked for the second month in a row," Ontario NDP Leader Howard Hampton said. "Thanks to the Conservatives' dirty deal on Hydro, everyone from seniors on fixed incomes to factory owners are being hit with huge hydro increases."

The spike in Ontario's hydro prices pushed up the electricity index across Canada by 6.8% in August, the largest monthly jump in more than 11 years.

Soaring electricity prices helped boost the nation's overall inflation rate to 2.6% in August, compared to a 2.1% rise in July.

HIGHER CIGARETTE TAX

Other major factors contributing to the rise (in inflation) include a 40% jump in cigarette prices (due to higher taxes), a 15.5% increase in auto insurance and a 6.1% rise in gasoline.

"Clearly, electricity is the big story here," said Douglas Porter, senior economist at BMO Nesbitt Burns.

The inflation figures were released the same day Ontario residents were being urged to ease up on their electricity consumption because of unseasonably warm weather.

Electricity rates shot up more than 13 times the average price yesterday afternoon as generators across Ontario struggled to power the province's air conditioners.

The price of electricity soared to 69 cents per kilowatt-hour yesterday, compared to an average of just over a nickel since May 1, according to the Independent Electricity Market Operator (IMO), which oversees pricing.

Large industrial users were hammered again yesterday thanks to so-called "uplift charges" that pay for expensive imports needed to keep the lights on and air conditioners running yesterday. That additional charge almost doubled the cost of power for an hour.

SCARCE SUPPLY

IMO spokesman Ted Greutzner said yesterday's unusually warm weather hit when many generators were down for routine maintenance and imported electricity was in scarce supply.

"Electricity prices have gone from being one of the most stable elements of the consumer price index to being one of the most volatile," Porter said. "They're almost making gasoline prices look sedate by comparison."

The only good news from Statistics Canada on the energy front in August was a 32% drop in natural gas prices.

Porter said that prices are starting to creep up on the wholesale level, which will lead to higher consumer prices.

"However, they're still way below what they were two winters ago when they hit some phenomenal spikes," Porter said.

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