Factors that Influence Electricity Rates

There are many things that contribute to the cost of electricity. Here we discuss the most important criteria that influence the cost of electricity.

Availability of Hydroelectric and Natural Gas Generation

Hydro (electricity generated from water turbines) is one of the cheapest forms of electricity to generate and maintain. Obviously, you can't generate hydro unless you have a reliable source of water energy. An abundance of hydroelectric facilities has a favourable impact on the rates in Yukon (99% hydro), Quebec (94%), Manitoba (92%), Newfoundland & Labrador (91%) and British Columbia (86%). Learn more about how each province generates electricity.

Natural Gas is also a relatively cost efficient form of energy for thermal power plants, so having access to lots of Natural Gas will allow a province to utilize this inexpensive form of energy. Natural Gas fired power plants are widely used in Alberta, Ontario and Saskatchewan. Here you can see the cost of electricity by power source.

Population Density

It costs a lot of money to build and maintain transmission lines to deliver power to all regions of the province. This helps to lower the rates in provinces like PEI, Ontario and New Brunswick, the provinces which have the highest population densities in Canada.

Bloated Provincial Government Payrolls

In Ontario, where electricity rates are amongst the highest in Canada, one of the main reasons for this is that the various crown corporations which control the electricity production and distribution are awash in overpaid public employees with huge salaries, pensions and golden benefit packages. Can you name a private sector company with over 15,000 employees where 75% of them make over $100,000/year? Probably not, since such a company likely does not exist. These huge payrolls, defined benefit pensions and benefit packages only exist in the public sector and are funded by ever increasing hydro bills.

Learn more about electricity rates in Ontario.

Debt Payments

Ontario hydro bills are particularly impacted by charges intended to pay off so called "Stranded Debt" left over from the former Ontario Hydro crown corporation. This debt, which is sitting at about $9 Billion, adds .7 cents/kWh to the hydro bills of those living in Ontario.