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IESO’s own electricity forecasts show that the need for the auctions is non-existent well into the next decade. The agency’s most aggressive demand forecasts — which include a major uptake of electric vehicles and a switch from natural gas to electric heating — clearly show that existing generation assets in the province can meet summer and winter peak demand out to 2025 and 2023, respectively. A more realistic scenario, according to IESO, shows that existing generators can largely meet peak demand out to 2035, with just a very minor shortfall in one year (2025). IESO concluded that Ontario has “sufficient resources to meet demand requirements generally over the next decade across all outlooks.”

Nonetheless, IESO is planning to actually increase the size of its auctions by nearly doubling it next year. The experts at the OEB say the only reason IESO is expanding the program is so it can hit “administratively determined” targets, not ones based on a “reasonable expectation” of needs. Put more simply: The program isn’t needed and is simply a bureaucratic exercise aimed at hitting politically established conservation targets, rather than providing value to electricity customers or an environmental benefit.

Worse still for the province’s residential customers and small business owners is that the cost of conservation programs is funded through a charge called the “global adjustment,” which is applied each month to the generation portion of hydro bills. Due to a provincial policy introduced in 2011, small customers now pay a greater share of global adjustment costs than large consumers, meaning the cost of the auctions, among other conservation programs, is paid disproportionately by small customers, while large customers remain their biggest beneficiary.

Abandoning the Demand Response program would cut $100 million off electricity costs for the province, notably for the small businesses and households that will pay the majority of those costs, while having no negative environmental impact.

Brady Yauch is an economist and Executive Director of the Consumer Policy Institute (CPI). bradyyauch@consumerpolicyinstitute.org