Rethinking electricity pricing in Canada

Canadian Emissions and the Electricity Sector Among the many different sources of Canadian GHG emissions shown in Figure 1, the single largest one is the electricity sector.3 This stationary GHG emission source is responsible for 16% of all emissions, which represented 117 Mt of CO2 emissions in 2006, 22% more than in 1990. [...] The three other energy-related GHG sources are other stationary sources (28%), transportation (different mobile sources responsible for 25% of all emissions) and fugitive sources (9%).4 The four largest other stationary sources are the fossil fuel industry (9%), the residential sector (5.5%), the commercial and institutional sector (4.5%) and the manufacturing industry (3%, for a combined 22% of a [...] Also, in order to avoid using electricity for heating purposes when better alternative heat sources are available (such as heat from co-generation, from a geothermal heat pump, from solar energy or natural gas), the correct price signals have to be put in place in the energy sector in general, and in the electricity sector in particular. [...] In the case of Alberta and Ontario, even if an hourly market price is determined in an open spot market7, most consumers (residential and small businesses) are not directly exposed to these market prices because of the “Regulated Rate Option” in Alberta, and of the “Regulated Price Plan” in Ontario.8 These plans allow consumers to pay at any given time a different price than the market price. [...] In the case of Manitoba, for 2007-2008, this type of price regulation resulted in the sale of 21 TWh within the province, for an average revenue of 5.22¢/kWh (including distribution costs).