Electricity prices in Canada are comprised of generation costs, transmission costs and distribution costs. Generation costs come from the actual production of electricity. Transmission costs are the costs incurred when electricity is transferred from its original source to a distributor. Distribution costs are the costs associated with final delivery to the end user. Generation and transmission costs are primarily regulated by the provincial government. Distribution costs can be controlled at either the provincial or the municipal level. In a deregulated environment, electricity prices are driven by a supply and demand scenario.
The variation in electricity prices between Canadian provinces comes from generation costs. According to the Centre for Energy™, more than 60% of the electricity produced in Canada comes from hydroelectricity. Simply put, hydroelectricity comes from the energy in falling water. It is the least expensive way to generate electricity. Natural gas fired thermal generation is the most expensive.
Whether operating in a regulated or deregulated environment, electricity prices continue to go up. Like natural gas, electricity prices can be impacted by the weather. In summers with cooler temperatures and winters with more mild conditions, the demand for air conditioning and heating decreases. Lower demand ultimately leads to lower electricity prices.
Concerns about global climate change and impending government regulations will likely affect electricity prices in the future as many governments, including Canada, are seeking and pledging to use renewable energy sources. Renewable energy sources produce electricity without depleting other natural resources like coal. Electricity produced from these sources is cleaner. It produces almost no greenhouse gases and is much safer for the environment.
At ECNG ENERGY, we understand the electricity market. More importantly, we understand how unpredictable electricity prices can affect your ability to accurately budget your energy costs, as well as your bottom-line.
ECNG ENERGY is not a reseller. This means we do not profit from the sale of electricity. As an independent energy consulting firm, our job is to help you lower your procurement costs, reduce your risk, and achieve your corporate objectives. We do so by providing customized value added services to electricity users across North America.