Auto Makers In Canada And The Issues Over The Rising Costs Of Electricity

Auto makers in Canada are concerned over the rising costs of electricity. A study made by Automotive Policy Research Centre at McMaster University in Hamilton revealed that the price of electricity in Ontario is higher than the 10 largest auto-producing states in the US. However, high cost of electricity has not yet put Toronto at a competitive disadvantage when bidding for new car company investments.

Electricity rates in Ontario increased by 26% between 2010 and 2015. This is almost double than the worst performing auto making jurisdiction like Indiana. If measured against the percentage of vehicle production in US dollars, electricity rates fell in Ontario during the period stated. However, the decline was not as steep as the top auto-producing states.

Meanwhile, as rates in Ontario grow higher, the cost of electricity is only 6% more for every car that has been assembled in the province compared to Michigan with the next highest costs of electricity. According to the research, even if the rates are considered as one of the factors for the deteriorating competiveness of the manufacturing industry in Ontario, the size of the gap is not yet alarming to warrant characterizations; certainly not in the context of a $30,000 car.

On the other hand, although Canadian plants compete with the plants in the United States for mandates, the assessment is based on US dollars. Plants located in Canada pay their electric bills in Canadian dollars. In the new pricing scheme, Industry Conservation Initiative, large users of power can reduce their electricity costs if they operate when the demand for power is low.

Although the conservation scheme has its advantages, it does not apply to Canada auto makers that have 3-working shifts daily. It is not possible to schedule shifts based on electric demand because the auto makers have a more intricate operation process.

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