Commission on the Reform of Ontario's Public Services

Larger regional entities might allow for economies of scope as well as scale, allowing greater
participation in planning, design of conservation programs and expanding responsibilities to
deliver other resources such as water.
Recommendation 12-14: As part of the review of the feed-in tariff (FIT) program, take steps
to mitigate its impact on electricity prices by:
� Lowering the initial prices offered in the FIT contract and introducing degression rates
that reduce the tariff over time to encourage innovation and discourage any reliance on
public subsidies 17 ; and
� Making better use of “off-ramps” built into existing contracts.
Recommendation 12-15: Procure larger generation facilities through a request for
proposal (RFP) process.
Recommendation 12-16: Review the roles of various electricity sector agencies to identify
areas for economies in administration. This could include investigating the potential to
co-ordinate back-office functions.
Recommendation 12-17: Make wholesale electricity prices inclusive of transmission costs
such as capacity limitations and congestion as part of a comprehensive restructuring of the
wholesale electricity market.
Consumers located nearer to generation stations should be able to benefit from lower
electricity prices. Sending more efficient price signals to the marketplace should encourage
more optimal levels of investment in electricity infrastructure — generation, transmission
and distribution.
Recommendation 12-18: Make regulated prices more reflective of wholesale prices by
increasing the on-peak to off-peak price ratio of time-of-use pricing and by making critical peak
pricing available on an opt-in basis.
17 For example, Germany’s equivalent tariff program builds in an annual nine per cent reduction in rates paid to solar photovoltaic
generators. See W.E. Mabee, J. Mannion and Tom Carpenter, “Comparing the Feed-in Tariff Incentives for Renewable Electricity in
Ontario and Germany,” Energy Policy 40 (2011), pp. 480–89.
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