When 10 per cent of your capital expenditure goes towards keeping the lights on, and you consume one per cent of the province's hydro alone, high electricity prices are more than just an inconvenient monthly bill.
This is the case for Vale's Ontario operations, and the high cost of hydro is increasingly vexing. But they are taking advantage of energy savings programs, and hope to see other businesses do the same.
“When we do our budget planning, the price of energy is the second highest operating cost,” said Jody Kuzenko, Vale's director of refining in Sudbury. “You can see that energy pricing is a key variable that matters to us.”
Vale joined other Sudbury businesses, the Greater Sudbury and Ontario Chambers of Commerce, and the Independent Energy System Operator (IESO) at a roundtable Jan. 29 to discuss high hydro prices, cost-savings programs and provincial policies.
Programs run through the IESO can help cushion high costs. The range of programs includes retrofitting, audit funding, and support for new construction that incorporates energy efficient elements. But most of the programs are based on companies fulfilling conditions prior to qualification. Those who pay those hydro bills though would like to see more programs where businesses are rewarded for meeting specific targets.
It’s not news to major power users that Ontario's prices are higher than those in bordering provinces. Vale has operations in Manitoba that are significantly less burdened by the cost of hydro.
The Sudbury Chamber's board chair, Karen Hourtovenko, thinks Northern Ontario companies are even further impacted.
“It's not just a Sudbury issue, it's an Ontario issue,” said Hourtovenko. “We do have differences though, because of the industry that primarily drives Northern Ontario. Although it is a burden absolutely for smaller businesses, at an energy driven company (like Vale) you can't just turn the lights down and work with candles.”