Toronto, Ontario - January 12, 2017 -- Automatic Coating Limited -- Jocelyn Williams Bamford, Vice President of Automatic Coating Limited, gives a tour of the in the compressor room in Toronto, Thursday January 12, 2017. (Mark Blinch/Globe and Mail)Mark Blinch/The Globe and Mail
Arthur Leal is concerned about how 2017 is shaping up for his family business, which uses large amounts of electricity to finish and corrosion-proof aluminum for his clients.
In recent years, his Toronto company, Progressive Anodizers Inc., has seen its electricity bills soar to over $50,000 a month. Mr. Leal is also dealing with the impact of Ontario's new climate change plan, which will boost the price of natural gas for his plant by an extra $24,750 this year.
While Ontario has brought in relief measures to help small and large businesses, mid-sized manufacturers like Progressive Anodizers, Copper Core Ltd. and Automatic Coating Ltd., feel left out because they're are either too big or too small to qualify for government rebates and incentive programs.
"The middle businesses are falling through the cracks on these programs. It's like they're forgotten," said Julie Kwiecinski of the Canadian Federation of Independent Business.
Like many businesses, manufacturers blame their soaring hydro bills on time-of-use prices whose on-peak rates have climbed 81 per cent since the smart meter program began in November, 2010, as well as other fees.
Of particular concern is the global adjustment charge, which was about $25,200 on $6,600 of electricity for Toronto-based Automatic Coating last November. The global adjustment fee covers Ontario's energy conservation programs and varies month to month.
Many medium-size manufacturers aren't eligible for the province's new hydro rebate because they use more than 250,000 kilowatt-hours of electricity a year and exceed a demand of 50 kilowatts. And many also don't qualify for the Industrial Conservation Initiative (ICI), an incentive program for larger electricity users with a monthly peak demand over one megawatt.
The new cap-and-trade system, brought in to reduce Ontario's carbon footprint, is also a challenge for manufacturers. The system puts a limit on the amount of carbon dioxide emissions companies can emit and the government issues participating companies carbon credits, which specify the maximum amount of carbon dioxide each company can emit.
If a company emits less carbon dioxide, it can sell its unused credits to other companies that need more credits to cover their higher emissions. As an incentive to stay in Ontario, the provincial government will provide participating companies with free credits over the next four years.
But many mid-size businesses don't generate enough carbon dioxide emissions to be included in the cap-and-trade program so they can't take advantage of these benefits either.
"We can't trade credits even though we're low emitters," said Jocelyn Williams Bamford, vice-president of Automatic Coating. "We just pay through increases in our natural gas bills."
These increases could cost a small manufacturer $136,000 in 2017 and $720,000 in 2030, law firm Stikeman Elliott LLP estimated. Another forecast from ICF International Inc. pegs the costs at $170,000 in 2017 and $900,000 in 2030.
Some manufacturers will be eligible for the $25-million Smart Green program for grants to upgrade their processes or production equipment administered by Canadian Manufacturers & Exporters (CME) on behalf of the government. But the fund can only cover about 110 companies based on a grant of $200,000 per applicant, said CME vice-president Ian Howcroft.
To make sure mid-size manufacturers aren't left out, Ms. Williams Bamford of Automatic Coating formed the Coalition of Concerned Manufacturers of Ontario last fall. Her group has lobbied provincial ministers and policy advisers, urging them to "put [in] some strategy mitigation for our size of companies," such as tax credits.
In an e-mailed statement, Ontario's economic development and growth minister Brad Duguid said, "We recognize that there are some businesses in the province that are not being captured in either of these initiatives," referring to the hydro rebate and the ICI program.
"That's why we have made a special commitment to programs under the Climate Change Action Plan targeted at these exact businesses," Mr. Duguid said, adding the ministry will continue to work closely with these manufacturers.
Ontario Ministry of Energy spokesman Dan Moulton said in an e-mail that the provincial government will dedicate a portion of the annual revenue raised from cap-and-trade "to keep electricity rates affordable for medium-sized commercial and industrial businesses." But details still need to be finalized.
In the meantime, other coalition manufacturers are trying to figure out what to do about their rising energy costs. Progressive Anodizers has raised its prices to clients by 3 to 5 per cent, while fasteners maker Leland Industries Inc. has vowed to open its next plant elsewhere.
"A lot of us are family companies. We work here; we pay taxes; we employ people; and these policies are damaging our ability to compete globally," Ms. Williams Bamford said.