Ottawa businesses shocked by higher hydro bills

Bob Cabana, owner of clothing store FabGear64, says no matter what drastic measures he takes to conserve electricity, his bills continue to rise.

Photograph by: Chris Mikula, The Ottawa Citizen

OTTAWA - Over the past few years, Bob Cabana has cut electrical consumption at his Wellington Street West niche clothing store, FabGear64, by 40 per cent.

He's capped his air-conditioning system, installed low-energy lighting, reduced his window lighting by 90 per cent, and retrofitted for energy conservation.

His reward? His hydro bill is higher than ever.

"I almost work in darkness," Cabana says. "But the sad part is I don't see any decrease in my hydro. It's going up."

When Cabana complains to Hydro Ottawa, "their response is, 'Just think, sir, how much you'd be paying if you hadn't cut back'," he says, adding ruefully: "I'll probably have to start using candles, like they did back in the 1800s."

Cabana's story is all too familiar to Catherine Swift, chief executive of the Canadian Federation of Independent Business, which has 1,700 members in Ottawa.

"We know this is a huge issue," she says. "We've certainly heard anecdotally from a ton of businesses saying, 'this is just unconscionable'."

And more large increases are on the way. An analysis done for Canadian Manufacturers and Exporters (CME) estimates electricity rates for non-residential customers could rise by up to 63 per cent by 2015.

"This is going to hit everybody big time," Swift declares. "Some businesses will go out of business. I'm absolutely sure. This is a pretty essential input.

"Hydro used to be a competitive advantage in this province. Now it's absolutely a profound, meaningful competitive disadvantage."

The CFIB is so alarmed it plans to survey its members this fall to assess the impact of rising hydro costs.

"We want to get down to the nitty-gritty with our members and see exactly what the impacts are on their businesses," says Swift.

The size of the increases - commonly ranging from 25 and 50 per cent over the past two or three years - are part of the problem, she says.

But their frequency is an issue as well. "You can't keep adjusting to this constant barrage," Swift says.

Don't talk to Mario Giannetti, owner of Preston Hardware, about electricity prices. "It's pathetic, just pathetic," he moans. "I would say my hydro bill has gone up about 20 per cent from last year until now."

Giannetti pays $12,000 a month to Hydro Ottawa for his store's electricity. If the CME's estimate is accurate, that could jump to as much as $20,000 by 2015.

"It's just absurd," Giannetti fumes. "It doesn't make any economic sense at all. It seems to be just like a monopoly and we have no choice."

Businesses have no option but to pass on their higher utility costs, he says. "One way or another, these costs are going to end up in the pocket of the consumer if we're going to stay in business."

But the opportunity to pass on costs is limited by the "hyper-competitive" global economy, says Swift.

Erin Kelly, executive director of the Ottawa Chamber of Commerce, says rising electricity costs hit small retailers like Cabana especially hard.

"They have small margins to begin with," she says. "They really work on volume. Any kind of increase really affects them."

In sheer dollar terms, though, it's large institutions and businesses that are squarely in the crosshairs.

At Scotiabank Place, the electricity bill tops $1 million a year. "It's a significant cost to us," says Cyril Leeder, president of Senators Sports and Entertainment. "It's one of the ones we keep our eyes on pretty close."

Like many firms, the company has tried to mitigate the impact of rising electricity rates by embracing conservation. This summer, it replaced more than 2,000 lighting tubes at Scotiabank Place with high-efficiency models.

But if rates rise by 50 or 60 per cent by 2015, "you're not going to be able to fully mitigate that," Leeder says.

"You're going to have some extra costs that you're going to have to find some way to absorb. It's got to come from someplace."

The Ottawa Hospital and the Ottawa-Carleton District School Board are two of the largest institutional users of electricity in the city.

The hospital spends $9 million a year on electricity and the school board spends $8.7 million, about one per cent of its overall budget.

Mike Carson, the board's superintendent of facilities, said major increases in hydro costs would force the board to "look even harder" at conservation measures it has already instituted.

Those include converting to more efficient light bulbs and the use of motion sensors to activate lights.

The board also plans to install 10-kilowatt solar panel systems on the roofs of 13 of its schools to produce power and raise revenue as part of the Ontario Power Authority's green energy microFIT program.

It's close to finalizing an agreement with the province to install larger systems at a further 15 schools, Carson says.

Carleton University spends between 1.5 and two per cent of its budget on electricity - $4.5 million last year. It's also looking to the province's lucrative Feed-In Tariff program to help pay the bills.

The university is installing a 10-kilowatt solar system on the roof of its new engineering building, and may expand to the full 500-kilowatt system allowed under the FIT program.

"We think it's going to be in the range of a 10-to-11-year payback, but we're still in the study stage on that," says Darryl Boyce, the university's assistant vice-president, facilities management and planning.

The university's hydro bill has increased by 145 per cent since 2003-04, Boyce says, because of rate increases and new buildings.

Since tuition increases are set by the province, Carleton would have to reduce operating costs in other areas to offset further increases, he says.

As for Bob Cabana, he's planning to close FabGear64 this fall and concentrate his efforts on a smaller clothing store, Straight'n Wicked, across the street.

"The bigger store I really have to look at letting go, because the expenses are way too high."