Why Ontario’s Commercial Energy Rates Are a Ticking Time Bomb
For Ontario businesses, the challenge of rising electricity costs is no longer theoretical, it’s a stark reality reflected in every bill. The latest data from 2024 and 2025 shows that Ontario’s commercial energy rates are not just rising; they are accelerating, creating major risks for profitability and competitiveness.
The Unmistakable Surge: 2024 vs. 2025
The numbers speak for themselves. The price of electricity has seen a dramatic year-over-year increase.
- In 2024, the average electricity price paid by Class A and Class B commercial customers was 3.34¢/kWh.
- So far in 2025, the average electricity price has surged to 5.63¢/kWh, a jump of nearly 68% (IESO data).
- So far in 2025, the cost of electricity + Global Adjustment is up over 4% compared to 2024,increasing at over ttwice the rate of inflation.
This commodity cost explosion is only part of the story. Delivery charges are also climbing steeply. For example, Milton Hydro has already approved a 5.5% delivery rate increase for 2025, and utilities across the province have filed similar applications with the OEB. Even if government rebates soften the immediate blow, they can’t erase the structural fact: Ontario businesses are paying significantly more, and the trajectory is steepening.
2025 Outlook: Demand Surge, System Stress, Cost Uncertainty
From the “Seven Graphs and a Map: 2025 Annual Planning Outlook,” here are the key takeaways:
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Demand growth is accelerating. Ontario’s electricity demand is projected to grow 75% by 2050, significantly higher than previous forecasts. ieso.ca
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Baseload and system flexibility will be critical. Because more electricity is being consumed in off-peak hours (driven by EVs, modernization, new industrial loads), the province needs steady generation capacity (nuclear, hydro, storage) to stabilize pricing. ieso.ca
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Costs per unit are projected to remain under pressure. In real (2024) dollars, the IESO model suggests costs begin at ~$170/MWh in 2025, dip over time as new infrastructure comes online, but then increase again toward 2050. ieso.ca
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Energy efficiency still offers leverage. Demand-side management has grown—saving up to ~27 TWh annually by 2024—and new programs announced in 2025 aim to push that further. ieso.ca
These projections show that the stress on Ontario’s grid and pricing structure isn’t just near-term — it’s baked into long-term forecasts.
Recent Price Pressure: The Reality on the Ground
We already know the long-term trend is brutal. Now let’s lock in what’s happening right now:
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The Electricity Price component is showing steep year-over-year spikes (e.g. one month jumping ~60%+ relative to the same month last year).
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Utilities are raising delivery and distribution charges across the province (e.g. Milton Hydro’s 5.5% hike for 2025).
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Rebates (Ontario Electricity Rebate, etc.) continue to soften the visible impact, but they do not neutralize the structural cost drivers.
Put another way: the system’s demand and cost pressures coming from the 2025 Outlook validate what businesses are already feeling in their bills.
Why This Isn’t Just an Expense — It’s a Profit Threat
Inflation, rising electricity rates, delivery cost increases, and infrastructure investments all converge to make energy a variable you can’t ignore. If your business allows hydro hikes to nibble away at your margins — year after year — your bottom line simply won’t stand the erosion.
The risk isn’t in a single bill spike. The risk is in compounded increases, lost predictability, and squeezed capital budgets.
What Businesses Can Do to Fight Back
Here’s how to counter that systemic pressure:
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Commercial Solar Installations
Own your power. Reduce exposure to electricity price swings and convert unused rooftop capacity into predictable asset value. -
Energy Audits & Efficiency Strategies
Dig into your facility systems (lighting, HVAC, process controls) and retrofit or optimize where waste is highest. -
Smart Energy Management & Demand Control
Shift loads, optimize operations around pricing periods, and use analytics to reduce peak demand costs. -
Leverage Incentives Wisely
As Ontario’s grid evolves, new demand-side programs and capacity procurements will emerge. Be ready to take advantage of them when they come.
The Strategic Case for Solar in Your 2026 Budget
As you finalize your 2026 budgets, the data presented above isn’t just an operational concern, it’s a critical strategic and financial issue. Relying on the grid is no longer a predictable expense; it’s an acceptance of escalating financial risk.
For CEOs and CFOs, the decision to invest in solar is not an environmental initiative; it’s a fundamental financial strategy to protect your bottom line and secure a competitive advantage. Here’s why you can’t afford to ignore this during your current budget cycle:
- Transform a Volatile OpEx into a Predictable Asset. Grid electricity is a perpetual operating expense with zero control and guaranteed price hikes. A commercial solar installation is a capital expenditure that creates a 25+ year energy-producing asset on your books. It effectively converts an unpredictable liability into a predictable, high-return asset.
- Achieve Budgetary Certainty. The 68% spike in electricity costs shows that accurately forecasting electricity costs is nearly impossible. Solar locks in your electricity costs at a fixed rate. This budgetary certainty is one of the most powerful benefits, allowing for more accurate long-term planning, investment, and margin protection.
- Mitigate Significant Financial Risk. Given the IESO’s own projections, continued reliance on the grid is a direct threat to your profitability. Every budget cycle will be a gamble against market volatility. On-site generation is a powerful hedge that de-risks a core component of your operational costs.
- Secure a Competitive Advantage. As your competitors adopt solar, they will gain a permanent cost advantage. Their lower, predictable energy expenses will allow them to be more aggressive on pricing or reinvest savings into growth. The cost of inaction is not just your own rising bill, it’s the risk of being left behind.
The numbers for your 2026 operational budget are being finalized now. Deferring this decision effectively means locking in a significant, unavoidable cost increase for next year.
A brief consultation with Otter Energy can provide the preliminary ROI and cash flow analysis needed to model this strategic opportunity. It’s the most impactful 15 minutes you can spend on your 2026 budget.
Your Bottom Line
Ontario’s energy market is sending a clear message: costs are rising fast, and rebates can’t hold back the tide. With electricity prices spiking 60%+ year over year and utilities raising delivery charges, businesses that fail to act are leaving their future profitability to chance.
The real question is:
Will you let rising hydro costs drain your bottom line, or take steps now to protect it?
📞 Ready to take control? Contact Otter Energy today for a no-obligation consultation and discover how solar and smart energy strategies can protect your bottom line.
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