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New Increased Ontario Electricity Rates – A Symptom not a Solution

The Ontario Energy Board (OEB) today released the results of the regulatory review of the rates to be charged by 60 of Ontario’s 90+ electricity local distribution utilities for the delivery portion of the bill, as well as the rates associated with charges for commodity (Regulated Price Plan (RPP)) that will be passed on in the customer electricity bill. The net effect of the rulings will be to see the average homeowner’s bill (1000 kw monthly consumption) increase by a range of 3-15% or approximately $100-$120 per year.

The Public Interest Advocacy Centre (PIAC) was engaged with the representation of the Vulnerable Energy Consumers Coalition in the OEB proceedings that determined these distribution rates, and has been engaged in advocacy on behalf of low-income consumers during the entire course of electricity industry restructuring.

Michael Janigan, Executive director and General Counsel of PIAC stated,

“It is important to note that while it is claimed that we are now getting customers to pay the actual costs of the generating electricity, this is not quite accurate. Electricity is supplied to distribution utilities on the basis of a system of time- ahead bidding by generators administered through the Independent Electricity System Operator. While the actual costs of generation are reflected in these bids, the ultimate price is very much affected by demand”.

PIAC noted that current projections call for a need for approximately 25,000 additional MWs for Ontario needs before the end of the next decade. “We cannot be content to sit back, and let electricity prices go through the roof from escalating demand with the hope that the ability to make super profits will somehow motivate private investment”, said Janigan. “ A study by the Pembina Institute in November 2005 noted that we are investing less than one fifteenth of public monies in conservation than we are in new supply despite the fact that it is much less costly to save 1MW of electricity than it is to generate it without even factoring in the favourable environmental impacts”.

And while efforts are now being expended to ensure that all customers, including low-income customers, can access conservation programs to lower their bills, much more will have to be attempted to overcome barriers to participation. “We have had more sizzle than steak on this front right now”, said Janigan. Janigan noted that while the recent Ontario government announcements providing for as Home Electricity Relief and increases to the Emergency Energy Fund are welcome, they are short term in effect.

Janigan also noted that while the Board had attempted to mitigate rate shock in their approval of utility distribution rates, these utilities were already charging rates that had been greatly increased by the questionable decision of the previous government to allow them to become commercial entities with the ability to charge market based rates. As well, the number of distribution utilities that the Board has to scrutinize guarantees that any review has had to be abbreviated and differs from the usual regulatory standard.

The new rates will take effect on May 1.

 

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