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The Ontario Energy Board has announced another rate hike, effective November 1st. Here from energy economist Robert Lyman, is a view of what is going on (madness!).

In 2002, the residential electricity rate in Ontario was 4.3 cents per kWh. There was only one tier that applied at all times and levels of residential use. This is the rate for the power alone, and does not include the charges for transmission, distribution, regulatory charges, debt retirement and taxes.

In 2004, the two-tier system was introduced. The lower-tier rate was 4.7 cents per kWh and the upper-tier rate was 5.8 cents per kWh.

By 2011, the lower-tier rate had increased to 6.8 cents per kWh and the upper-tier rate had increased to 7.9 cents per kWh.

In 2011 and 2012, Ontario introduced time-of-use (TOU) rates based upon the use of “smart” meters. The rates were set at 6.3 cents per kWh for the off-peak and 11.8 cents per kWh for the peak periods.

Today (October 17, 2013), the Ontario Energy Board authorized an off-peak rate increase to 7.2 cents and a peak period rate increase to 12.9 cents, effective November 1, 2013.

Since 2002, therefore, off-peak rates have increased by 67%, and peak period rates have increased by 200%. Transmission and distribution costs have increased as well, of course, but not as much in percentage terms. The addition of the HST has added about $1.2 billion to ratepayers’ bills every year.

There are many conflicting projections as to where rates will go in future. The province projected in 2010 that rates would rise by about 50% by 2015. Parker Gallant, the well-known critic of provincial electricity policies, has estimated that costs could rise by $7.3 billion per year by 2016, or almost 100%.

Incidentally, Ontario consumes about the same amount of electrical energy today as it did in 2004.

This is the Liberal legacy.

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