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New rate increase removes $635 million from electricity customers’ pockets

Ontario now has highest electricity bills in Canada

Ontario’s Minister of Energy Bob Chiarelli in a press release of March 26, 2015 announced the end of the Debt Retirement Charge December 31, 2015. In the “Quick Facts” of the release stated: “Removing the Debt Retirement Charge will save the typical residential electricity ratepayer $5.60 per month.

Less than a month later the Ontario Energy Board (OEB) issued their semi-annual rate setting letter for the upcoming six months of May 1st to November 30th; it was full of continuing bad news for households and small businesses.   The OEB told us effective May 1st, our electricity bill would increase $5.71 a month.  So much for that savings of $5.60 a month!

Written to assuage the reader, the OEB’s letter pretends to be what it isn’t.  Rates are going up substantially and while the letter states monthly increases for the “average” consumer will be 4.6% or $5.71 per month, on the Electricity, line the truth is more daunting.  The rate increases should be annualized, but they aren’t.  If they were, the additional $70 annual increase suggested would be $143.

Off-peak rates are up 6.7% or about four times the inflation rate and the On-peak rate jumps up over 19% per annum.

By increasing on-peak rates by 19%, the OEB suggests the “ratio” shift to 2:1 between on-and off-peak prices “will benefit customers who shift their use to the cheapest time period.”  In another document the OEB released they say that about two-thirds of consumption is already in the off-peak period leaving the consumption split between mid and on-peak at 17% each.

So small businesses operating during on-peak periods, seniors living on fixed incomes, people with disabilities, the unemployed, and stay-at-home parents are locked into paying 16.1 cents per kilowatt hour.   Those who can least afford high rates are the ones expected to shoulder the burden.  This increase will simply add to the 570,000 households Energy Minister Bob Chiarelli admits are currently living in “energy poverty” in Ontario.

If one annualized the rate increases as it applies to “average” households and small businesses, the electricity sector will take approximately $635 million more from ratepayers’ pockets in pre-tax (small businesses) and after-tax dollars (households) in the next 12 months.  They will extract $281 million from on-peak, $134 million from mid-peak and $220 million from off-peak consumption from “average” ratepayers based on 4.5 million residential and small business ratepayers.

Ontario can now claim to be the highest cost electricity market in Canada, and rivals all but three or four of the U.S. states such as California, Alaska and Hawaii.

The Liberals can claim we are “green” but that green is supporting foreign investors enjoying the benefits of ratepayer dollars flowing into their pockets for wind and solar contracts obtained from the OPA under the direction of past and present Liberal Ministers of Energy.

Ontario: now “a place to groan.” No shifting of consumption will ease the burden or stop inflation of our electricity bills.

©Parker Gallant, April 21, 2015

The views expressed are those of the author and do not represent Wind Concerns Ontario policy.

Parker’s Calculations

May 2015  electricity consumer prices vs May 2014

Consumption is based on 66% off-peak, 17% mid-peak, 17% on-peak

TOU Consumption kWh Rates/kWh/cents 2015 costs $ 2014 costs $ Increase $
Off-peak 6,336 8.0 506.88 456.19 50
Mid-peak 1,632 12.2 199.10 169.73 30
On-peak 1,632 16.1 262.75 199.10 63
TOTAL 9,600 968.73 825.02 143