October 10, 2002
Tom Adams, director of the consumer group Energy Probe, says Ontario electricity consumers can likely expect rebates of $100 or more to offset unexpected spikes in prices in the wake of deregulation. Photo credit: Randy Quan, Ottawa Citizen
A hot summer has added up to record-high electricity bills for many Ottawa homeowners.
Homeowners have been shocked by electricity bills of more than $200 for the two-month-period covering July and August.
Some are finding their electricity bills are more than 50 per cent higher than they paid in the same two-month period in the summer of 2001.
The cause of the dramatic increase in the amount of the bills is above-average consumption, due to air conditioner use in extended spells of torrid heat, combined with sharply higher electricity rates.
A typical customer of Hydro Ottawa paid about $233, all charges and taxes included, for the two-month period from July 10 to Sept. 10, Ottawa Hydro said yesterday. That was for 1,800 kilowatt hours of electricity.
Heat waves in that period pushed up consumption by about 18 per cent over the same period last year.
With last year’s lower consumption and prices, the same homeowner paid about $145 for the same period, by Hydro Ottawa’s reckoning.
And there was no relief for September.
Hydro Ottawa said yesterday its electricity price averaged almost 9.5 cents per kilowatt hour in the first three weeks of September. That was almost three times the price in May and June, when the average was slightly below 3.4 cents per kilowatt hour after the market was opened to competition.
But there is good news – at least for some consumers, said Tom Adams, director of Energy Probe.
Many homeowners are likely to get a rebate of $100 or more next spring of part of the higher cost they now pay for electricity, the provincial government says.
The rebate is for the homeowner who buys electricity from a hydro utility, Mr. Adams said yesterday.
The government provided for the rebate to offset part of any increase in electricity prices following its decision to open electricity to wholesale and retail competition last May, he said.
Most of Ontario’s electricity is produced by Ontario Power Generation, owned by the provincial government.
Government rules stipulate that, if the agency earns more than 3.8 cents per kilowatt hour, it must refund the excess to its customers. The rule is in place for four years, to encourage Ontario Power Generation to sell or lease generating capacity.
However, consumers who purchase electricity from an independent retailer are unlikely to get the rebate.
Independent retailers, which offer electricity for periods up to five years at fixed rates, are under no obligation to pass on any rebate to their customers, Mr. Adams said.
The cost of electricity accounts for slightly more than half a hydro bill. The rest is for transmission, delivery and repayment of huge debts accumulated by Ontario Hydro during years of inefficient operation.
These related costs have also increased, by an estimated 15-20 per cent over the past three years, said Mr. Adams.
The refund will be paid at the end of April 2003, after the first year of market competition. It will be distributed according to how much a consumer used.
Mr. Adams estimated the refund would be at least one cent per kilowatt hour. Since May, the price of electricity has averaged about 5.5 cents a kilowatt hour.
So, with the refund, Mr. Adams said, electricity prices so far average about the same as the 4.3 cents per kilowatt hour fixed price that existed prior to competition.
Mr. Adams said his advice to consumers is to purchase electricity from their hydro utility, and not to sign a contract with an independent retailer, which typically charges a fixed rate of about six cents per kilowatt hour for terms up to five years.
He blamed indecision by the Ontario government for shortages of electricity that occurred this summer and which may occur again next summer, according to the Independent Electricity Market Operator, which runs the system.
Earlier this week, the provincial government refused to rule out the possibility of blackouts or brownouts.
“We went through the hottest summer in 50 years, the system was strained but the system worked,” sid Energy Minister John Baird.
The government has hesitated to move to a free market for production of electricity, and this has discouraged private investment, he said.