Hydro bills jolt users; inquiry urged

Richard Mackie
Globe and Mail
October 31, 2002

Electricity users in Toronto face increases of hundreds of dollars a year on their hydro bills to match the higher charges that have hit consumers across Ontario as a result of changes to the electricity industry, the provincial legislature was told yesterday.

The prospect of higher bills arriving in the mail starting in March is only part of the bad news about soaring electricity prices facing consumers within and outside of Toronto.

Across Ontario consumers can expect an additional surcharge of up to $100 a year to pay for more expensive electricity imported from other jurisdictions because of the power shortage within the province. Power bills describe this as an “uplift charge.”

And Toronto consumers likely will be hit with retroactive bills averaging about $200 to make up for the fact that they have been paying rates below the actual cost of electricity faced by Toronto Hydro, according to Liberal energy critic Sean Conway.

He called for an independent inquiry into why electricity prices have soared in the past four months.

“Millions of electricity customers who are getting it through the teeth should demand some immediate, independent oversight of the behaviour of . . . Ontario Power Generation, which controls most of this electricity market,” he said. OPG is owned by the government.

The bills faced by consumers could be offset somewhat by rebates. By the end of September, the average consumer was owed a rebate of about $45, Tom Adams of Energy Probe said.

These rebates were to be sent out next May, but Premier Ernie Eves, faced with a flood of complaints about electricity bills, has suggested that they could be in the mail much earlier.

Within Toronto, the rebates could be applied to the retroactive bills from Toronto Hydro, Energy Minister John Baird said.

“That’s certainly something I would be prepared to consider,” he told reporters at Queen’s Park.

Outside of Toronto, the rebates would provide some payback for bills that have increased by hundreds of dollars in many cases since the government allowed competition in the electricity industry starting last May 1.

But these rebates would not go to most of the one million consumers who signed on to fixed-price contracts. In exchange for getting electricity at a guaranteed price, most of these consumers signed contracts that allow the supplier to keep the rebates.

Bills in Toronto will start catching up to those in most other municipalities on Jan. 1, when Toronto Hydro starts charging its customers the rapidly fluctuating spot price for electricity.

Until then, the bills are based on a base charge of 4.3 cents a kilowatt hour, which the Ontario Energy Board had calculated as the average price that municipal distribution systems would pay over a full year.

For May and June, these calculations seemed to be on target as prices were about 3.3 cents. But they started soaring as demand increased in the hot summer months of July, August and September. Prices have continued to be high through October, and are expected to average 6.51 cents for September and October together. As the colder weather sets in, they are likely to hit an average of 8.31 cents through to the end of February.

Pushing up the prices is a shortage of supply of electricity in Ontario. Four of the eight nuclear reactors at Pickering are out of commission and their return to service is three years overdue.

The higher-than-expected prices are putting a severe squeeze on Toronto Hydro, it said in its application filed on Tuesday to change the way it charges its 400,000 customers.

At the end of September, it was owed more than $619-million. At the end of last year, customers owed it $280-million. Toronto Hydro said the $339-million increase in unpaid bills was being financed by loans from the banks.

Since the system was changed, Toronto Hydro has paid the Independent Electricity Market Operator, which supplies the power, $276-million in a single month. Its previous record monthly payment was $154-million.

 

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