Gillian Livingston
Ottawa Sun
August 16, 2005

The oppressive heat wave that prompted Ontario residents to crank up their air conditioners has subsided but it has left a costly electricity bill in its wake.

To date, residents on the regulated electricity rate plan have underpaid their hydro bills by $113.5 million for the period from April 1 to July 31.

At the end of June that amount was $42.1 million, but it skyrocketed after electricity demand broke records during July’s heat wave, and tight supply caused a dramatic spike in market prices.

"It’s a big jump," said Tom Adams, executive director of Energy Probe. "There’s going to be sticker shock."

Bill Rupert, the managing director of strategic planning and policy development for the Ontario Energy Board, said he’s not surprised the price of power has exceeded the rate residents pay because of the sweltering weather.

Normal forecast

When the board set prices earlier this year, it didn’t forecast such a hot summer, he said.

"Our forecast was really based on more or less a normal weather year," Rupert said. "We did not do our forecast based on an extreme weather year."

Hot weather and the need to use higher-priced natural gas electricity generation were factors that boosted the market price, Rupert said.

A household using 1,000 kilowatt hours of electricity every month for an annual total of 12,000 kilowatt hours would owe an extra $18.50 if it had to settle that bill right now.

But the regulated price residents pay won’t change before next spring.

However, the Ontario Energy Board will factor in the difference between what’s been paid versus the actual market price when the regulated price is examined early next year.

That amount will fluctuate depending on the weather and what effect it has on the demand for power and the market price.

The board said it’s too early to tell how this might affect prices in the future.

Fixed-rate plan

Ontario residents and small businesses are on a fixed-rate plan, so they don’t pay the market price like big industries do.

Ontarians currently pay 5cents per kilowatt hour for the first 750 kilowatt hours used, and then pay 5.8cents per kilowatt hour beyond that level.

The average market price since May 1 is 7.68cents per kilowatt hour, and the price so far in August is nearly 12cents per kilowatt hour.

Adams expects that over the next two years, overall electricity prices in Ontario, including the cost of transmission, will rise by 25%.

Rupert urged Ontarians to conserve when overall demand is high because rising demand pushes up market prices, and that eventually factors into the regulated price.