Karen Howlett
Globe and Mail
March 13, 2006

Toronto: Residential electricity charges in Ontario will jump by an average of 16 per cent next month, and industry observers warn that consumers should brace for regular increases in the future.

Typical consumers who use 1,000 kilowatts of power a month will see their monthly hydro rates climb to $61.60 from $52 under rate changes announced yesterday by Ontario’s energy regulator. The new rates of 5.8 cents a kilowatt hour and 6.7 cents, depending on consumption, come into effect May 1. The current rates are five cents and 5.8 cents.

The regulator said the new rates reflect the impact of last summer’s record-shattering heat wave that sent energy costs soaring and forecasts showing more of the same for this summer.

But for some unlucky consumers, the bad news will not end there. The Ontario Energy Board also announced new rates for electricity distributors across the province, which will also be reflected on the monthly bills.

Distributors had applied to the regulator to charge higher rates for delivering electricity to consumers’ homes. The regulator rolled out a string of approvals yesterday that will see some distributors lowering their rates and others imposing hefty increases.

As a result, the new combined rates for the electricity itself and delivery will translate into overall increases ranging from a low of just over 3 per cent to just under 19 per cent on consumers’ hydro bills.

The new prices are part of the Ontario government’s plan to have electricity users pay the actual cost of buying the commodity on the open market.

As things now stand, consumers are paying artificially low prices and the government has accumulated a deficit of $377-million as of Feb. 28.

Tom Adams, executive director of Toronto energy watchdog Energy Probe, said electricity prices will continue to climb as the McGuinty government carries out its plans to replace the province’s coal-fired generating plants with more expensive sources of electricity. The government plans to close the province’s four remaining coal plants by 2009.

"As we see his purchasing strategy implemented over the next few years, we’re expecting to see steady, steep increases in overall electricity prices," Mr. Adams said.

Electricity rates in Ontario will be the second highest in Canada, following Prince Edward Island, he said.

Grand Valley Energy Inc., which serves customers in Brantford, Ont., has the highest overall rate increase at 18.9 per cent. Customers of Hydro One, the province’s largest utility, will see overall increases of 11.7 per cent, while Toronto Hydro’s customers will see their bills climb by 5.8 per cent. All rates are based on 1,000 kilowatts of electricity a month and will be in effect until Nov. 1, when the regulator can revise them again.

The government was criticized by the opposition yesterday for hiking rates after promising during the 2003 election campaign to freeze them until this year.

"Ontarians are getting zapped by another Dalton McGuinty broken promise," Progressive Conservative Leader John Tory said.

New Democrat Leader Howard Hampton said the new rates will "make life more difficult and more expensive for low-and-modest income Ontarians who are already struggling to pay the bills."

The government vowed yesterday to soften the blow for low-income consumers by doubling an emergency energy fund to $4.2-million. The fund was set up in 2004 to help those on social assistance and other low-income earners pay for utility arrears.

Consumers who crank up the air conditioning during the summer could be hit hardest by the new rates.

The higher rates of 6.7 cents a kilowatt hour will kick in after 600 kilowatts between May and October, down from the current level of 750 kilowatts. The threshold for the lower price rises to 1,000 kilowatts during the winter.

Energy Minister Donna Cansfield said this was done to encourage consumers to conserve electricity during the summer by using fans instead of air conditioners and closing the curtains to keep out heat.

"We can do things to make a difference with people’s bills," Ms. Cansfield told reporters. "We have to get out there to work with them and lower their consumption."

Ontario’s new rates

A look at some estimated increases, depending on local utility distribution rates, for a homeowner who uses 1,000 kilowatt hours per month:

Brantford Power Inc.: $17.71

Burlington Power Inc.: $9.58

Greater Sudbury Hydro Inc.: $13.01

Guelph Hydro Electric Systems Inc.: $10.15

Hydro Ottawa Ltd.: $12.65

Kingston Electricity Distribution Ltd.: $11.70

Kitchener-Wilmot Hydro Inc.: $7.70

London Hydro Inc.: $13.80

Niagara Falls Hydro Inc.: $14.56

Thunder Bay Hydro Electricity: $6.30

Toronto Hydro Inc.: $6.72

Waterloo North Hydro Inc.: $8.10

Source: Ontario Energy Board,

Electric shock

A typical monthly bill for a residential customer of Hydro One, the province’s largest utility, who uses 1,000 kilowatt-hours of electricity a month under the existing regulated plan is compared with charges under the new plan that comes into effect May 1.

* 1,000 kwh @5.8 cents/kwh

SOURCE: HYDRO ONE AND ONTERIO ENERGY BOARD