Jason Ballantyne
Simcoe County Online
March 18, 2005

It’s not an April Fool’s joke – starting April 1, the average homeowner will be charged about $3 to $4 a month more for electricity. The rate increase was calculated by the Ontario Energy Board. The energy board announced Monday that, as of April, householders will pay five cents a kilowatt hour for the first 750 kilowatt hours of power they use each month, and 5.8 cents for all other power.

That’s up 0.3 of a cent from the current rate of 4.7 cents for the first 750 kilowatt hours, and 5.5 cents for other power – or $3 a month for a consumer using 1,000 kilowatt hours a month. The new rate will be effective for a year.

On top of that, Barrie Hydro has asked the energy board to approve an additional rate hike.

George Todd, head of Barrie Hydro, said the increase his utility is waiting approval on would mean an additional $2 a month for the average homeowner using 1,000 kilowatt hours a month. Todd said the pending rate hike was actually part of a three-stage plan that was frozen in the third stage by the previous Tory government.

The Liberal government has now allowed utilities to move forward in implementing the third and final phase.

Todd said the hike, if approved, would generate about $1.9 million for the utility, which then has to be reinvested within the next year in conservation and demand management initiatives.

Consumers will have to brace for another price change as utilities begin to install ‘smart meters’ that can charge different rates for power used at different times of day.

Once they get a smart meter, consumers will pay up to 9.3 cents a kilowatt hour on the energy portion of their bill – double today’s lower-tier rate.

The energy portion makes up about half the current electricity bill. The remainder covers the cost of the wires that deliver the electricity, plus administrative fees and a special charge to pay down the debt left by the former Ontario Hydro.

Consumers can still opt to sign a fixed-price contract with an energy retailer.

Critics complained that the looming price changes will confuse consumers.

"It’s sort of like reading a Da Vinci’s Code," said Conservative energy critic John O’Toole.

"It’s virtually impossible for a consumer to have a way of understanding what they’re paying for electricity – or why," said Tom Adams, executive director of Energy Probe.

But Dave Martin of Greenpeace Canada said the announcement is "clearly moving in the right direction" by pushing prices to a more realistic level that doesn’t subsidize consumption.

New Democratic Party Leader Howard Hampton noted that it’s the second price increase in a year, breaking the Liberals’ 2003 election promise that they will freeze prices until 2006.

Energy Minister Dwight Duncan acknowledged "we were wrong" to have initially supported the price freeze, which failed to cover the price that generating companies were receiving for their power.

The new prices should cover the full cost of power, he said. (Duncan has kept a depressing finger on that price, however. Earlier, he announced that most power produced by provincially owned Ontario Power Generation, which produces about 70 per cent of Ontario’s power, will be priced at about 4.5 cents a kilowatt hour.) "We’ve provided a new framework for pricing that will afford a fair, reliable and sustainable supply of electricity," he said.

Prices need to be high enough to attract new investment in generating capacity, Duncan said, adding that "failure to deal with this would have left us in an untenable position."

The best way to head off future price increases is to increase supply and lower consumption through conservation, Duncan said. "We’re doing both."

The two-tier price plan and the installation of smart meters give consumers tools to manage their power bills, Duncan said. Less that 1 per cent of consumers now have smart meters, but that number is expected to grow to 20 per cent in 2007 and 100 per cent in 2010.

Customers with smart meters will have to pay a low rate of 2.9 cents a kilowatt hour in off-peak periods – defined as weekends, holidays and overnight.

But they’ll pay 9.3 cents during the peak periods: weekdays from 11 a.m. to 5 p.m. in summer; 7 to 11 a.m. and 5 to 8 p.m. in winter. Mid-peak rates are 6.4 cents a kilowatt hour.

"What our policy does is allows people through modest changes in consumption to mitigate any increases in their bills," Duncan said.

"Nonsense," retorted Hampton, who said people of modest means have little room to manoeuvre, and no money to pay the higher bills. "What do they do? Unplug their fridge? Turn their electric heat off completely? Or do they skip a meal?"

Keith Stewart of the Low Income Energy Network noted that it will cost consumers $1 billion for new meters, while this year’s budget for local utilities to spend on conservation measures that will be more effective in curbing costs for the poor is at most $225 million.

Martin of Greenpeace agreed that conservation is being neglected. Instead of giving consumers a break in winter by allowing them to use more power at the lowest price, the province should be offering incentives to get people off electric heating altogether, he said.

Duncan said the energy board – but not the provincial government – will launch a public education campaign to explain all the changes. "Over time people will understand this."

With files from Torstar News Service.