Ronald Zajac
Brockville Recorder Times
April 23, 2002

Electricity marketers may offer customers stable prices in an uncertain power market, but for now it makes sense not to sign any long-term contracts, says the head of a Toronto-based energy watchdog group.

While he has nothing against the private retailers who will be selling Ontarians power starting May 1, Tom Adams, executive director of Energy Probe, believes that at the moment the market favours those who sit and wait.

Starting May 1, electricity bills will be "unbundled," a term meaning the total amounts they show will be divided into their constituent parts.

A part of the bill will go to costs over which the consumer has no control, such as transmission, distribution and the retirement of the old Ontario Hydro’s debt.

The rest, known as the commodity price, will vary according to the regulated "spot market," where the actual power that ends up in people’s home is bought and sold.

For instance, a provincial government estimate, based on January 2002 figures, places the average cost of electricity at 9.3 cents per kilowatt hour. The commodity portion accounts for 4.3 cents, while the rest goes to the other costs.

Area residents who are visited by electricity marketers should remember the marketers only have control over the second part of the bill.

People will have a choice between buying electricity from one of the licensed marketers now offering deals, or sticking with the company that currently distributes power into their area. Under the second option, the company is required to provide electricity at the spot market price.

What the marketers can offer is a fixed commodity price over a set number of years. The customer signs on thinking he or she will get a better deal with the fixed price, in the long term, than on the fluctuating spot market.

But people should know that, according to a provincially mandated rebate program, electricity customers are currently entitled to some money back if the commodity portion rises above 3.8 cents per kilowatt hour, Adams noted.

It’s a cost mitigation program the province has put in place for the next four years, he said.

Even more crucial to know, according to Adams, is that deals with marketers tend to sign away that rebate into the hands of the marketers.

The combination of current market conditions and that provincial rebate makes it more advantageous, at the moment, to stick with the fluctuating market, according to Adams.

"Eventually, it might make sense to sign with a marketer," he said.

People who want more information about the new electricity market can call the Ontario Energy Board at 1-877-632-2727.