Barbara Carss
Canadian Property Management
April 1, 2002

If May 1 seemed anticlimactic, that’s only what insiders at local utility companies had expected. They’re gearing up for more intensive consumer reaction after the first new-look electricity bills are mailed out later this summer.

"We’re anticipating about a 60% increase in call volume," says Anthony Horton, Director, Customer Relations, with Hydro One Networks Inc., the regulated transmission and distribution subsidiary of the former Ontario Hydro. "It’s safe to say the large players in the marketplace, including us, have put enough investment, energy and time into this that we don’t anticipate any large problems, but we can pretty much guarantee that there will be little blips."

The competitive market is still largely built upon its traditional infrastructure – the generating stations and transmission lines that function in the very same manner as they did prior to market opening. However, software systems that track a range of electricity purchasing options and corresponding variables for calculating rates are the critical new technology that allow multiple players to participate in the market.

The utilities – known as local distribution companies (LDCs) – are responsible for billing both those customers who have signed contracts with a retail supplier and those who have opted to stay with the default electricity supply based on spot market prices, and also for remitting payment to either the electricity retailers or to the Independent Electricity Market Operator (IMO) that oversees the open electricity market. To do so, the utilities rely on an Electronic Business Transaction (EBT) clearinghouse, a financial and administrative hub where retailers and LDCs exchange and process information on customers’ electricity consumption and account status.

"There was extensive testing of that and, really, that’s where a lot of the market readiness efforts were focused," says Blair Peberdy, Vice President, Communications and Corporate Planning, with Toronto Hydro Corporation. "We have also done a tremendous amount of work in our call centres, training the staff in the details of the new market, and the questions they’re going to be getting from customers, but we don’t expect that to happen until around July/August when the first new bills start to hit."

LDCs have invested in equipment, technology and personnel. "IT was the primary area where additional staff would have been brought on in the last year. We’ve had to completely overhaul our billing systems and how these flow through to our accounting systems – and for 1.1 million customers, our systems are obviously fairly large," Horton reports. "We’re beefing up staff in our call centre and our actual billing area." (Nevertheless, Hydro One’s largest expenditure no doubt lies in the acquisition of 80 former municipal electrical utilities.)

The so-called unbundled electricity bill will itemize each element of power provision, breaking down separate costs for energy, distribution, transmission, wholesale market service charges, customer charges for services such as billing and meter reading, and debt retirement charges for the former Ontario Hydro’s stranded debt. Only the energy portion of the bill is an outcome of competition, and will reflect either a contracted rate with an electricity retailer or a variable rate dictated by prices on the spot electricity market.

Transmission and distribution rates are fixed, yet do vary somewhat throughout the province because the Ontario Energy Board (OEB) approves distinct rates for each of Ontario’s 94 local utilities. The debt reduction charge is a consistent 0.7 cents per kilowatt-hour for the vast majority of consumers, with the exception of communities and industries that did not historically purchase power from Ontario Hydro and a small number of large industrial users with special rate discounts originally granted by Ontario Hydro.