Louise Elliott/Canadian Press
Globe and Mail
May 22, 2001

Toronto – Ontario consumers may be unwittingly signing away a valuable electricity-price rebate to private utility companies, the head of an energy watchdog group says.

The market power mitigation rebate was created in 1999 to offset a potential rise in power prices once Ontario’s electricity market is opened to competition next spring.

Sales representatives from private electricity-marketing companies have been knocking on doors in Ontario for months, asking homeowners to sign on for a fixed electricity rate when the market opens.

Tom Adams, director of Energy Probe, says consumers may not notice a fine-print clause which, in many of the agreements, hands the potential rebate over to the electricity firm.

While there may be nothing wrong with such a clause, consumers by and large don’t even know the fine print or the rebate exists, Mr. Adams said.

"If the price is right, it’s a balanced transaction, but the problem is nobody has any information and the public agencies aren’t doing their job of explaining it to us."

The rebate is supposed to kick in for consumers when the yearly average cost of electricity for a household rises above a benchmark price of 3.8 cents per kilowatt hour.

The rebate is designed to shield consumers from massive price spikes experienced in deregulated markets such as Alberta and California, where prices have tripled recently.

The rebate may be crucial to helping save the province from the supply crunch that continues to cripple California, Mr. Adams said. "This is actually one fundamental strength that Ontario’s electricity restructuring has that California doesn’t have."

Intended to reduce the market dominance of Ontario Power Generation, which at the time of deregulation will control 65 per cent of the market, the rebate will be paid out by the company for the first four years after deregulation takes effect.

A typical residential customer using 10,000 kilowatt hours a year at an average electricity price of 5.65 cents a kilowatt hour would get a rebate of about $139.

But that information is hard to come by because bodies such as the Ontario Energy Board and the Ministry of Energy aren’t doing their jobs, Mr. Adams said.

"The public agencies that are responsible for providing customer education and explaining what this rebate is about don’t have any literature anywhere on the public record that explains the rebate," he said.

The Web site of Ontario Power Generation contains information about the rebate for the province’s wholesale electricity consumers.

But most retail customers still have no clue a rebate even exists for them, said a spokesman for the Independent Electricity Market Operator, the body that will calculate the rebates.

"We [try to] make it abundantly clear to the wholesale customers in the province," Kevin Dove said.

By its own admission, the Ontario Energy Board has failed to produce any printed information geared to residential customers.

"The problem is there’s a lot of information we won’t have until closer to market opening," Christine Staddon, a spokeswoman for the board, said. "That’s our dilemma."

She said a fact sheet on the rebate for consumers will be made available "imminently."

But many customers have signed away their rebates and are still in the dark, Mr. Adams said.

Customers are making uninformed decisions because the energy board is not doing its job, he said.

Michael Krizanc, a spokesman for Energy Minister Jim Wilson, said the government provided information on the rebate in a mailed notice to electricity customers last year.

But he acknowledged there is still an information gap and said a new public-awareness campaign will begin in the lead-up to next year’s deregulation date in May, the third date set by the government.