Ontario's Electricity Restructuring Causes Rates to Rise

media release
June 28, 2002

Rates for Toronto Hydro’s low-volume residential customers have increased 14.5 per cent since Ontario‘s restructured electricity market began in 1999. Energy Probe, a national environmental and consumer think-tank, compared rates paid prior to the legal commencement of Ontario’s restructured electricity market in April 1999 to rates paid immediately prior to May 1, 2002, when the commodity portion of electricity bills – the amount of electricity consumed, exclusive of costs for regulated services like transmission and distribution – became subject to market forces.

The impact of Ontario‘s electricity restructuring on consumer prices has been the subject of much speculation. In February 2002, the Ontario Ministry of Energy, Science and Technology in cooperation with Fred Lazar, a professor of economics at York University, issued a public statement claiming "average electricity prices in Ontario‘s new competitive market will, over time, be considerably lower than what they should have been under the old monopoly-based system." Representatives of the Ontario Electricity Coalition, Myron Gordon and John Wilson and advisors to NDP leader Howard Hampton, claimed in the Toronto Star (April 30, 2001) that "electricity deregulation in Ontario will double our bills." In October 2000, Energy Probe published its own forecast, estimating that rates would increase 20 per cent for ordinary consumers after reforms had been implemented, compared to rates paid prior to market restructuring.

Energy Probe’s rate calculations By comparison to a Toronto Hydro electricity bill valued at $56.40/590 kWh for the period November 1998 to February 1999, rates for the period March 1, 2002, to May 1, 2002: Customer Charge: $14.22/month Distribution Charge: 0.0134 c/kWh Energy Charge: 0.0646 c/kWh Wholesale Energy Surcharge: 0.00735 c/kWh Total (Assuming 590 kWh): $64.57 The overall increase for the period is: 14.5 %