Energy Probe

John Spears
Toronto Star
February 11, 2005

Ontario householders will pay less to heat their homes in winter but more to cool them in summer under a pricing proposal from the Ontario Energy Board.

In a draft pricing manual, the board says consumers should pay a relatively low price for a set quantity of power each month, and a higher price if they use more than that.

But the set quantity should change with the seasons, the board says, to ease the price shock for low-income users, who are the ones most likely to have electric heating.

The board proposes that in summer, consumers should pay a lower price for the first 600 kilowatt hours they use; in winter, that limit would rise to 1,000 kilowatt hours.

Advocates for low-income consumers had argued for a lower winter price because the poor may be reliant on electricity to stay warm and can’t avoid big winter electric bills. Heavy summer power use probably means it’s being used for air conditioning.

The proposal was released yesterday for public comment.

Energy Minister Dwight Duncan ordered the board to devise a regulated pricing system for householders to come into effect April 1.

Consumers are currently charged 4.7 cents a kilowatt hour for the first 750 kilowatt hours used each month, and 5.5 cents for any amount beyond that. Fixed charges that flow to the local utility, Hydro One and the fund servicing the Ontario Hydro debt add a roughly equivalent amount to the total price.

The board still hasn’t set a consumer price. But an example given in the draft manual released yesterday uses a theoretical average price of 5.6 cents a kilowatt hour. The example said consumers might pay 5.2 cents a kilowatt hour until they hit the seasonal threshold, and 6 cents a kilowatt hour afterward.

A household using 1,000 kilowatt hours of power a month now pays an average of 4.9 cents per kilowatt hour for the energy portion of the bill.

Tom Adams, executive director of Energy Probe, said the pricing method the energy board has chosen may result in consumer prices diverging from the market price.

In fixing prices, the board must estimate a price going forward, then make retroactive adjustments if it turns out to be too high or too low. Those retroactive adjustments will continually intersect with the estimated prices going forward, Adams said. That will blur the link between the consumer price and market prices.

Meanwhile, the small but growing number of residents with “smart meters” that record the time of day power is used will probably face sharply higher prices for power in peak periods.

They’ll pay a relatively low base price for power used at off-peak times, such as during the night.

In mid-range periods, the price will be double the base rate; at peak periods it will be triple the base.

Off-peak periods will be the same all year long: all day on weekends and holidays; and 10 p.m. to 7 a.m. weekdays.

Mid-range periods from Nov. 1 to April 30 will be weekdays from 11 a.m. to 5 p.m., and 8 p.m. to 10 p.m. in winter. In the summer it will be weekdays 7 a.m. to 11 a.m. and 5 p.m. to 10 p.m.

The peak period in winter will be on weekdays from 7 a.m. to 11 a.m., and from 5 to 8 p.m. In the summer it will be weekdays from 11 a.m. to 5 p.m.

John Spears and Richard Brennan
Toronto Star
January 27, 2005

Ontario householders can expect to pay an additional $3 to $4 a month for electricity to cover the cost of installing and running new “smart meters” throughout the province, the Ontario Energy Board says.

The OEB has released a $1 billion implementation plan to meet Energy Minister Dwight Duncan’s promise to install a smart meter in every home and business in the province by 2010.

The meters will enable utilities to charge even more for electricity used during peak periods, when the power grid is under stress.

An official in Duncan’s office cautioned that the report isn’t yet government policy.

“The government is going to be reviewing the OEB’s plans and recommendations and will be considering them but we will be announcing our own plan,” said Angie Robson, communications assistant to Duncan, who was in New York yesterday and unavailable for comment.

The monthly costs are far higher than the previous estimates of a dollar or two a month for the smart meters, but Robson emphasized that the savings people could realize by using these meters could easily offset the monthly fee.

“That $3 and $4 doesn’t incorporate potential offsetting savings resulting from people shifting their use to off-peak times,” she said. “We want to empower consumers to better manage their electricity use and consumption.”

New Democratic Party leader Howard Hampton said the plan will do little to cut power consumption, but will have one unpleasant effect.

“It’s going to substantially increase people’s electricity bills,” he said. “There are a lot of people, a lot of businesses and some industries in the province that can’t afford it.”

Conventional meters simply record the total amount of power used between readings, taken every month or two.

Smart meters record power use hour by hour, so customers can be charged a high rate during the peak evening hours, but a lower rate overnight or on weekends when demand for electricity declines.

The board says local utilities should be able to choose their own meters and supporting systems from the variety on the market. Some send information to the utility by radio signal, others over a phone line.

The energy board said consumers should be able to see each day’s electricity use within 24 hours via telephone or Internet, so they can monitor consumption and cost.

The energy board’s plan has one big gap: It doesn’t look at the possibility of installing individual meters for each unit of apartment or condominium buildings that now have a single meter for the entire building.

Duncan has said installing individual meters for each apartment and condo unit in the province would boost the number of meters to about 6 million from 4 million – boosting the cost of the meters alone by another $500 million.

Critics said the plan will hit the poor hardest – they are the most likely to heat their dwellings with electricity, and are most vulnerable to increased power costs.

Keith Stewart of the Low Income Energy Network also noted that the communication systems utilities will install to monitor the new meters will make it easier for them to cut off service to people who fall behind in their payments.

Tom Adams of Energy Probe noted that, under the energy board plan, utilities will be able to charge customers for the computer and communications systems needed to run the smart meters even before all customers get the meters.

“Most customers will be paying smart metering costs even before they get smart meters,” he said.

John Spears
Toronto Star
January 18, 2005

Consumer electricity prices will vary from season to season according to the amount of power a household uses, says the Ontario Energy Board.

The board also says that consumers with “smart meters” that measure hour-by-hour power consumption will pay three different rates for power, depending on the time of day it is used.

But consumers will have to wait a little longer to find out exactly what prices they’ll be paying when the new price regime kicks in this spring.

The energy board’s plan released yesterday is only a framework, with blanks left when numbers need to be filled in.

The proposal will apply to consumers who have not signed fixed price contracts with retailers.

Among the features of the new pricing regime:

Householders with ordinary meters will continue to face a two-price system. They’ll pay a lower price for a basic amount of power, and a higher price for any power used in excess of the basic amount.

The basic or “threshold” amount of power may vary from season to season under the energy board’s new plan, but the board hasn’t decided what it will be.

Currently, consumers pay 4.7 cents a kilowatt-hour for the first 750 kilowatt-hours of power they use each month, and 5.5 cents per kilowatt hour for additional power. That covers the energy portion of the bill, which makes up about half the total.

Consumers with sophisticated “smart meters” that measure what time of day power is used will face a three-tier pricing system. They’ll pay more for power used during period of high demand. But again, no specific prices are suggested.

The energy board can’t set prices until Energy Minister Dwight Duncan decides what rates to charge for power produced by Ontario Power Generation’s nuclear and large hydro-electric generators. One expert has estimated that price could be anywhere from 4.5 cents to 5.3 cents a kilowatt-hour.

Julie Girvan, a consultant often hired by consumer groups, said the board seems to be moving toward the system that gas utilities use. They charge consumers an estimated price for several months, and then adjust it with a credit or debit to consumer’s accounts to bring it into line with actual prices.

Tom Adams, executive director of Energy Probe, noted that the energy board seems to have shelved the idea of “critical peak pricing.” That would allow the energy minister to set a special, short term price a day in advance as a signal for consumers to cut back consumption if it appeared the electricity grid might be under too much stress.

If critical peak pricing is abandoned, there’s little need to install expensive “smart meters” in every home, as the government proposes, Adams said. Instead, much less expensive meters would do the job.