And the winner is : Hydro One! Most expensive residential power rates in North America

Transmission System ProjectsUntil recently the only jurisdiction in North America with higher all-in residential electricity rates than Ontario was Hawaii. The website for Hawaiian Electric in a media release March 14, 2016  bragged about their electricity rates being at a six-year low, even though Oahu had an effective rate of 22.6 cents per kilowatt-hour (kWh) and that rate included their distribution costs.

The title for most expensive rates now belongs to Hydro One, whose low-density clients pay 25.9 cents per kWh and medium-density clients pay 22.6 cents per kWh effectively, in a tie with Oahu. Add in the HST and the price jumps to over 27 cents per kWh for low-density ratepayers.

Hydro One’s website has a chart outlining their Delivery Rates for “Medium” and “Low Density” ratepayers — the differences are significant compared to “Urban High Density”.  As an example, the Distribution service charge for medium-density is $8.02 higher per month ($96.00 annually) and $20.46 higher ($245.00 annually) for low-density ratepayers.  On top of that the claimed “line losses” for low-density ratepayers is almost double that for urban ratepayers at over 10%. That means people are charged for kilowatt hours they didn’t consume.

Hydro One’s definitions of Medium and Low Density are: Medium Density – contains 100 or more customers, with at least 15 customers for every kilometer of power line used to supply energy to the zone. Low Density – the remaining area not covered by Urban or Medium Density areas.”

It’s not clear exactly how or when densities are reviewed to determine whether the rate classification should change as it is not outlined in OEB’s approvals for rate increases.

27 cents/kWh for the average user in Ontario today

Now examining just the delivery costs for the three “average”1. residential ratepayer definitions,  Urban customers pay 6.6 cents/kWh, medium-density pay 9.05 cents/kWh and low-density 12.55 cents/kWh.  The latter is a higher cost per kWh than the electricity supplied and as noted above combined with the cost of electricity and HST brings the price to over 27 cents/kWh for the “average” residential low-density ratepayer.

Looking back to an Ontario Energy Board (OEB) ruling on March 15, 2005 in respect to increased Hydro One Distribution rates, the OEB granted them rate increases related to regulatory assets and conservation spending.  The calculation of their delivery rates from the OEB’s approval disclosed:  urban customer rates were set at 3.4 cents/kWh, medium density at 4.25 cents/kWh and low density 8.2 cents/kWh.

Since then, delivery rates from Hydro One have jumped 94% for urban, 113% for medium-density and 53% for low-density ratepayers in that 11 years.

Not stopping here

We should expect more OEB-approved increases.

According to Hydro One’s annual report, the “net-zero” settlement claim with their workers will shortly become a submission for a further rate increase, that will again raise delivery rates as this excerpt from the Annual 2015 Report indicates: “Share-based Compensation-The Company recognizes costs associated with stock-based compensation in a regulatory asset as management considers it probable that stock-based compensation costs will be recovered in the future through the rate-setting process.”

No need to wonder what is causing “energy poverty”2. in Ontario — all you need to do is examine the books of Hydro One, their submissions to the OEB, and the blessing of all their requests by the OEB.

© Parker Gallant

August 10, 2016

  1. The average “residential” ratepayer is classified by the OEB as consuming 750 kWh per month or 9 megawatt hours (MWh) annually.
  2. Energy Poverty is generally defined as spending 10% of household income on home energy as this article link to the Homeless Hub notes: http://homelesshub.ca/toolkit/subchapter/what-energy-poverty
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53 thoughts on “And the winner is : Hydro One! Most expensive residential power rates in North America”

    1. I think it;s time we Canadians REVOLT! the government is doing nothing to stop big enterprise from Stealing every penny we have…having to make the choice between eating or paying your hydro bill! what is happening to this province! we are getting Ripped Off! while the fat cats raking in the dough!live a carefree existance this is CRIMINAL…why is the government doing nothing? because they are all getting rich off us!Down with Hydro One send them criminals to prison

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      1. a full national revolt or better still revolution ( with our military in the forefront against the corrupts and incompetent governments ( all levels) is what each province and the country as a whole needs to get us back to being a country to be reckoned with that cares for its people and military 1st and foremost).

        Liked by 1 person

      2. Exactly! This is an outrage! I cannot believe that this increase was given the OK. I do not own a new car because I do not want the monthly payments. Now for certain I will never be able to afford the payments, as Hydro One is my monthly “Mercedes” car payment! However, the “LUXURY” is all “Theirs!” Thanks for Nothing…Hydro One…Crooks!😠

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    2. This is bullshit our hydro already costs more then our rent…. Regular people and retired people can’t live like this this is getting retarded… $700.00 or more a month

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  1. We bought our rural property and built a small bungalow here in North Milton back in 1963, we raised our family here and enjoyed hobby farming over the 53 years.

    Our Ontario hydro bills have escalated to $700. Per month in winter months. One month last year, we were away with our heat turned way down, our hot water heater turned off and small appliances unplugged. Our bill was still over 600. for the month!

    Since Smart Meters were installed our costs have escalated at alarming rates.

    Many seniors are being forced out of their family homes due to these energy costs and high taxes. Reverse mortgages are another money grab, but the only way some can survive. This is a disgrace!

    Is this due to our liberal governments mismanagement and overspending, or is it federal? We have complained and inquired and get no answers except that everyone is in the same boat…. which is sinking fast!

    Yet our liberal government seems to have more and more money for unnecessary programs that may not be as beneficial!

    What is going on ONTARIO CANADA!

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    1. Ontario and Canadian citizens are classed as 2nd or 3rd class citizens… I recall 9 years ago when I queried a local politician why was it that permanent residents didn’t have to go through all the red tape that Canadian citizens had to to bring in their foreign spouses (I was trying to expedite the love of my life ( my bride) entrance into Canada). that politicians response (echoed by a few other MP’s) “they permanent residents) work and pay taxes!” as if Canadians don’t!

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  2. This is an absolute joke. Who oversees Hydro One and these terrible contracts etc? There needs to be an independant investigation and changes to these idiotic decisions and obvious sketchy deals.

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    1. the problem Brad is that they, none of them have a set of balls to stand up and be counted,,,factor in the outrageous salaries paid at the top and just like the government they feel entitled to all of this at the expense of the rest of us

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  3. Sad, but not surprising to see such clear evidence of the intended outcome of the longstanding ties between the “triple bottom line” accounting and land-use planning policies & practices for achieving “Sustainable Development”. This is Agenda 21.

    Liked by 2 people

  4. I am surprised if our electricity rates are higher then the Caribbean island rates. I think the norm has occurred regards this article, the writer does not know which countries are part of North America and only considers Canada, USA and Mexico.

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    1. The Caribbean countries are not who Ontario competes with for industry that will create and/or maintain jobs. The Caribbean countries also don’t experience the cold winters we do when many seniors and young couples or singles with children need to decide to “heat or eat”! Electricity is not a luxury, it is a necessity in this province but the way the Ontario Liberal Party have handled the portfolio it has become a luxury that only the well-off can afford.

      Its nice that your company’s office is off-grid and that your involved in solar panel installations and for that reason you should appreciate that your business is driving electricity prices up. I have personally met many small business CEO’s who have been forced to lay people off because of the climb in electricity prices.

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    2. ATTENTION EVERYBODY! – Please check out the big brain on Michael! It’s important to him that you know he knows something you may not, even if it has nothing to do with the topic at hand.

      Your recognition of his mental prowess is appreciated.

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  5. My Hydro bill for the month ending July 21 was $69.63 with about 62% of the consumption in the off peak time period. The Haldimand County Hydro minimum charge is $21.32 with a rate of 3.7 cents/kWh. The electricity charges are the same as the rest of the province–sky high. I have a gas hot water heater, gas drier, and gas heat. I also refuse to have a dishwasher in my house. As of September, Hydro One takes over. Haldimand Council was given an unsolicited offer well above book value by Hydro One. Council couldn’t refuse having the money. They also feared the province forcing them to sell.

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    1. The $69.00 bill is a reasonable monthly bill. We used to have such bill totals like yours. Ours last month’s bill was $435.00. A “Luxury car payment” that we don’t have the luxury of driving! Am I angry? You bet! How can people afford anything else with all the other monthly payments combined? But Ontario can give Free education to Immigrants, while my husband and I cannot afford to pay for our own Canadian children’s education. And now we have even “Less” money….Thanks to Hydro One and our lovely Government!!!

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  6. In my “seasonal” residence I paid over $300.00 per month for Jan. Feb. And Mar. this year JUST for delivery. Total bill was over $700.00 per mo. – I live alone and was only there for 20 days out of the 90. Up over $100.00 mo. From last year.

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  7. As usual with Parker Gallant analysis, he is very selective with the “facts”. He only reference s”Low” and “Medium” density customers, which make up very few Hydro customers in Ontario. What about urban customers? He also obsesses about delivery charges and includes HST and does not just price at the actual price of electricity. He should not be including HST unless he is going to include taxes in every jurisdiction in North America. He claims Ontario is the highest in North America, but only compares to Hawaii. What about all the other electricity markets in all of North America. If you look at the Hydro Quebec analysis that they publish every single year, you can see that electricity rates in Toronto are about average in North America, suggesting that electricity prices for most in Ontario are about average in North America. How does he square that with his very simplistic, narrow, deceptive and superficial analysis? See: https://issuu.com/hydroquebec/docs/comp_2015_en

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    1. Philip, Living in the Beaches in Toronto it is probably hard to understand that Hydro One in the Yearbook of Distributors filed with the Ontario Energy Board claim they service 650,000 square kilometres of the province and about 1.3 million residential customers who are almost all classified as “rural”. In other words they don’t claim they service ANY urban communities and that’s a fact. I do reference Hydro One’s “urban” rates in relationship to the other two residential distribution rates – that’s a fact. Hydro One service the thousands of small villages and towns spread throughout the province and only a few small cities. That’s a fact! Another fact is the reference you hand out — Hydro Quebec equalizes distribution rates throughout the province of Quebec. In other words it’s all inclusive and includes: generation, transmission and distribution costs. Global News raised this issue in several recent news broadcasts and did so directly with the current Minister of Energy Glen Thibeault in a 17 minute interview and that’s a fact. Another fact is that Hydro One’s “Conditions of Service” is 140 pages of legalize — why would a monopoly need such an inclusive CoS document? Another fact is that the US EIA monthly publish the average electricity rates for all US states so you can compare rates and that is linked in my article above. In any event you can find it here: https://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a It is pretty easy to compare. In respect to HST I do reference the before price as the key in this article and point out the HST drives it even higher. Not all jurisdictions levy a sales tax on the delivery of electricity or have a lower levy. That’s a fact!

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      1. who is living in The Beaches? you? your analysis is complete “cherry-picking”. It is a farse, false and purposely misleading. It is completely apples and oranges, which is pretty much what all of your analysis is over the years. You are comparing the highest priced electricity in Ontario (low and medium density prices which comes with a distribution charge) to average electricity prices in other jurisdictions or States and Provinces. You completely ignore the high density customers in Ontario, which are the majority of customers and who have the lowest electricity prices in Ontario. Your numbers are completely and purposely distorted. If you want to see how electricity prices compare for Ontario’s low and medium density customers (rural customers), then you have to also compare those customer to other low and medium density (or rural customers) in other Provinces and States. There is nothing wrong in the Hydro Quebec comparisons to equalize distribution costs. It gets you to a true average and allows you to compare to other cities and jurisdictions. You cannot compare your ridiculous low density and medium density only customer numbers to the US EIA data, as the US EIA data includes all the high density and lower cost customers, which you conveniently ignore.

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    2. Phillip, I live in the Niagara Region, had Geothermal heating and cooling installed 7 years ago. This requires electricity for the condensers. If I take my Hydro One billings of 2009 ($4,988) add 3% a year compounded for inflation I get $5,956. To me that is reasonable. But my current 2016 cost is $9,687. Can you explain with your brilliant analysis where the additional $3,731 came from. Try stupidity, incompetence, mismanagement, and a green energy plan that ignores collateral damage. Peter Gallant may not have all his ducks in a perfect row, but he is 100% correct in that we have been well screwed over on a massive scale and you are wrong to pretend that nothing abnormal or wrong has happened.

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  8. Hydro One penalizes those who live in a low density area rather than being clustered in the city. How do they get away with that mentality?

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    1. I think it is a calculated effort to gain back loses from an overly generous Wind and Solar power program using rural customers to pay for it. It is absurd that wind turbines litter the countryside and the power is sold off for urban use when it should be used in the region where they operate. That is the first clue, None of this was meant to improve the lives of those who live in the wind corridor. It was the French peasants that paid for the excess of Versailles, the pomp and granduer. How is this any different. The grand schemes of Wynne and her minnions to personally champion a green energy crusade as if this province is a nation. As king Louis 14th said “L’etat c’est moi”. They act on projects of a vast scale with no acountaibity and no consultation with the people of the province. Green energy advocates are not the place to get an unbiased view point. Its about time we de-frock these powdered wigs and throw them out of office before they create any more suffering and anxiety in the Ontario Heartland.

      Liked by 2 people

  9. Harris conservatives in the 1990’s created this situation. They knew what they were doing and they were told then to expect rate increases. This is user pay plus cheap power for corporations. And now they want to continue to spend multi-billions on rebuilding nuclear power stations in Ontario, these are all unfunded liabilities for future generations.

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  10. With the boss at Hydro One making as much as any four bosses in other provinces put together, it doesn’t take a rocket mechanic to figure this out. Simply put, mismanagement. Put a mother with five kids in there and I know she’ll manage better. It’s called a budget. But when the money is not yours, who the hell cares. FAT CATS AT THE TROUGH ALL TAKING CARE OF EACH OTHER.

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  11. I agree with most of what has been said in this article. Marco mentioned living close to a hydro utility and yet being charged a large delivery fee. I am in the same situation. I am within a mile of the Rolphton Power Dam and the main lines coming from there pass within 50 yards of my home but that power is sent to the cities in southern Ontario and to North Bay.

    I also read another article about the Ontario government having set up a hidden revenue generating system that will ensure that regardless of any change in the initial cost of power or if their is a reduction in demand our hydro bills will continue to rise.
    Read that article at –
    http://business.financialpost.com/fp-comment/ontario-electricity-has-never-been-cheaper-but-bills-have-never-been-higher

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  12. And it’s only going to get worse, since the Fiberal government has sold off 60% of Ontario Hydro. They aren’t in it for the consumer but for the bottom lime – PROFIT! If they don’t think they’re making enough for their shareholders, then up goes the rate and there’s no end to the increases!!

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    1. I don’t understand all the folks complaining about electricity rates. It was more than clear in 2003 that voting for the Liberals would mean those rates were going to rise dramatically. It was even more clear in 2007 and in 2011. By 2013 they were already rising dramatically and we even knew without a doubt why this was so but what did Ontarians do in each of those elections but vote for higher electrical rates. Well you got what you voted for so why complain.
      Pretty much similar to the provincial debt except the bad consequences of the debt have yet to really be felt however Ontarians have voted for higher debt for many elections now so lets not hear about how tough times are when the full implications of having too much debt arise, which they will without doubt.
      You should be careful what you vote for as you likely will get it.

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  13. Hey, I did some analysis on your numbers and after doing that I didn’t find this convincing. The claim that the “average” Ontarian pays the highest electricity rates isn’t exactly correct. Since low-density accounts for at most 15% of the users in Ontario, the average is much lower then the 27 cents/kWh you calculated.

    At best you’ve shown that the average low-density user pays as much as somebody from Oahu. That sounds horrible, but it’s definitely not the average Ontarian.

    If you’re interested here’s my take on it. I’d love to know what formula you used to get the 27 cents/kWh.

    https://t.co/HcOH3xTQLH

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    1. The 27 cents was the easy part. The OEB has a “bill calculator” right on their website. I simply used it. Now this is what I expect you should have done in order to attempt to debunk my calculations.

      You should have looked at “median family income” in the US/State versus Canada/Ontario and converted US to Canadian income (as you did with the rates). Than of course you should have looked at the percentage of income spent on heat and electricity for comparison purposes, before reaching a conclusion. Disposable income is important and helps pay for food and clothing.

      You than would carefully review the EIA monthly stats to get your US state by state all-in-costs. You would examine the report and note at the bottom the EIA clearly indicate the rate includes ALL costs; delivery, transmission and even state taxes–not just the commidity cost. You should than have examined the recently released OEB report on ratepayers in arrears at the end of 2015 and used your math skills to determine if 567,000 ratepayers are in arrears that would represent 12.4% of all residential ratepayers in the province. You would observe Hydro One alone had 226,000 of those meaning almost 20% of their customers were in arrears. You should have than looked at the Hydro One statistice filed on the Yearbook of Electricity Distributors on the OEB site and noted that Hydro One don’t claim they have any URBAN residential ratepayers as customers. Than you would have reached the conclusion that it must be not only low-density users who are having difficulty paying their electricity bills and that Ontario’s electricity rates are pretty high-perhaps higher than all other provinces and US states with the exception of a couple of cities in Haiwaii! You did all that of course?

      Some how I have my doubts you took the time to do any of that!

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  14. These figures are specious. If you are comparing RURAL Ontario then I suggest you not compare it to Oahu which is the most urbanized of the islands. In my posts on the subject I used some 2015 rates but see that Hawai’i’s rates have fallen more in 2016. Still, don’t forget Hawai’i’s are in US dollars while Ontario’s are in Canadian dollars. Convert the USD to CAD and it will not look as bad.

    HOWEVER, I just calculated by suburban Powerstream bill (Aurora) and yes, I’m paying 24.8 cents per kWh for 30 hours per week. Then 20 cents for another 30 hours and 15.5 cents for the remaining 108 hours per week. This averages out (weighted) to 18 cents per kWh. Considering I recall spending 10 cents per kWh back in the early 1980s, I don’t think this is so bad. I was able to use time-of-use charges somewhat effectively. The two peak periods are each 17.86 % of the time and the On Peak contributed 18.49 % of my bill and the Mid Peak 20.08 % of my bill, but the usage was On Peak 11.67 % of the total kWh and Mid Peak 17.85 % of the usage. I was able to move about 6 % of my usage from On Peak to Off-Peak, thanks in part to us doing laundry drying during off-peak and raising the Cooling temp during the On Peak (and a bit during Mid Peak).

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    1. Richard, You should read my response to Hypothesis Collider above as I respond to the issues you raise. A bill I have from Toronto Hydro in 2003 shows I was paying 9 cents a kWh all in back then. Today using the OEB calculator it is 21.4 cents/kWh. That is an increase of 138.3% or an annual increase (simple terms) of 10.6%. If you did that calculation for Hydro One it would be even higher.

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