2. Ratepayer relief for Hydro One and its arrears
October 12, 2016
Yesterday, I dealt with the announcements from the Minister of Energy, Glenn Thibeault in September and the ways he promised would reduce our electricity bills. What the minister failed to explain was where the money is coming from.
Electricity ratepayers should be worried.
As Global TV began its coverage of the electricity sector in Ontario and how it affected people’s lives, many horror stories about “energy poverty” were showcased, particularly from Hydro One’s clients. We customers have become accustomed to bad news stories related to Hydro One’s “smart meters” and “over-billing” highlighted by former Ombudsman, Andre Marin. The stories Global uncovered were even more remarkable as they were able to obtain data from the OEB that disclosed the number of ratepayers in arrears as of December 31, 2015. As it turned out, Hydro One had almost 226,000 clients in arrears (20% of all their residential clients and 40% of all ratepayers in arrears in the province and 63% [$105.6 million] of the total dollar amount). Additionally Hydro One Remote (a not-for-profit subsidiary serving remote communities) had 1,147 in arrears (33.7% of all [3,400] their residential ratepayers).
In the latter case, the rest of Ontario’s ratepayers supplement (read: subsidize) the 3,400 “remote” ratepayers at an average of $9,500 each (about $32 million annually) via the RRRP (Rural or Remote Electricity Rate Protection) fund. The fund is set at $174 million annually which adds 0.13 cents/kWh to each kilowatt hour consumed in the province. The fund is also used to reduce the 329,000 Hydro One customers classified as “low-density” ratepayers. The latter bills are reportedly reduced by $31.50 per month. This eats up another $124 million of the fund.
It is my strong suspicion that it will be this fund that, using the words in Minister Thibeault’s press release of September 13th, result in: “Providing eligible rural ratepayers with additional relief, decreasing total electricity bills by an average of $540 a year or $45 each month”.
If just the 329,000 “low-density”1: Hydro One clients are the “eligible” rural ratepayers envisaged in Minister Thibeault’s press release, the cost will be an additional $150 million. What that means is that “electricity” rates will increase by an additional 0.12 cents/kWh for all the remaining Ontario ratepayers, adding about $20/25 per year to the “average” residential bill.
This also means Hydro One will be handed a guarantee they will receive the $150 million whereas they now have to be concerned with arrears and non-payment from those same clients. This in turn would favourably impact their writeoffs for bad debts which were reported as $66 million in 2014 and $61 million in 2014. It would also put Hydro One in the enviable position of knowing they could deliver zero kilowatt hours but still bill their clients for over $725 million or about 53% of their 2015 gross (net of cost of power) distribution revenue.
Hydro One, despite their smart meter and billing mess, have been on a rampage to shame their paying clients. They do this by sending a “Home Energy Report,” a printed paper report delivered to participating customers via the mail. These reports include a so-called comparison to “efficient” neighbours and other neighbours.
People living year-round in low-density rated areas are talking about these reports. The bills I have seen viewed belong to people living close to many “seasonal” residences used on weekends or for short summer periods. A couple of these homes were heated with electricity. The unsolicited Energy Reports are specific in their language with a cover letter from the “Director, Customer Strategy & Conservation Officer.” A recent letter falsely claimed “You’re among the first in Ontario to receive this innovative new report”. I wrote an article about one of those reports almost two years ago so the recent letter provided to me was hardly “among the first.” One recent letter admonished the recipient “you used 56% more electricity than your neighbours.” In fact this particular ratepayer for the January-June 2016 period used 800 kWh hours monthly which until the May 1, 2016 change announced by the OEB was an “average” ratepayer consuming 9.6 MWh annually.
The ironic issue about these “shaming letters” is if the customer consumes less, Hydro One will submit an application to increase their rates to recover lost revenue. So Hydro One not only bills us for the “shaming letter” costs (via the $400 million a year spent on conservation efforts) via the cost of the electricity we consume, but they then obtain a rate increase to recover lost distribution revenue.
NEXT: The third in this series will examine ratepayer subsidies related to another of Minister Thibeault’s announcements.
1. The following chart was provided to the writer by Hydro One who advised me that “Residential-High Density customers are now classified as “Residential-Medium Density”.