Ontario’s electricity bills reconvene their climb

The OEB (Ontario Energy Board) recently advised us our electricity rates would once again rise but they tried to soften the blow by noting rates hadn’t increased since November 2019.  They said the average household (consumption of 700 kWh) would see an increase of $2.24 a month* on their hydro bills.  The latter applies only to the actual cost of power which is about 60/65% of most household bills.  The increase was principally blamed on lower demand in the province due to the Covid-19 pandemic impact as many businesses were forced to shut down or reduced their demand.  Lower demand did not occur in most households however as many employees and others were forced to work from home meaning household demand actually increased.  The impact of the $2.24 average monthly increase translates to about $27.00 annually so is probably close to inflation rates however incomes have fallen meaning more households may now, or in the near future, experience “energy poverty” meaning 10% or more of their income will be spent to keep the lights on and the house heated.

As the rate increase notice was announced by the OEB they also offered households and small businesses the opportunity to either choose to remain on TOU (time of use) rates or to convert to the RPP (regulated price plan).  The TOU plan affords you the opportunity to consume power at lower rates during certain times whereas the RPP is a constant price (12,6 cents/kWh) up to 1,000 kWh increasing to 14.6 cents/kWh for anything above the first 1,000 kWh.  The OEB has therefore amended their “bill calculator” to allow you to enter the information from your previous bill(s) to calculate which plan would afford you the lowest monthly cost.

I would encourage all to use the OEB calculator (link in foregoing) to determine the best one to use before making the choice to stay on TOU or convert to RPP by notifying your distributor.   

It is worth noting the OER (Ontario Electricity Rebate) which reduces electricity bills of households by 33.2% will remain in place and continue to labour Ontario’s taxpayers** with a cost of approximately $5.5 billion annually.

Another support program specifically aimed at low-income households either on the verge of, or experiencing, “energy poverty” is the OESP (Ontario Electricity Support Program) which provides a direct credit to your monthly bill.  The credit you may qualify for is dependent on the income level and number of people living in the home.  An application must be completed and submitted which should be done (via the link above in the full name of the program) for those who qualify.

There is also one other support program available to individuals who are in arrears or behind on either their electricity or natural gas bill. It is known as LEAP (Low-income Energy Support Program) but it must be accessed via an “intake agency” listed on the OEB (link via the full program name above).  The amount available is dependent on similar criteria to that of the OESP.

I would encourage those who are, or know of people, experiencing difficulties to access the programs applicable. Energy poverty in Ontario’s winter climate must not happen!

*My estimate of total annual costs to households associated with the monthly increase is $120 million.

**Don’t expect the Ford Government to ever deliver on their promise to further reduce your electricity bill by the 12% announced during his run-up to the Provincial election.

Author: parkergallantenergyperspectivesblog

Retired international banker.

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