This is what a kilowatt hour of electricity in Ontario REALLY costs

Our household just received the electricity bill from Hydro One and our consumption for the month dropped by 14% compared to the 2020 bill.  If one does the simple math on the latest bill, ie: total cost including taxes divided by consumption it suggests the cost per kWh (kilowatt hour) was 13.8 cents. Going through the same process for the 2020 bill produces a higher cost of 15.9 cents/kWh.

The foregoing year-over-year drop of 2.1 cents/kWh does not really represent a more efficient system, instead it is a reflection of the Ontario government’s move to “lock-down” all of us commencing December 26th due to an anticipated jump in Covid-19 cases.  Shortly after the “lock-down” the Ontario government instructed the electricity sector to only charge residential ratepayers 8.5 cents/kWh from January 1, 2021 for 28 days and subsequently extended that order for an additional 12 days.

The bills on page 1* from Hydro one in a separate little box in dollars and cents, provides what is referenced as “Total Ontario support”. For our household it worked out to 13.6 cents/kWh meaning collectively, the all-in cost per kWh consumed was 27.4 cents with 98.2% of that allocated to taxpayers.

Examining our bill for March 2011 indicated the full all-in cost at that time, was 12.5 cents/kWh. Compared to the recent bill with an all-in cost of 27.4 cents/kWh it represented an increase in 10 years of 119%.

To put the above in context, the OEB in their “Yearbook of Electricity Distributors” for 2019 indicated Ontario had almost 4.8 million residential ratepayers who, on average, consume 750 kWh monthly! In 2021 the all-in costs of one month’s consumption by those residential ratepayers was approximately $1,315.2 million whereas in 2011 it was about $600 million.  Over 12 months residential ratepayer all-in costs for 2011 were $7.2 billion. For 2021 all-in costs could amount to $15.8 billion shared by residential ratepayers and taxpayers.

What the increase of approximately $8.5 billion all-in costs to residential ratepayers/taxpayers over those 10 years represents are principally; the effects of the GEA. Those costs were added as industrial wind turbines and solar panels received 20 year contracts at above market prices over the first few years and then were built and added to the grid.  Lots of other spending under the GEA also increased costs with spending on; conservation, energy storage, rate class establishment containing cross subsidies, gas plant additions to back up the intermittent and unreliable nature of wind and solar etc etc. The gas plant costs include $1 billion of expenses to move two of them. A major scandal eventually evolved from the disclosure on the reason for the moves and the costs.

The Justin Trudeau led government seem to view the recent and very visible history of what happened in Ontario as one he and his party favour.  The outcome in Ontario should serve as a warning to the rest of Canada what happens when the government sees CO 2 reduction as the thermostat to control the climate!

Going green for electricity generation is very costly so get ready to pay up to charge your Tesla!

*Page 2 is the actual bill containing individual costs for kWh consumed, distribution costs, regulations costs, etc.

Author: parkergallantenergyperspectivesblog

Retired international banker.

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