Ontario electricity rates go up - analysis and outlook

May 08, 2012
Written by
Lisa Brodeur is a 'Quality Assurance Supervisor' at 360 Energy who writes a weekly post for Energy Edge.
Lisa Brodeur is a 'Quality Assurance Supervisor' at 360 Energy who writes a weekly post for Energy Edge.
As of May 1st, Hydro rates across the Province of Ontario are on the rise.  Distribution rates for most utilities have gone up, and so have customer service charges.



Smaller customers should expect to pay $6 more per month on their electricity bills, while larger businesses will see varying rate increases depending upon their utility.

One item that will remain the same across the board for most businesses is the cost of the Global Adjustment. Global Adjustment is comprised of several elements including the difference between market revenues, the Hourly Ontario Energy Price (HOEP) and what contracted generators are paid and energy efficiency programs such as the FIT program.

The Global Adjustment over the last couple months has been a far larger expense than the hourly price and utility charges, and we anticipate it will continue to be this way over the next several years. The substantial cost of the Global Adjustment in the last two months is due in large part to a lack of demand over the winter and record low natural gas prices, creating lower HOEP prices, which in turn raises Global Adjustment.

Costs are also on the rise in the electrical sector, due to the need for costly infrastructure upgrades including new nuclear construction as the province's nuclear facilities age, as well as the phasing out of coal and the building of new sources of green generation such as wind and solar. 

Wind and solar generation have been the most expensive per kWh source of electricity that the province has added over the past several years, with solar generators having been paid over 80 cents per kWh generated, and wind generators over 10. Nuclear generators are paid just over 5 cents per kWh generated, and hydroelectric at between 2 and 4 cents. 

The province has announced that it will no longer be offering solar and wind contracts for the amounts that have been offered in the past; that being said, contracts for green generation have already been approved at the higher guaranteed rates, which will be in effect for the next 20 years.  It should also be noted that while there are more contracts out there for solar and wind generators, it is actually the contracts for our nuclear generation that are accounting for the largest portion of Global Adjustment – a whopping 45%!

It does not matter what province you are in – understanding the various elements that are going to affect your electrical bill plays a key role in managing your energy usage and your business as a whole.

Speak to your local energy consultant or utility representative to find out how you can budget for upcoming changes in your electricity bill.

Lisa Brodeur is a Quality Assurance Supervisor at 360 Energy.

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