By: John Spears Business reporter, Published on Thu Oct 17 2013
Ontario consumers will face higher hydro bills starting Nov. 1 — with the sharpest percentage increase coming during off-peak hours.
Time of use electricity rates, which are now paid by most consumers and small businesses, are due to rise by 0.5 cents a kilowatt hour for all time periods, the Ontario Energy Board announced Thursday.
The increase affects only the energy portion of the bill; consumers pay additional charges for delivery and debt retirement, plus a fixed monthly amount.
Those who pay time-of-use rates will pay about 3 per cent more for electricity on their total bill — or $4 a month on a monthly hydro bill of 800 kilowatt hours, according to the energy board.
Consumers who buy power from energy retailers at a fixed price won’t be affected by the new prices, which will be in effect for six months.
The new price for peak power will be 12.9 cents a kilowatt hour; for mid-peak, 10.9 cents a kilowatt hour; and for off-peak, 7.2 cents a kilowatt hour.
In percentage terms, the off-peak power price jumps 7.5 per cent, while the peak price rises only 4 per cent, and mid-peak 4.8 per cent.
The board said the new prices are being driven by “more generation from sources including renewables, along with a higher market price for natural gas.”
Gas and renewables are set to play a bigger role in Ontario’s power market, as the last coal plants shut down. The province has decided not to build new nuclear reactors.
The new rates continue to shrink the gap between peak and off-peak prices.
Five years ago, the peak price was more than three times the off-peak price; today, it’s less than twice the off-peak price.
Peter Tabuns, energy critic for the New Democratic Party, said the new prices reduce the incentive for people to consume less during the peak.
“That seems to be contrary to everything they’ve been saying in the past,” he said in an interview.
“So everyone who’s switched to doing their laundry in the middle of the night is going to be paying more than they would have.
“The other thing that struck me is that the increase in the cost of electricity is an awful lot more than the rate of inflation,” he added, saying the government should do more to promote conservation.
Time of use pricing is meant to discourage short, sharp peaks in demand. To supply those peaks, the power system has to build expensive plants that operate only a few hours a day, and only during part of the year.
Conservative critic Lisa MacLeod linked the latest price increase with the cost of moving unpopular gas-fired plants out of Oakville and Mississauga, estimated by the provincial auditor-general to be $1.1 billion.
“The way this government’s mismanaged energy, someone’s got to pay for it and unfortunately they’re going to have the say: It’s the ratepayer,” she said. “There’s no way to recover this money from the Liberal Party of Ontario.”
Energy minister Bob Chiarelli avoided any direct comment when asked about the new prices.
“Since 2003, the Ontario government has made smart, strategic investments in both transmission and generation infrastructure to bring us into a healthy supply situation in order to power our homes, farms and businesses,” he said in a statement.
An official in his office said prices are tracking lower than those predicted by the Liberals’ long-term energy plan released in 2010.
Julie Girvan of the Consumers Council of Canada said in an interview she’d like to see more clarity from the energy board about the impact that time of use pricing has had on consumer behaviour and on hydro bills.
Energy board spokesman Alan Findlay said that the board has been gathering data about the impact, and will be releasing a report by the end of the year.
In setting rates, “the approach is to match the costs of supply with the appropriate time period they’re used,” he said.
The energy board says most consumers use 64 per cent of their power during off-peak hours. During the winter months, off-peak hours are all day on weekends and holidays, and on weekdays from 7 p.m. to 7 a.m.
Peak periods are weekdays from 7 to 11 a.m., and 5 to 7 p.m.