Energy Minister claims $408 million increase is simply an “aberration”
When asked about the latest increase in electricity prices coming into effect May 1, 2015, Ontario Energy Minister Bob Chiarelli told the Legislature it was an “aberration.” He went on to blame Ontario consumers for the price rise because they “used less electricity than expected this past winter”.
Decreased electricity demand was also the reason given by the Ontario Energy Board (OEB) in their press release. The OEB said the price of the average bill would increase by “$3.13 per month for households and small businesses”. That makes no sense: the OEB’s press release of April 2015 made no mention of the fact that more energy was used in the prior winter because it was exceptionally cold — yet the price went up.
Using more or less electricity doesn’t affect continually rising electricity prices despite claims made when the local distribution companies (LDC) are spending those hundreds of millions of our ratepayer dollars telling us to “saveONenergy”.
Let’s look at the electricity line on the “average bill” for the actual cost to Ontario’s 4.5 million residential ratepayers.
The message from the OEB was: it will only cost the “average ratepayer” $3.13 more per month and together with the same cost in the October 2015 press release of $4.42 more per month, adds $90.60 annually to the “average bill”. If one applies the $90.60 annual cost to just residential ratepayers, the amount removed from ratepayers pockets is huge. With 4.5 million ratepayers (based on the OEB’s Yearbook of Distributors for 2014) it represents $408 million. That’s without including the additional costs to tens of thousands of small and medium sized businesses.
If it seems like power bill increases never end in Ontario, let’s look back. The all-in average electricity rate as of November 1, 2008 was 6.02 cents per kilowatt hour (kWh) so the 4.2 million ratepayers, at that time, consumed 40.3 terawatts (TWh), costing them about $2,4 billion. Fast forward to November 2015 and the 4.5 million ratepayers were paying an average of 11.6 cents/kWh, and the cost of the 43.2 TWh consumed was $5 billion. The increase in just seven years was 108%. That’s well above Ontario’s inflation rate.
The rates for every kWh of electricity consumed since 2008 have cost ratepayers $9.5 billion more than if the rates been maintained at 6.02 cents/kWh. The average annual increase ratepayers have paid for just electricity has been almost $1.4 billion1. and has been caused mainly by the addition of renewable energy, principally in the form of unreliable and intermittent wind and solar requiring back-up support from gas plants.
With the increase effective May 1, 2016 and the prior one of November 1, 2015, the added cost of over $400 million annually to residential ratepayer’s bills for the electricity line will be an “aberration” only in the sense that it represents an increase of 8% as opposed to the double digit growth of the previous seven years.
April 21, 2016
1.Please note the $2 billion cost of smart meters, transmission lines to connect wind and solar to the grid are billed in the “delivery” line.
The opinions expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy.