Ontario Energy Board: strange math behind time-of-use pricing

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Magic tricks: how the OEB explains electricity bill increases

The Ontario Energy Board’s (OEB) news release of October 16, 2014 tells us that our rates will once again increase on November 1, 2014, but only by 1.7% on the total bill. In their Backgrounder, the OEB tells us that  “Electricity prices make up about half the total of an average household bill.”

If they are telling us they have increased “electricity prices” they should be explaining how much rates are going up in dollars and percentages, and not relate it to the total bill—but maybe that’s a way to lessen the visual impact.  If they were truthful they would annualize the increase.  If they had done that, the story would then be that the electricity portion of our bills has increased 13.2%, measured from the prices applicable on October 31, 2013.

The On-peak rate as of October 31, 2013 was 12.4 cents/kWh and effective November 1, 2014 will be 14 cents/kWh. That’s an increase of 12.9%.  Mid-peak rates one year ago were 10.4 cents/kWh and on November 1, 2014 will be 11.4 cents/kWh, an increase of 9.6%. Off-peak rates will jump to 7.7 cents/kWh from 6.7 cents/kWh, an increase of 22.3%.

Taken together, those increases in the price we pay for electricity increased 13.2 %, or $8.87 a month, and $106.44 for a full year.

OEB not coming clean

The OEB has also never come clean about the requirement to no longer include “line losses” on the electricity line of ratepayers’ bills.  That should have driven time-of-use/TOU pricing down by 5.2%, but didn’t!  Those line losses, effective August 2013 should have reduced electricity costs and increased the delivery line on ratepayers’ bills by an equivalent amount, yet were “forgotten” in the explanations offered by the OEB.  The 5.2% line loss reallocation would represent 33.3 kWh on an average (800 kWh) monthly ratepayer bill. In dollar terms, that’s a $3.95-per-month decrease or $47.40 annually—but it didn’t.  Taken together, the hidden line loss increase, coupled with the approved OEB increase, raised average electricity prices by $12.82 monthly or $153.84 annually.

In just one year, the 4.6 million residential ratepayers in Ontario will have had another $707.7 million removed from their disposable income just to cover the cost of electricity. That’s way over the rate of inflation.  Added to that will be the dollars extracted for rate increases for distribution and regulatory charges for  the other “half the total of an average household bill.

Energy poverty in Ontario

For stay-at-home parents, seniors living on fixed incomes, or the disabled, the increases will affect their ability to simply put food on their tables!

Time for the OEB to come clean with ratepayers and issue “transparent” news, rather than abuse the ratepayers by hiding the true costs of the “greening” of Ontario with wind and solar intermittent generation.

©Parker Gallant

October 19, 2014

The opinions expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy.

 

 

Comments

Julian
Reply

I am pleased to see this article.

It seems every entity responsible for some portion of hydro (OEB for commodity price, OPG for its generation, Toronto Hydro for local distribution, etc.) is intent on making the headline number seem as low as possible. It’s a big ruse. All parties love to quote their increases relative to the overall bill and a lot of people may not realize that based on that methodology, each year, you have to ADD all those 2% here, 3% here increases to get the true effect on one’s overall bill.

It’s utter madness.

Ron Hartlen
Reply

“…The On-peak rate as of October 31, 2013 was 12.4 cents/kWh and effective November 1, 2014 will be 14 cents/kWh. That’s an increase of 12.9%. Mid-peak rates one year ago were 10.4 cents/kWh and on November 1, 2014 will be 11.4 cents/kWh, an increase of 9.6%. Off-peak rates will jump to 7.7 cents/kWh from 6.7 cents/kWh, an increase of 22.3%…”
So, once again, electricity users who are doing the right thing (off peak use) will take the largest increase. The result is that those of us who are doing the right thing are subsidising those who are nor. Does this surprise me? No. Why? It buys votes.

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