NOTL Hydro recently enabled its customers to switch to the Ultra-Low Overnight Rate.
This is one of two major initiatives required this year by the Government of Ontario that can have an immediate customer impact. They both also illustrate some of the challenges the Government is having with this portfolio.
Ultra-Low Overnight Rates
The first is the Ultra-Low Overnight (ULO) electricity price. This is a new price plan that allows customers to purchase electricity at a very low 2.4 cents per kwh between 11:00 pm and 7:00 am every day. The offset is that it will cost a much higher 24 cents per kwh to purchase electricity between 4:00 pm and 9:00 pm on weekdays; the time of maximum electricity use. There are also some changes to the timing of the mid-peak and off-peak rates though the rates themselves remain the same.
The ULO is expressly designed for those who have purchased an electric vehicle. An electric vehicle being charged uses much more power than all the appliances in an average house so getting people to do this charging at night, when there is unused electricity available, makes sense. NOTL Hydro supports the ULO.
The government is rightly very concerned that if EV sales take off and if all the new EV owners try to charge their vehicles around the same time when they get home from work, which is also already the peak electricity usage time, that the electricity grid will not be able to manage.
The problem is that a couple of years ago the Government of Ontario also mandated that tiered rates also be offered. Tiered rates do not vary based on time of use and are currently 8.7 cents per kwh for the first 600 kwh (1,000 in winter) and 10.3 cents per kwh thereafter. Tiered rates were mandated so that customers could have a set of rates whereby they did not have to worry about their time of use.
The government therefore will have one set of rates to encourage customers to modify the timing of their electricity usage and another which tells customers it does not matter when you use electricity. The contradictory nature of these two rates will mitigate the potential impact of the ULO rates.
The other new development mandated by the Government of Ontario is Green Button. Green Button is a standard that would allow a customer to access accounts across multiple utilities without having to log in separately to each in a different format. It is therefore useful for organizations that have many places of work (school boards, retail chains, large companies, etc.).
Most utilities, like NOTL Hydro, already have customer access programs that offer much more information than is provided by Green Button. Therefore, unless you need the multi-utility and location functionality, Green Button will not be of value. That would be the case for the vast majority of our customers.
Meanwhile, implementing Green Button is still costly. NOTL Hydro has done its implementation jointly with a number of other utilities to minimize the cost but it will still cost over $25k to implement and have ongoing annual costs. This will need to be recovered from all ratepayers thus increasing their rates. It remains to be seen whether our customers get enough value from Green Button to justify this cost.
At the same time the Government of Ontario is subsidizing the cost of electricity by around $7 Billion a year to make electricity rates lower it is mandating programs like Green Button which increase rates.
These current examples show the dangers of a government trying to micro-manage an industry and satisfy too many objectives. You can easily end up in contradictory situations.