Rates Comparison with the USA

All rates in $CAD

One thing the Government of Ontario often publicizes is the lower electricity rates in Ontario and the advantage Ontario has in being an Energy Superpower.  I decided to test this by comparing end user rates for electricity with three locations in the USA.  The first location is Upper New York State which is served by National Grid as this is just across the Niagara River from Niagara-on-the-Lake.  The second location is the parts of Florida State served by Florida Light & Power.  There are many snowbirds in Niagara-on-the-Lake, and they will often comment on how cheap the power is in Florida.  The final location is Texas as it is meant to have some of the lowest rates in the USA.  Oncor is the biggest distributor in the state.

A few comments on the calculations:

• The NOTL Hydro rates are shown before applying the Ontario Electricity Rebate of 23.5%.  This is a better reflection of the actual cost of electricity and is the cost Ontario consumers are paying; just that some of it is via income taxes.  These rates are still subsidized by the reductions of the cost of the renewable energy from the Green Energy Act.
• The retail market is very active in all three of these states so there can be a wide variation in electricity rates depending on the retail contracts.
• The rates shown for National Grid, Oncor and Florida Light & Power are my best efforts based on two means of calculation.  I am no expert on US rates and they have some features than make Ontario rates look simple.  First, I used the posted base rates on their websites and did the calculation.  Second, I asked Google’s Gemini what the rates would be.  It provided a range into which these posted rates fall.
• The US electricity rates have been converted to $CAD at a conversion rate of $1.38 CAD/USD.

Some observations:

• New York has some of the highest electricity rates in the US so having lower rates than those of National Grid should not be the goal.
• The states with the cheapest electricity in the USA are the mid-west states like North Dakota, Idaho, Wyoming and Nebraska.  With the exception of Idaho, which has a lot of hydropower, these are all heavily reliant on coal for their electric power.
• Texas and Florida get most of their electricity from natural gas.  Natural gas is particularly cheap in Texas which is why the cost of electricity is so much lower there for larger users.
• Ontario’s electricity supply is around 90% carbon free.  None of these US states can make that claim.  Like Ontario, New York has largely phased out coal though natural gas still supplied 40% of its electricity.
• Distribution and transmission costs tend to be higher in the USA; at least when compared to NOTL Hydro and other similar Ontario municipal LDCs. 
• It used to be that rates in the USA were skewed to favour business customers.  With the expansion of the retail market this has changed with supply costs now being more similar across all rate classes in the state.  The pricing model for customers is now more similar to Ontario’s with statewide or provincewide rates for the supply.  The difference is that there is competition for that supply.

Conclusions

• I am not sure if our rates justify Ontario being thought of as an Energy Superpower but they are competitive right now and that is the most important thing.
• Ontario has some of the cleanest energy on the continent.  With the current political situation in the US that may not show up in rates but I believe it will do so eventually.
• The biggest concern I have with regards to Ontario versus US rates is that the electricity system in Ontario is still very top-down with the key decisions being made by the government.  The markets play a much bigger role in US and this ultimately will affect rates.