The Ministry of Energy of the Government of Ontario (MOE) and the Ontario Energy Board (OEB) both recently issued press releases related to the cost of power. There are some interesting take-aways from these announcements.
- The OEB got to tell the bad news. https://www.oeb.ca/newsroom/2023/ontario-energy-board-announces-changes-electricity-prices-households-small-business . The Regulated Price Plan (RPP) rates are going up around 20% each. It is interesting to note that the OEB only provides the new rates and not the old rates or the % increase in their press release. Factually correct but missing a bit of context. Meanwhile, the MOE got to tell the good news of the increase in the Ontario Energy Rebate (OER). https://news.ontario.ca/en/release/1003661/ontario-helping-families-and-small-businesses-keep-electricity-costs-down . Of course, they barely mention the corresponding increase in RPP rates other than a vague reference to “normal year-to-year variability in electricity costs”.
- The cost of power for residential and small business customers is going up even after the OER. I calculate the increase at 9% though that will vary depending on your price plan and consumption patterns. See the purple line in the chart above.
- The actual cost of power seems to be fairly stable. This is good news. As can be seen with the yellow line the cost of power has been much more stable over the past three years than it was in the prior thirteen years. This cost of power is an estimate. Because the Government of Ontario subsidizes the cost of power by around $3.2 billion a year by way of the Comprehensive Electricity Plan (CEP), offsetting the cost of the Green Energy Act, the actual cost is not provided. The difference between the yellow and purple lines is the total of the OER and CEP subsidies.
- The Government of Ontario is also increasing the eligibility (household income threshold) for the Ontario Electricity Support Program (OESP) at an estimated cost of $50 million. This is an additional subsidy directly targeted to low-income households and is not included in the chart.
- The cost of the OER was $2.2 billion in the year ended March 31, 2022. That year the OER was 17% so at 19.3% the cost will be at least $2.5 billion. With these increases and natural growth, the total electricity subsidies for 2024 will be close to $7 billion. For the year ended March 31, 2022 they totaled $6.3 billion. A small percentage of these subsidies is recovered in rates (RRRP) but the vast majority comes from taxation revenue. They may be keeping electricity costs down as per the press release but we will all still be paying for the true cost.