Ontario’s Electricity Rates

February 16, 2022

Ontario’s electricity rates have become very confusing. To demonstrate I will provide the NOTL Hydro rate sheets for 1992 and 2022.

1992 Residential Bi-MonthlyRate
First 500 kWh14.80¢ per kWh
Balance kWh7.08¢ per kWh
Minimum Bill$18.50

A customer’s bill in 1992 would look very close to the rates presentation above. It is very clear what the cost of using additional electricity will be. Below is an image of Niagara-on-the-Lake Hydro’s rate order beginning January 1, 2022.

CategoryRate TypeRate
Tiered – First 1,000kWh$/kWh0.0980
Tiered – After 1,000kWh$/kWh0.1150
System Loss Factor%3.73%
Service Charge$/month$30.87
Rate Rider for Alignment of Rate Year with Fiscal Year – Fixed Rate – effective until April 30, 2022$/month$(0.90)
Rate Rider for Disposition of Large Use Deferral/Variance Accounts – effective until April 30, 2022$/month$(0.16)
Smart Metering Entity Charge – effective until December 31, 2022$/month$0.57
Rate Rider for Disposition of Global Adjustment Account (2022) – effective until December 31, 2022. Applicable only for Non-RPP Customers$/kWh$(0.0001)
Rate Rider for Disposition of Deferral/Variance Accounts (2022) – effective until December 31, 2022$/kWh$(0.0016)
Rate Rider for Disposition of Global Adjustment Account (2021) – effective until April 30, 2022. Applicable only for Non-RPP Customers$/kWh$(0.0005)
Rate Rider for Disposition of Lost Revenue Adjustment Mechanism Variance Account (LRAMVA) (2021) – effective until April 30, 2022$/kWh$0.0002
Rate Rider for Disposition of Deferral/Variance Accounts (2021) – effective until April 30, 2022$/kWh$(0.0008)
Rate Rider for Disposition of Capacity Based Recovery Account (2021) – effective until April 30, 2022. Applicable only for Class B Customers$/kWh$(0.0001)
Rate Rider for Disposition of Large Use Deferral/Variance Accounts – effective until December 31, 2022$/kWh$(0.0003)
Retail Transmission Rate – Network Service Rate$/kWh$0.0087
Retail Transmission Rate – Line and Transformation Connection Service Rate$/kWh$0.0012
Wholesale Market Service Rate (WMS) – not including CBR$/kWh$0.0030
Capacity Based Recovery (CBR) – Applicable for Class B Customers$/kWh$0.0004
Rural or Remote Electricity Rate Protection Charge (RRRP)$/kWh$0.0005
Standard Supply Service – Administrative Charge$/month$0.25

The following is the standard format for a bill in 2022. The format is mandated by the Ontario Energy Board and is based on the rate categories above.

OFF-PEAK WINTER0.08207,608.56$623.90
MID-PEAK WINTER0.11302,649.00$299.34
ON-PEAK WINTER0.17002,640.44$448.87
TOTAL HST$232.59

Electricity Charges

This is the actual cost of the electricity that is used by the customer. It is increased by 3.73% to account for the electricity lost while delivering the power to the customer. In the example above they are time-of-use (TOU) rates so are based on the actual consumption at different times of the week. The timing of each TOU rate category varies slightly between winter and summer. Residential and small business customers have the option of TOU rates or tiered rates which are just based on consumption over the month and not on when they are used. Larger businesses pay based on the actual hourly price plus global adjustment. In all cases, NOTL Hydro does not make any margin and the entire amount is used to pay for the electricity we have purchased; the cost flows through directly to the end user.

Regulatory Charges

The regulatory charge is made of three separate components:

  • IESO charges – The wholesale market service and capacity-based recovery are charges to cover the cost of managing the power generation and ensuring the supply meets the demand. They are paid to the Independent Electricity System Operator (IESO).
  • Rural Rate Protection – Certain customers in the far north of Ontario and certain very rural areas have their costs subsidized as it is very expensive to bring them electricity.
  • Standard Supply Service – This is kept by NOTL Hydro and is $0.25 per month.

Delivery Charges

The delivery charge is made up of four separate components:

  • Service charges – This is the part of the bill that is kept by NOTL Hydro. For residential customers it is a fixed monthly charge so does not vary based on usage. For business customers there is both a fixed and a variable charge.
  • Smart Meter Entity charge – This is paid to a central agency in Toronto that monitors meter readings for accuracy. NOTL Hydro has argued that costs could be reduce by eliminating this agency as this monitoring is also done by every electric utility company.
  • Transmission – These are paid to the companies that manage the provincial transmission system (mainly Hydro One) to pay for the cost of bringing the power from the generation to NOTL.
  • Rate Riders – For the commodity, regulatory and transmission charges that are passed to other parts of the electricity system, NOTL Hydro does not just collect the money from our billings and pass these on. Instead, we are billed based on rates set for the electric utilities. We track the difference between what we collect and what we have paid and use the rate riders to adjust. A negative amount means we have collected too much and are returning it via a credit and a positive amount means we are short and must make up the difference.

It is appropriate that the details of all the rate elements above be available to customers. These are all on our website and on the OEB website. However, I do believe the actual bills should be shown in a manner that makes sense to customers, that they can recalculate and that they can use to monitor changes in their usage. Instead of “Delivery” and “Regulatory Charges”, which mean little to customers, a fixed monthly charge and a variable cost per kwh charge would be much more meaningful.

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