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Breaking it Down: The Fair Hydro Plan

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On March 2, 2017, Ontario Premier Kathleen Wynne announced sweeping changes to Ontario’s electricity sector, dubbed “The Fair Hydro Plan”.  What does this new regulation mean for Ontario ratepayers, and who will reap the benefits?  Let’s break it down.

Lower Costs for Residential Ratepayers

The biggest and most publicized change, of course, is the relief for residential consumers.  The plan will lower the average residential bill by 25%, and limit increases to the rate of inflation for the next four years.  Small commercial ratepayers will also benefit from these lower rates.

In order to achieve this reduction in rates, a new Global Adjustment (GA) pool will be made for Regulated Price Plan eligible consumers. This pool will allow for refinancing of GA costs over a longer period of time, lowering costs in the short term while extending the payback period.

There is good news for small commercial customers who have chosen to opt out of the RPP and pay market rates or secure a fixed price for electricity: this new, lower cost GA pool will also be applied to you.

Expansion of the Industrial Conservation Initiative

Changes to the Industrial Conservation Initiative, or ICI, were announced in late 2016 to allow customers with an average monthly peak demand of 1MW to participate in the Class A Global Adjustment pool. You can check out our previous blog post to learn more.

With this announcement, this pool will be expanded to include small manufacturing and industrial consumers with an average monthly peak demand of 500kW or more. This expansion will be limited to customers with manufacturing NAICS codes.

Participation in the ICI can save businesses up to 30% on Global Adjustment costs. However, it is important to note that not all businesses who qualify for the Class A GA pool will benefit from participating. Reduction in costs will be dependent on the load profile and usage patterns of the customer.

Not all businesses who qualify for the Class A GA pool will benefit from participating. Reduction in costs will be dependent on the load profile and usage patterns of the customer.

The biggest question yet to be answered?  When will this new pool of Class A customers be eligible to opt-in for the ICI?  The enrollment period for the 2017-2018 program ends on June 1 – will these newly eligible businesses be able to opt-in this year?  We are eager for more information to be released on this in the near future.

Expansion of the Rural or Remote Electricity Rate Protection (RRRP)

Rural or Remote Rate Protection lowers costs for residential consumers facing higher distribution costs from their utilities when compared to customers in urban areas.

The changes announced will expand this program from its current participation of 350,000 customers to approximately 800,000 customers.  The program will target customers served with the highest distribution rates across the province. The total cost reduction will vary from customer to customer but will average $20/month.

The total cost reduction from RRRP changes will vary from customer to customer but will average $20/month.

The Fair Hydro Plan will provide welcome relief for many customers across Ontario. However, there are still some customers who will remain unaffected by these changes.  For most mid-sized commercial businesses, there will be no noticeable changes to electricity bills as a result of the Fair Hydro Plan.

 

Are you interested in learning more about recent regulatory changes and market conditions impacting Ontario Electricity prices? Join us on April 6 for our annual Spring Market Insights Webinar.

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