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Electricity Price: Deciphering Your Electricity Bill Part 4/4

This is the final post in Samira’s series on electricity price. It covers 4 types of charges on your electricity bill:

    1. Delivery charges
    2. Regulatory charges
    3. Debt retirement charge
    4. Ontario Clean Energy Benefit

1. Delivery Charges

This is the portion of your bill that utilities charge to deliver electricity from a generator (e.g., Bruce Power’s nuclear power plant) to the transmitter’s system (e.g., Hydro One), to the distributor’s system (e.g., Toronto Hydro), then to your business.

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There are 77 utilities that deliver electricity directly to homes and businesses in Ontario.

The delivery charges on your bill cover the costs for a utility to build, operate and maintain infrastructure, such as transmission lines, distribution lines, towers, poles and transformers. It also includes costs that the utility needs to recover for billing, administration, day-to day and emergency services, or any other service it provides.

The delivery charge is comprised of a fixed monthly charge and a variable charge. For business and industry, both charges are based on your demand (kW).

The rate that utilities charge are regulated by the Ontario Energy Board (OEB), an independent government agency that serves the public interest. These rates are determined on a five year cycle. The OEB reviews each rate application through a public process, and then sets the rates for the distributor to charge. The rate application is based on a distributor’s costs

 

WHAT YOU CAN DO:

The delivery component of your bill is charged on a demand basis. Some utilities like Toronto Hydro charge you based on your maximum demand and your demand during peak hours (7am – 7pm on weekdays). Other utilities use your average demand.  Depending on your utility, lowering your maximum, peak, or average demand will lower your delivery costs.

2. Regulatory Charges 

Regulatory charges are the costs of administering the electricity system and market, maintaining the reliability of the provincial grid, and covers administration fees of the IESO and the OPA. Utilities collect this charge and pass it through to the Independent Electricity System Operator (IESO) who operates the Ontario grid.

 

WHAT YOU CAN DO:

Keep in mind that the regulatory component makes up about 5% of your bill. The majority of this charge is billed on a consumption basis; therefore, the less you consume, the less you pay.

3. Debt Retirement Charge

The Debt Retirement Charge of 0.68¢ /kWh pays down the residual stranded debt of the former Ontario Hydro. Utilities collect this money and pass it through to the Ontario government. Although the debt was acquired in the past, it is paid by today’s electricity customers since the electricity generation and transmission infrastructure financed by the debt continue to be used by all Ontario’s electricity consumers.

By law, the Debt Retirement Charge will end when the government’s assets and the estimated value of its other dedicated revenues from the electricity sector are sufficient to service and retire the remaining amount of debt and other liabilities. The government estimates that the Debt Retirement Charge will likely end between 2015 and 2018. Click here for more information.

 

WHAT YOU CAN DO:

The Debt Retirement Charge is also a consumption based charge – the less you consume, the less you pay.

4. Ontario Clean Energy Benefit (OCEB)

The Ontario Clean Energy Benefit takes 10% off the cost of up to 3,000 kWh/month of electricity use. A medical exemption from the 3,000 kWh/month cap is available – click here for more information. The OCEB expires on December 31, 2015.

 

WHAT YOU CAN DO:

Not much! This cap is realistic for residents and small businesses (less than 10 kW demand).

To learn more about electricity price and how to decipher your electricity bill from Samira, be sure to read the firstsecond, and third blog posts in this series.

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Download our Guide to Electricity Pricing in Ontario to better understand and decipher the components of your electricity bill.

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