New Winter Electricity Prices for Households and Small Businesses

TORONTO, Oct. 15, 2015 /CNW/ - Today the Ontario Energy Board announced new electricity prices. The new prices will apply to most households and small businesses starting November 1.

When the prices change, the hours for mid-peak and on-peak prices also change to the winter time-of-use hours. The lowest-priced, off-peak period remains from 7 p.m. to 7 a.m. on weekdays and all day weekends and holidays.

This chart outlines time-of-use prices and the times they are effective as of November 1, 2015:  

Category

Time(s) – Winter

(Nov 1-Apr 30)

Price

Change

Off-peak

Weekdays 7pm-7am

All day weekends and holidays

8.3 ¢/kWh

up 0.3 cents

On-Peak

Weekdays 7am-11am and 5pm-7pm

17.5 ¢/kWh

up 1.4 cents

The price is increasing by approximately $4.42 per month on the "Electricity" line, and about 3.4% on the total bill, for a household that consumes 800 kWh per month.

Increased costs from Ontario Power Generation's (OPG) nuclear and hydro-electric power plants make up about 40% of this increase. Costs from renewable generation sources are another driver, representing about one-third of the increase.

The off-peak price remains less than half the on-peak price. This means customers who shift use to evenings and weekends save 9¢ per kWh. The typical Ontario TOU household uses about two-thirds of its power during off-peak hours, and the off-peak price remains largely unchanged.

Through recent OEB consumer research, Ontarians have signaled a need for pricing that provides greater incentives to conserve. Giving customers incentives and opportunities to manage their bills by shifting their time of electricity use is a key objective of the OEB's price plan.

Household consumption has been declining and successful conservation programs are likely a contributing factor. While the OEB continues to use 800 kWh per month for comparison purposes, actual consumption, particularly in large urban centres, is declining. Over the last three years, average residential consumption in the greater Toronto area and other larger cities has been about 700 kWh per month. The change for these customers is a $3.86 per month increase to the 'Electricity' line, assuming a typical TOU consumption pattern. 

The OEB reviews electricity prices twice each year based on updated cost forecasts and they are designed to recover the actual cost of electricity.The forecast includes a number of variables, like estimated changes in the total cost of power from Ontario's diverse electricity supply. Key elements of the Independent Electricity System Operator's outlook for the power system over the next 18 months, such as forecasts of electricity demand and of new generation sources coming online, are also factored in.

These electricity price changes reflect changes in the cost of electricity for RPP customers. They do not affect the cost of transmission or distribution reflected in the Delivery line, nor do they alter the Regulatory Charges or Debt Retirement Charge on people's bills.

Quick facts:

  • Time-of-use prices encourage consumers to use power when prices are lower.
  • These price changes only affect households and small businesses that buy their electricity from their local utility and have a smart, or interval, meter. Customers who have signed a contract with an electricity retailer do not pay these prices.
  • Regulated Price Plan TOU prices for November 1st are set to recover the forecast cost of power.
  • The typical Ontario TOU household uses about two-thirds of its power during off-peak hours, and the remainder in near equal amounts during mid-peak and on-peak times.
  • For those customers who remain on "Tiered Pricing", winter price information is available in the OEB's Backgrounder.

The Ontario Energy Board is an independent and impartial public regulatory agency. We make decisions that serve the public interest. Our goal is to promote a sustainable and efficient energy sector that provides consumers with reliable energy services at a reasonable cost.  

Social and Resources:

OntarioEnergyBoard.ca
@OntEnergyBoard

Graphic of Time-of-Use Price chart: http://www.ontarioenergyboard.ca/OEB/_Documents/For+Consumers/TOU_prices_Winter.pdf

Electricity Prices Explained video:
http://youtu.be/zVdm5BI4gU8  

Time-of-use video:
http://www.youtube.com/watch?feature=player_embedded&v=bJ04SSArI6c  

Backgrounder:
http://www.ontarioenergyboard.ca/oeb/_Documents/Press Releases/bg_RPP_20151015.pdf

Ce document est aussi disponible en français.

 

Backgrounder – November 1st electricity price change

October 15, 2015

About Electricity Prices

The Ontario Energy Board reviews prices for households and small businesses twice each year, on May 1 and November 1.

The price changes affect households and small businesses who buy their electricity from their local utility and not those who buy from an electricity retailer.

Electricity prices make up about 60% of the total bill of households using 800 kWh/month. These electricity prices are shown on the Electricity line. They do not affect the cost of transmission or distribution reflected in the Delivery line, nor do they alter Regulatory Charges or the Debt Retirement Charge.

Time-of-use Pricing

With time-of-use, customers pay different prices depending on when they use electricity.

There are three time-of-use periods – on-peak, mid-peak and off-peak. Prices are lower in the evenings, on weekends and on holidays.

TOU pricing encourages households and small businesses to use electricity during lower-cost time periods. This can in turn ease pressure on the provincial power system.

Almost 4.6 million customers, or 96%, of Ontario households pay time-of-use prices.

TOU prices are set to recover the expected costs of electricity.

Winter Time-of-use Electricity Prices

Category

 

Time(s)

 

New Winter
Price

 

Change

Off-peak

 

Weekdays 7pm-7am

All day weekends and holidays

 

8.3 ¢/kWh

 

up 0.3 cents

 

Mid-peak

 

Weekdays 11 a.m. - 5 p.m.

 

12.8 ¢/kWh

 

up 0.6 cents

 

On-Peak

 

Weekdays 7am-11am and 5pm-7pm

17.5 ¢/kWh

up 1.4 cents

Summer & Winter Time-of-Use Hours

The TOU price periods change each May 1 and November 1 – the same day prices are adjusted.

The difference between the summer and winter periods reflects differences in consumer habits. In summer, electricity use peaks when air conditioners are running on high. In winter, less daylight means electricity use peaks twice: once in the morning when people wake up and turn on their lights and appliances and again when people get home from work.

Tiered Prices

A small number of customers –fewer than 1 in 10 – are still on the old pricing system, known as tiered pricing. The changes for these customers are:

New Tiered Prices for Households

 



 

Winter
Threshold

 

New Winter Price

 

Change

1st Level

 

Up to 1,000 kWh/month

 

9.9 ¢/kWh

 

up 0.5 cents

 

2nd Level

 

More than 1,000 kWh/month

 

11.6 ¢/kWh

 

up 0.5 cents

Note: The threshold for small businesses stays at 750 kWh/month all year. In the winter, the threshold for residential customers increases from 600 kWh to 1,000 kWh.

Bill Impact of New Prices

The price for TOU customers is increasing by approximately $4.42 per month on the "Electricity" line, and about 3.4% on the total bill, for a household with a typical consumption pattern using 800 kWh per month. The cost of power for 2016 is broadly in line with the amount estimated in the Long Term Energy Plan.


Reasons for Changes

The Ontario Energy Board sets electricity prices based on a forecast of the cost electricity prepared by Navigant Consulting Ltd. Among other things, Navigant uses information about the past cost of electricity and a forecast of the expected demand in Ontario, both provided by the IESO, to prepare its forecast. The details of these calculations are explained in the OEB's RPP Price Report: November 1, 2015 to October 31, 2016.

Increased costs from Ontario Power Generation's (OPG) nuclear and hydro-electric power plants make up about 40% of this increase. Costs from renewable generation sources are another driver, representing about one-third of the increase.

A significant element of those changes is the result of a 2014 application by OPG seeking to recover past costs.


When a Typical Household Uses Most of its Electricity

Typically, households on TOU currently use most of their power, almost two-thirds of it, during off-peak hours when prices are half the cost of on-peak.


Ratios between on/mid/off peak

The difference between on- and off-peak prices is expanding from a ratio of 2:1 to 2.1:1. The difference in the prices is now more than 9 cents. This change is intended to encourage customers to shift their use to off-peak periods.

The change in ratios effective November 1st will affect customers differently, depending on how they use electricity. For example:

  • A customer using 800 kWh per month whose consumption pattern is typical for those on TOU would experience no overall bill impact due to the ratio change. Their bills will rise by 3.4% because the cost of power has increased.
  • Customers who use more electricity than the typical TOU household in the on-peak hours, and do not shift any of their usage to the off-peak period, will experience a higher bill impact.
  • Customers who already use more than a typical portion of their power in off-peak hours will see a benefit from this change.
  • The overall effect is that customers who shift on-peak consumption into off-peak periods will see a greater reward for doing so.


Why Prices Depend on the Time Electricity is Used

As demand rises, so does the cost of electricity.

Ontario's electricity grid is fed by lower cost power when demand is lower. Known as baseload generation, this power largely comes from nuclear and large hydroelectric facilities. When demand is high and all baseload power is used, the province must turn to higher-cost generators. Those power sources generally include some natural gas-fired plants and some renewable generators.


Setting Electricity Prices

The Ontario Energy Board calculates how much it will cost to supply households and small businesses in the province with electricity for the following year. Many factors go into this estimate, including:

  • The amount of power customers are expected to use
  • The projected price of fuel during that time – e.g. natural gas
  • The types of power that will be available (i.e. how much nuclear, hydroelectric, natural gas, renewable), and at what cost
  • The accuracy of previous projections

The OEB then sets prices for each of the three time-of-use periods in order to recover expected costs while providing incentives and opportunities for customers to manage their bills by shifting their time of electricity use.


Retail Contracts

A small number of electricity customers – fewer than 1 in 10 – get their power from an electricity retailer rather than their local utility.

Those customers continue to pay the prices stated in their contract.

They are, however, subject to a fluctuating rate known as the Global Adjustment. The Global Adjustment appears as a separate charge on their electricity bill. It is designed to cover the difference between electricity market prices and the actual payments generators receive. It also covers the cost of conservation and demand management programs.

All customers pay the Global Adjustment but it is incorporated into the electricity line item on the bill for customers who pay the prices set by the OEB under the Regulated Price Plan.


For more information

For more information, visit the OEB's consumer website at www.ontarioenergyboard.ca.



Ce document est aussi disponible en français.



 

 

SOURCE Ontario Energy Board

Image with caption: "Summer & Winter Time-of-Use Hours (CNW Group/Ontario Energy Board)". Image available at: http://photos.newswire.ca/images/download/20151015_C8992_PHOTO_EN_522119.jpg

Image with caption: "Typical Household Electricity Consumption on TOU Pricing (CNW Group/Ontario Energy Board)". Image available at: http://photos.newswire.ca/images/download/20151015_C8992_PHOTO_EN_522130.jpg

For further information: Media Inquiries: 416-544-5171; Public Inquiries: 416-314-2455, 1-877-632-2727


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