OEB Announces Reduction in Electricity Prices



    TORONTO, Oct. 12 /CNW/ - Today the Ontario Energy Board (the Board)
released electricity commodity prices that will take effect November 1, 2007.
    Effective November 1st, the Regulated Price Plan (RPP) prices will be 5.0
cents per kilowatt hour up to the consumption threshold each month and 5.9
cents per kilowatt hour above that. The new prices represent a 0.3 cents per
kilowatt hour, or 4.8%, decrease relative to the prices that went into effect
in May 2007. The impact of this price reduction on each consumer will depend
on how much electricity the consumer uses.
    The period from November 1st until April 30th marks the winter price
period where residential consumers can use more electricity at a lower price.
As in previous years, the amount of electricity charged at the lower price
will change from the summer threshold of 600 kilowatt hours per month to the
winter threshold of 1,000 kilowatt hours per month. Non-residential consumers
eligible for the price plan can continue to use 750 kilowatt hours each month
at the lower price throughout the year.
    The reduction in electricity prices announced today is primarily due to
the need to reduce the surplus in the RPP variance account balance. As a
result, a credit of 0.3 cents per kilowatt hour has been included in RPP
prices to clear the variance account surplus over the next 12 months.
    Another reason for the drop in electricity prices is the expected
decrease in the cost of fuels, such as natural gas, used by some electricity
generators, relative to the previous forecast. The recent appreciation in the
Canadian dollar is a major contributing factor since such fuels are purchased
by generators in U.S. dollars.
    These prices are reflected on the "Electricity" line of consumers' bills.
The commodity prices announced today apply to consumers who buy their
electricity through their utility. Consumers who currently buy their
electricity from a retailer and pay their contract price will continue to do
so.
    The price plan is designed to ensure consumers pay what it costs to
supply their electricity while smoothing the daily price variations that occur
in the market. When the Board sets prices, it adjusts for past differences
between what consumers have paid and what it has cost to supply them, and it
incorporates a 12-month forecast for future electricity costs. RPP prices are
reviewed and can change twice a year at set dates in the spring and in the
fall, taking into account a number of factors.
    Time-of-Use (TOU) prices will also be reduced and have been set at 3.0
cents per kilowatt hour (Off-peak), 7.0 cents per kilowatt hour (Mid-peak) and
8.7 cents per kilowatt hour (On-peak). The overall impact for average
consumers paying these TOU prices is calculated to be about the same as those
paying the regular two-tier prices discussed above.
    Currently, Milton Hydro and Chatham-Kent Hydro are the only utilities in
Ontario charging TOU prices for some of their residential and small business
consumers.
    The Ontario Energy Board regulates the province's electricity and natural
gas sectors in the public interest. It envisions a viable and efficient energy
sector with informed consumers served by responsive regulatory processes that
are effective, fair and transparent.
    For more information, please refer to the attached backgrounder, visit
the OEB website at www.oeb.gov.on.ca or contact the Consumer Relations Centre
at 416-314-2455 or toll-free at 1-877-632-2727.

    
    Backgrounder

    October 12, 2007
    -------------------------------------------------------------------------
    November 1, 2007 Electricity Prices for Regulated Price Plan (RPP)
    consumers

    Highlights:  - Starting November 1st, consumers who buy their electricity
                   from their utility will pay 5.0 cents per kilowatt hour
                   for consumption below the threshold each month, then 5.9
                   cents per kWh for electricity used above the threshold
                   each month. These prices are reflected on the
                   "Electricity" line of consumers' bills.

                 - For residential consumers, the monthly threshold for the
                   lower price is set at 1,000 kWh per month during the
                   winter season, from November 1 to April 30 (and at 600 kWh
                   per month for the summer season of May 1 to October 31).

                 - For non-residential consumers eligible for the price plan,
                   the threshold remains at 750 kWh per month for the entire
                   year.

                 - The RPP currently applies to residential and small
                   business consumers, and other consumers identified by
                   regulation.

                 - Consumers who currently buy their electricity from a
                   retailer (or who recently signed a new contract) and are
                   paying their contract price will continue to do so.

                 - On average, this represents a 4.8% decrease in electricity
                   commodity prices.

                 - The reduction in electricity prices is primarily due to
                   the need to reduce the surplus in the RPP variance account
                   balance. As a result, a credit of 0.3 cents per kilowatt
                   hour has been included in RPP prices to clear the surplus
                   over the next 12 months. As of September 15, 2007, the
                   positive net balance was about $180 million and is
                   expected to be $208 million by the time the new prices go
                   into effect. Among other factors, the increase in the
                   variance balance was primarily due to wholesale
                   electricity prices being lower than forecast.

                 - Specific hours for RPP time-of-use pricing periods are for
                   consumers of utilities that:

                   1. have billing systems capable of charging time-of-use
                      prices that vary throughout the day; and

                   2. have voluntarily implemented time-of-use pricing.

                 - The time-of-use prices have been reduced for all
                   three periods:

                   -  On-peak = 8.7cents per kWh (previously
                      9.2 cents)
                   -  Mid-peak = 7.0 cents per kWh (previously 7.2
                      cents)
                   -  Off-peak = 3.0 cents per kWh (previously 3.2
                      cents)

                 Time-of-use prices only apply to a small subset of consumers
                 on the Regulated Price Plan at this time. This currently
                 includes some consumers with Milton Hydro and Chatham-Kent
                 Hydro.

    Background   The Regulated Price Plan applies to residential and small
                 business consumers who use under 250,000 kWh/year and who
                 buy their electricity from a utility. These consumers are
                 charged a regulated price for the electricity they use. The
                 Board set these prices based on a forecast of the expected
                 cost to supply RPP consumers from November 1, 2007 to
                 October 31, 2008.

                 Electricity prices under the RPP are affected by a number of
                 factors. Among them are:

                 -  the amount of electricity produced by generators that are
                    paid regulated or capped prices;
                 -  contract prices of generators that have entered into
                    agreements with the Ontario Power Authority (OPA) as well
                    as the costs associated with OPA conservation & demand
                    management (CDM) programs;
                 -  market prices for electricity paid to other generators;
                 -  prices of natural gas and coal (used as fuels by some
                    generators);
                 -  the exchange rate (because generators purchase such fuels
                    in U.S. dollars); and
                 -  the weather.

                 RPP prices also take into account the variance account
                 balance (positive or negative) which reflects the difference
                 between the stable forecast price paid by consumers and the
                 actual fluctuating cost of supplying them with electricity.

    Variance     The variance account for the RPP is managed by the Ontario
    Account      Power Authority (OPA). It tracks the difference between what
                 consumers have paid and what has been paid to generators.

                 Since the last RPP price adjustment in May 2007, the
                 positive balance in the variance account has increased due
                 to wholesale electricity prices being lower than forecast.
                 The price of natural gas, which is used as a fuel by some
                 generators, was lower than expected and the unexpected
                 significant appreciation in the Canadian dollar was also a
                 major contributing factor with fuels such as natural gas and
                 coal purchased by generators in U.S. dollars. To clear the
                 surplus over the next 12 months, the Board has included a
                 credit of 0.3 cents per kWh in the new RPP prices.

    Time-of-Use  Milton Hydro and Chatham-Kent Hydro are currently the only
    (TOU)        utilities in Ontario that charge TOU prices for their
    pricing      residential and small business consumers.

    OPG Rebate   If consumers buy electricity under the RPP, an estimate of
    and          the OPG Rebate and the Provincial Benefit is already
    Provincial   reflected in the RPP price on the "Electricity" line of the
    Benefit      bill. For consumers that buy from an electricity retailer,
                 the Provincial Benefit and OPG Rebate are not included in
                 the contract price offered by the retailer, so on the bill
                 it's shown as a separate item.

                 Provincial Benefit: It can be a credit or a charge, and
                 reflects the difference between regulated and contract
                 prices for electricity paid to certain generators (as well
                 as Conservation & Demand Management initiatives) and the
                 market prices they would have received had they not been
                 subject to government regulation or contracts. It's forecast
                 to be a charge of 0.22 cents per kWh in RPP prices effective
                 November 1st.

                 OPG Rebate: The Government placed a cap on the amount paid
                 to certain generation facilities owned by Ontario Power
                 Generation (OPG). Consumers receive a rebate for any
                 revenues from those facilities exceeding the cap. The
                 estimated credit included in RPP prices is 0.42 cents per
                 kWh.

                 Net Impact: The combined effect of the OPG Rebate and
                 Provincial Benefit is an estimated credit of 0.2 cents per
                 kWh "built in" to RPP prices.

                 This is a forecast and, for consumers with a retailer, they
                 will pay or receive actual amounts for these two items on
                 their bills.

    For more     Details on today's announced electricity prices are
    information  available via the Board's website at www.oeb.gov.on.ca.

                 The Ontario Energy Board regulates the province's
                 electricity and natural gas sectors in the public interest.
                 It envisions a healthy and efficient energy sector with
                 informed consumers, and works towards this vision through
                 regulatory processes that are effective, fair and
                 transparent.

    




For further information:

For further information: Paul Crawford, Ontario Energy Board, (416)
440-7607; Eric Pelletier, Ontario Energy Board, (416) 440-7685


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