Electricity prices are dropping again on July 1

TORONTO, June 22, 2017 /CNW/ - The Ontario Energy Board (OEB) today announced that electricity prices will go down on July 1.  These reductions flow from the government's Fair Hydro Plan, and apply to different customers in different ways depending on how they buy their electricity. 

For residential and small business customers that buy their electricity from their utility, the OEB has set new lower Regulated Price Plan (RPP) electricity prices that build on the reduction in RPP prices that came into effect on May 1.  With the new RPP prices that will start to apply on July 1, the total bill for the proxy customer described under the Fair Hydro Act, 2017 will be about $121. That is about $41 or 25% lower than it would have been without the following mitigation: 

  • the planned refinancing of a portion of the costs of the Global Adjustment (GA), as reflected in the new RPP prices;
  • the 8% rebate, equivalent to the provincial portion of the HST, that has been in place since January 1, 2017;
  • the impact of removing most of the cost of the Rural and Remote Rate Protection program from electricity bills, which will now be paid for from provincial revenues; and
  • the impact of removing the cost of the Ontario Electricity Support Program (OESP) from electricity bills.  The OESP will continue to be available to help eligible low-income customers reduce their electricity bills, and will also be paid for from provincial revenues.

For other customers that are eligible for electricity bill reductions under the Fair Hydro Act, 2017, the OEB has set a credit that will reduce their GA charges.  These include customers that are eligible for the RPP but have chosen a contract with an energy retailer or market-based pricing.  The credit is designed to provide these customers with a level of benefit that corresponds with the benefit being provided to the proxy customer through the lower RPP prices announced today. 

The table below shows two sets of prices: what time-of-use (TOU) prices would otherwise have been for RPP customers during the 2017 summer period (May 1, 2017 to October 31, 2017); and the lower TOU prices now set by the OEB to start on July 1, 2017.

TOU price periods

TOU prices that would have been
in effect during the 2017 summer
period without any Fair Hydro Act,
2017
reductions

TOU prices reflecting the
Fair Hydro Act, 2017
reductions effective
July 1, 2017

Off-Peak

9.1 ¢/kWh

6.5 ¢/kWh

Mid-Peak

13.3 ¢/kWh

9.5 ¢/kWh

On-Peak

18.5 ¢/kWh

13.2 ¢/kWh

 

The table below shows the same sets of prices for RPP customers who pay tiered prices.

Price tiers

Tiered prices that would have
been in effect during the 2017
summer period without any
Fair Hydro Act, 2017 reductions

Tiered prices reflecting
the Fair Hydro Act, 2017
reductions effective
July 1, 2017

Tier 1

10.7 ¢/kWh

7.7 ¢/kWh

Tier 2

12.5 ¢/kWh

9.0 ¢/kWh

 

The GA credit that applies to other eligible customers has been set by the OEB at $32.90/MWh (or about 3.3¢/kWh).

The new RPP prices and the GA credit will be in effect until April 30, 2018.  At that time, the OEB will reset RPP prices and the GA credit in a way that holds increases to the rate of inflation in accordance with legislation.

For more information on how the OEB set the new RPP prices and the GA credit that come into effect on July 1, see the OEB Backgrounder online at www.oeb.ca/sites/default/files/rpp-backgrounder-20170622.pdf.

For more information on how the Fair Hydro Act, 2017 affects different parts of an electricity bill, please visit the OEB's website at www.oeb.ca/newsroom/2017/fair-hydro-act-2017.

About the Ontario Energy Board

The Ontario Energy Board (OEB) is an independent and impartial public 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.

Contact Us

For more information, please visit the OEB website at oeb.ca or contact us directly.

Ce document est aussi disponible en français.

BACKGROUNDER: Electricity Prices Are Dropping Again on July 1

Reason for New Prices

The Ontario Energy Board (OEB) has set new lower Regulated Price Plan (RPP) electricity prices to give effect to reductions that flow from the government's Fair Hydro Plan. These build on the reduction in RPP prices that came into effect when the OEB set RPP prices effective May 1.

 

The OEB has also set a new credit for customers that are eligible for electricity bill reductions under the Fair Hydro Act, 2017 but are not paying RPP prices.  This credit will reduce the Global Adjustment (GA) charges paid by these customers.

 

The new RPP prices and GA credit will apply to electricity used between July 1, 2017 and April 30, 2018.  For May 1, 2018, the OEB will reset RPP prices and the GA credit in a way that holds increases to the rate of inflation in accordance with legislation.

 

For more information on how the Fair Hydro Act, 2017 affects different parts of an electricity bill, please visit the OEB's website at www.oeb.ca/newsroom/2017/fair-hydro-act-2017.

Bill Impact of New Prices

With the new RPP prices that start to apply on July 1, the total bill will be about $121 for the "proxy" customer described under the Fair Hydro Act, 2017. This is about $41 or 25% lower for the proxy customer than it would have been without the reductions called for in the Fair Hydro Act, 2017.

 

Because the RPP prices calculated for this proxy customer apply to all RPP customers, the total bill impact for individual customers across the province may vary depending on the customer's electricity usage and the utility that serves them.

 

The GA credit is designed to provide eligible non-RPP customers with a level of benefit that corresponds with the benefit being provided to the proxy customer through the lower RPP prices announced today.  

Who is Affected

When the OEB sets electricity prices, the changes usually affect only residential and small business customers that buy their electricity from their utility and are covered by the RPP.

 

This time, a larger number of customers will be affected.  The GA credit that has been set by the OEB for July 1 will apply to:

  • customers that are eligible for the RPP but have chosen a contract with an energy retailer or market-based pricing; and
  • customers that are not eligible for the RPP but are eligible for the 8% rebate that came into effect on January 1, 2017 under the Ontario Rebate for Electricity Consumers Act, 2017.

These customers are eligible for bill reductions under the Fair Hydro Act, 2017.  They will see their bills lowered through the use of the GA credit that will reduce the amount of the GA on their bills.

What is Included in the 25% Bill Reduction?

The 25% total bill reduction that is being delivered for the proxy customer includes the impact of the following measures: 

  • the planned refinancing of a portion of the costs of the GA, as reflected in the new RPP prices;
  • the 8% rebate, equivalent to the provincial portion of the HST, that has been in place since January 1, 2017;
  • the impact of removing most of the cost of the Rural and Remote Rate Protection program from electricity bills, which will now be paid for from provincial revenues; and
  • the impact of removing the cost of the Ontario Electricity Support Program (OESP) from electricity bills.  The OESP will continue to be available to help eligible low-income customers reduce their electricity bills, and will also be paid for from provincial revenues.

What is Meant by a "Proxy" Customer?

The Fair Hydro Act, 2017 establishes a framework for lowering electricity bills for all residential customers, as many as half a million small businesses and farms and some others.

 

Because distribution rates vary across the province and customers use different amounts of electricity, the Fair Hydro Act, 2017 establishes a proxy customer for the OEB to use when setting RPP electricity prices to give effect to the bill reductions.  Under the Fair Hydro Act, 2017, the "proxy" customer is described as a residential customer of Toronto Hydro who uses 750 kWh a month, pays time-of-use (TOU) RPP prices and has the TOU consumption profile of a typical residential customer.

 

As required by the Fair Hydro Act, 2017, RPP prices have been set by the OEB to deliver the 25% reduction for this proxy customer.  These new prices apply to all RPP customers across Ontario. The total bill impact for individual customers across the province may vary depending on the customer's electricity usage and the utility that serves them.

What is the GA Credit?

Customers that are not on the RPP but that are eligible for electricity bill reductions under the Fair Hydro Act, 2017 will see their bills lowered through a reduction in their GA charges in each billing period. These customers include those that are eligible for the RPP but have chosen a contract with an energy retailer or market-based pricing instead.

 

The GA credit set by the OEB is designed to provide these customers with a level of benefit that corresponds with the benefit being provided to the proxy customer through the lower RPP prices announced today.  It is based on the difference between what RPP prices would have been for the proxy customer without the Fair Hydro Act, 2017 reductions and the new lower RPP prices set by the OEB effective July 1, 2017.

 

Utilities and the IESO, where applicable, will apply the GA credit to each eligible customer's consumption to reduce the GA charges they otherwise would have paid.

Time-of-use Pricing

With TOU prices, customers pay prices that generally reflect the value of electricity supply at different times of the day.

 

There are three time-of-use periods – on-peak, mid-peak and off-peak. Prices are highest during on-peak, lower during mid-peak and lowest during off-peak.

 

TOU prices encourage households and small businesses to use electricity during lower-cost time periods. This can ease pressure on the provincial electricity system, and can also benefit the environment.

 

Nearly all residential customers and many small business customers on the RPP pay time-of-use prices.

Ratio Between On/off peak

The off-peak price is a little less than half the on-peak price. This encourages customers to conserve power when it costs most.

Why Prices Depend on the Time Electricity is Used

TOU prices are like many cell phone rates. They are cheapest when demand is lowest: during the evenings, on weekends and on holidays.

 

In Ontario, when demand is lower, most of the electricity we use comes from sources of power like nuclear generators and large hydroelectric stations, which are designed to run all the time. This is called "baseload" power.

 

As daytime begins, more people and businesses turn on their lights, appliances and devices. As the increased demand exhausts all available baseload power, the province turns to sources that generally cost more, such as natural gas-fired plants that can be called into action quickly to meet rising demand. Renewable sources, such as solar and wind, contribute to our supply needs when they are available.

Summer and Winter Time-of-use Periods

TOU periods are different in the summer than they are in the winter.

 

The difference reflects the seasonal variations in how customers use electricity. During the summer, people use more during the hottest part of the day, when air conditioners are running on high. In winter, with less daylight, electricity use peaks twice: once when people wake up in the morning and turn on their lights and appliances, and again when people get home from work.

For more information, please visit the OEB's website at www.oeb.ca

Call the OEB – For more information, give us a call at 1-877-632-2727 (toll-free) or visit our website at www.oeb.ca.

Ce document est aussi disponible en français. 

SOURCE Ontario Energy Board

For further information: Media Inquiries: 416-544-5171, Email: oebmedia@oeb.ca; Public Inquiries: 416-314-2455 Or 1-877-632-2727

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