Happy New Year: Ontario’s 2016 Power Rate Shell Game

Ontario power rates will increase dramatically in 2016 but tracking the changes will be challenging. The multi-dimensional, inter-temporal shell game of Ontario power rates will kick into overdrive. Here are a few of Official Ontario’s tricks to watch.

Back on November 1, consumers got whacked with a 12.6% year-over-year increase in the commodity portion of their bills. The rapid escalation of Global Adjustment costs in recent months — $1.1 billion for November alone — suggests another great leap forward for the commodity price come next May.

January 1, the Ontario Clean Energy Benefit (OCEB) disappears. The OCEB is a vote buying scheme McGuinty set up to help him over the top in the 2011 election. When it served McGuinty’s interest to justify raising rates, McGuinty’s marketing pitch was all about protecting our grandchildren. When folks started to pick up on the costs of McGuinty’s schemes, he moved to cover up those costs by sticking them to our grandchildren. The OCEB today transfers 10% of the household power bill to future generations by way of the provincial deficit. Eliminating the OCEB will jack up rates by 11% (not 10%).

A number of distribution rate increases appear to have been timed to save the government from OCEB deficit impacts. For example, Toronto Hydro filed with the OEB in September 2014 for a five-year series of rate increases starting 2015 May 1. The first distribution increase for households was to be 21% but the case has still not been decided by the OEB although final arguments in that case were filed in April 2015. The OEB’s delay will bulldoze the recovery of 2015 costs into 2016. Toronto Hydro switches from bimonthly to monthly billing in 2016, which may throw a few consumers off the scent of the rot.

Hydro One’s delivery rates
are going up January 1. When I inquired today with Hydro One as to how much that increase will be I was told that that information is not yet available. No need to plan ahead.

Another exciting development for 2016 will be more cost shifting. OEB has introduced a new policy for all-fixed distribution rates for residential customers that will shift costs from high volume users to low volume users within the residential class.

The Ontario government is removing the Debt Retirement Charge from residential bills. Most customers currently pay 0.7¢ per kWh for the Debt Retirement Charge. A typical customer using 800 kWh a month will see what the government calls a “saving” of $5.60 per month. This “saving” is really a short term cost shift from residentials to commercial consumers, who will see their DRC charge stretched out to 2018. Once the government comes around to understanding the coming insolvency of Ontario Electricity Financial Corporation due to the double whammy of the reduced DRC tax revenue and the Hydro One sale, look for a new DRC on steroids.

The government is also introducing a new race/income/occupancy-based energy welfare program called the Ontario Electricity Support Program (OESP). With the new program, the OEB is now a welfare agency, a task it is utterly unqualified for. The overall project design’s two key principles are to give the government a talking point to respond to concerns about the rate trajectory and to keep welfare costs off the government’s books. OESP is another assault on the principles arising from the Magna Carta of no taxation without representation (like the funding for the Ontario Home Energy Audit and Ontario Home Energy Retrofit programs a few years ago, neither of which was ever audited.) IBM (the computer company) is project managing the OESP. ICF Consulting is doing that actual admin. ICF will have access to mountains of detailed private lifestyle, economic, and racial information about potentially hundreds of thousands of Ontario citizens. The actual financial benefit of the OESP to almost all eligible and registered households will be small relative to the other power rate increases coming at them.

When the government and those benefitting from rising rates take a break from blaming the provincial Auditor General for not understanding the power system, they complain about how consumers don’t understand power rates. They doth protest too much. Keeping consumers confused is actually a central strategy of Official Ontario. New acronyms, new programs, more hidden accounts — all good. The Ontario power rate shell game is engineered to keep you in the dark.

2 Comments

  1. When will all this end? We are being strangled by these hikes in energy rates. Not to mention the provincial debt.

  2. The Hydro One increases are nicely listed here: http://www.hydroone.com/OurCommitment/Connected/Pages/default.aspx

    I also got one with my recent bill which included two pages of “were here to help” & energy saving and shifting tips” and a separate letter sized one telling me about the OESP

    It is amusing that the only one of the 5 pricing changes listed on the above webpage to actually show a dollar & cents amount is the debt retirement charge. All the rest show the percentage increases based on a total bill. They cloud the commodity cost increase (4.4%) and don’t even mention the OESP.

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