Canada's Condominium Magazine

Relief for hydro customers as government cuts rates by 25 per cent

Not that it matters a great deal—people don’t care much about other people’s pain—but Ontarians do not pay the highest residential electricity rates in the world. In Canada, yes, but if you lived in New York City or San Francisco or just about anywhere in Europe, you’d pay more: $233.87 in New York compared to $142.40 in Toronto according to estimates, based on 750 kilowatt hours of usage, put together by the Globe and Mail. The high cost of electricity in Ontario bugs people so much that it headed the list of provincial issues of concern, above healthcare, jobs and the economy, taxes, education and the environment, in a survey of Ontarians last fall. Hydro rates in Ontario have tripled over the past fourteen years.

Now the government has announced that residential rates will go down by 25 per cent this year. That includes the 8 per cent rebate already announced in January. A statement from the premier’s office says that many small businesses and farms would also benefit from the cut.

Premier Kathleen Wynne. Photo: Ernest Doroszuk, Toronto Sun

The government tries to justify the higher costs we have had to pay by referring to years of neglect of the grid by previous governments, and to its own efforts to invest in new, green infrastructure. Refurbishing nuclear power plants to the tune of $50 billion is a big expenditure, bigger than anything done anywhere else in Canada. But again, people don’t care much about that: they care about their own hydro bills.

Like the Toronto guy with the cottage in Muskoka who used just $1.30 worth of electricity, but had to pay $82.53 for Hydro One to deliver it. And there are even more ridiculous examples of delivery costs that are many times higher than the cost of the electricity used. It calls into question the point of trying to conserve energy if you still have to pay so much to have it brought into your home. The premier, Kathleen Wynne, could not help but admit that some people pay disproportionately high delivery charges.

It almost always costs more for services in more remote areas, of course. In an urban high density area like downtown Toronto, with 3,000 or more customers and at least 60 customers per kilometer of power line, the distribution volume charge is 0.91 ¢. In low-density areas like Muskoka, where, as they say, there are more hydro poles than customers, the rate is 3.74 ¢. It has been widely reported in Ontario that many rural customers are faced with hydro bills of several hundred dollars a month, forcing those on fixed or modest incomes to choose between paying their bills and buying groceries.

Source: Globe and Mail

In contrast, if you lived in a 700 square foot high-rise condo in downtown Toronto, your hydro bill, based on rates in force on April 1, 2016, would have been around $55, based on consumption of 286 kilowatt hours of electricity per month. A New Yorker would have paid $87.98. Even in Detroit the bill would have been higher, based on the Globe and Mail estimates. But those lucky Montrealers would be laughing, paying just $21.91.

According to Hydro One, the delivery charge includes charges for things like meter reading, billing, customer service and account maintenance, as well as the costs of building and maintaining the distribution system, and a charge for operating the high-voltage transmitters that carry the electricity from generating stations to the utility. Under the terms of the cuts announced today, some 800,000 hydro customers could see distribution charge relief, the government says.

Before today’s announcement, the government had been forecasting higher and higher electricity bills for the foreseeable future. The average residential bill was expected to increase by 52 per cent between 2013 and 2032, rising from $138 to $210. Now the government is saying that this was unfair, and that the burden of paying for all of the system improvements it has made should not be borne by today’s ratepayers, but should be spread out over more years.

Premier Wynne commented that her government was, in effect, refinancing the mortgage, making smaller monthly payments, and taking longer to pay it off. There will be more interest to pay as a result, but the short-term relief will be welcome to ratepayers.

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