
TORONTO: Ontario's opposition says people are afraid to open their hydro bills since the HST added another eight per cent to electricity costs on July 1, and the unpopular sales tax isn't the only thing making power less affordable and monthly statements more confusing.
The Ontario government is spending billions of dollars to modernize what is says was a dirty and unreliable electricity system, costs that are being passed on to customers. At the same time, the province is also shutting down relatively cheap coal-fired generation and replacing it with much more expensive wind and solar power.
The Liberal government is also spending more than $1 billion to install so-called smart meters in people's homes that force them to switch to time-of-use pricing, with the highest price at peak demand times nearly double the rate people had been paying before.
The time-of-use pricing means customers see three separate lines for their electricity usage: on-peak, mid-peak and off-peak.
Hydro bills already list a dizzying array of charges on top of the actual electricity that's used, including delivery fees, a loss factor adjustment for power that you don't use but the utility loses, regulatory charges, a debt retirement charge and of course the HST.
What do they all mean?
The delivery fees are often as much or even more than the actual electricity used. They cover the cost of transmitting the power along high-voltage lines and then distributing it to your home on lower-powered lines.
The loss factor is a multiplier used by your local utility to offset the electricity that drains from the lines on the way to your house. You actually end up paying for electricity you never use. Toronto Hydro, for example, uses a loss factor adjustment of 1.0376 per cent.
The debt retirement charge, which averages about $5.60 a month for homeowners, is to deal with a $20-billion stranded debt from the former Ontario Hydro.
Another line on hydro bills is for regulatory charges, which includes 0.65 cents per kWh for a wholesale operations charge plus a charge of 0.03725 cents per kWh for one year to recover costs associated with funding conservation and renewable energy programs.
There's also the alphabet soup of provincial agencies and companies that make up Ontario's energy sector, which can make understanding your hydro bill a frustrating exercise.
In addition to Hydro One and Ontario Power Generation (OPG), there is also the Ontario Power Authority (OPA), the Ontario Energy Board (OEB), the Independent Electricity System Operator (IESO), the Ontario Electricity Financial Corp. (OEFC) and the Electrical Safety Authority (ESA).
What do they all do?
Ontario Power Generation has 12,000 employees and operates 65 hydroelectric, three nuclear and five thermal generating stations and two wind power turbines, generating about 70 per cent of Ontario's electricity. OPG's net income rose to $623 million last year from $88 million in 2008. It's asking for an increase in rates that it estimates would add $1.86 to the average monthly bill starting next March.
Hydro One, with 5,400 employees, owns and operates virtually all of Ontario's electricity transmission system, and had a net income of $470 million in 2009. The agency also doubles as a local distribution company (LDC) for 1.3 million customers in 79 smaller and rural communities across Ontario.
The Independent Electricity System Operator (IESO), which has a $123-million budget and a staff of 450, is like the air traffic controller of the power grid. It operates the system in real time, monitoring demand and arranging for supply to be generated and directing the flow of electricity across the grid. The IESO adds .08 cents to each kilowatt hour consumers use.
A Local Distribution Company (LDC) is your local utility, such as Algoma Power, the Chapleau Public Utilities Commission or Toronto Hydro, which retail electricity to homeowners. The Ontario Energy Board gave LDCs an increase in their guaranteed return on equity this year of 10 per cent, but the regulator says their actual profits will be closer to three per cent than 10.
The Ontario Power Authority has 228 employees and a budget of $65 million a year. The OPA develops a long-term plan for the electricity sector and contracts needed generation in addition to designing and co-ordinating conservation programs.
The Ontario Energy Board is the regulator of the electricity system, and it also sets electricity prices for homeowners. It ensures that market participants in the natural gas and electricity sectors comply with regulatory obligations. Its $34.5-million budget _ $26 million of which goes to pay salaries for its 184 employees _ is funded by charges to natural gas and electricity industry participants.
The Ontario Electricity Financial Corp. (OEFC) was set up to deal with the $20-billion stranded debt from the former Ontario Hydro, a figure the Liberals say they've lowered to below $15 billion since they came to power in 2003.
The Electrical Safety Authority was another agency created when Ontario Hydro was dismantled by former premier Mike Harris. It describes itself as a not-for-profit, self-funded organization which charges fees for inspecting electrical installations in homes and commercial buildings. It has no apparent impact on home hydro bills.