Energy rebate well hidden

Canadian Press - May 22, 2001
by Louise Elliott

Ontario consumers may be unwittingly signing away a valuable rebate on their electricity prices to private utility companies, says the head of an energy watchdog group.

Private electricity marketing companies have been asking homeowners to sign on for a fixed electricity rate when Ontario's electricity market is opened to competition, some time next spring.

But Tom Adams, director of Energy Probe, says consumers may not notice a clause which, in many of the agreements, hands a potential rebate over to the electricity firm.

While there may be nothing wrong with such a clause, most consumers don't even know the Market Power Mitigation rebate exists, Adams says. "If the price is right, it's a balanced transaction, but the problem ... the public agencies aren't doing their job of explaining it to us."

The rebate is supposed to kick in for householders when the yearly average cost of electricity rises above 3.8 cents per kilowatt hour.

The rebate is meant to shield consumers from price hikes such as those in Alberta and California, where deregulated markets have seen a tripling of prices and rolling blackouts.

Intended to reduce the market dominance of Ontario Power Generation, which at the time of deregulation will still control 65% of the market, the rebate will be paid out by the generator for the first four years after deregulation.

"If they control 65% of the market (at the time of deregulation), which is their current position, you'll get a rebate on about 50% of your cost above 3.8," Adams said.

For example, a typical residential customer using 10,000 kilowatt hours a year at an average electricity price of 5.65 cents a kilowatt hour would get a rebate of about $139.

But that information is hard to come by, Adams says.

By its own admission, the Ontario Energy Board has so far failed to produce any printed information geared to residential customers.

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