Get set for a hydro bill shock

It's not our fault, say spokesmen for St. Catharines Hydro

St. Catharines Standard, September 17, 2002
by Grant LaFleche

If you haven't opened your latest hydro bill yet, brace yourself. Chances are, it will hit your pocketbook like never before.

St. Catharines Hydro officials say the recently mailed bills for July and August show an average increase of 30 per cent thanks to a combination of hot weather and the newly deregulated power market.

But the city-owned utility says it's not to blame for the sudden rate hike.

"We don't control the price of the commodity, the electricity," said Frank Fabiano, vice-president of customer service at St. Catharines Hydro, during a meeting with The Standard's editorial board Monday. "We just distribute the electricity on our system in St. Catharines."

Nevertheless, as customers have been receiving their bills this week, Fabiano has received many calls from irritated customers.

"They are very, very angry," he said. "Many are confused and don't understand what they are looking at on their bills."

This is the first time many local residents will see the effects of deregulation on their bills, he said.

The energy market in Ontario was deregulated in May by the provincial government, giving residents the choice of staying with their standard provider, such as St. Catharines Hydro, or signing on with a retail provider.

Under provincial regulations, standard providers must buy electricity from the Independent Electricity Market Operator, more commonly called the IMO.

The IMO, based on bids placed by power generators, sets the price for all providers in the province on an hourly basis. Customers pay for their usage based on the average rate for the billing period, Fabiano said.

That price is subject to change as it is based on supply and demand. "So basically, on high-demand days, the price goes up during peak usage hours," Fabiano said.

Retail providers, on the other hand, buy power from generators at a fixed price. Residents who sign up with a retailer pay a fixed rate for the life of their contract.

Customers of St. Catharines Hydro are now facing high bills in part because the cost of electricity in the deregulated market has risen, and because of the hot summer. Fabiano said the demand for electricity during August, driven by extensive use of air conditioners, broke the previous record.

Where consumers were paying an average of 4.2 cents per kilowatt/hour before deregulation, during July and August that average rose to 6.6 cents.

During peak hours, from 7 a.m. to 7 p.m., the rate can get into double digits. In fact, that is still the case even as summer gives way to fall.

According to the IMO Web site, which updates the electricity rate daily, the price hit 28.9 cents by 4 p.m. Monday.

Customers will also notice a breakdown of charges on their bills they did not see before, including a "debt retirement charge" that Queen's Park is charging all Ontario users to pay down the debt of the former Ontario Hydro.

"This is a charge that has been mandated by the government," said John Kerklaan, president of St. Catharines Hydro. "We have no choice but to include it on our bills."

Kerklaan said the IMO-set electricity price and the debt-retirement charge make up more than half the bill.

Ultimately, he said, the best way for customers to lower their costs is to reduce power consumption.

This means turning down air conditioners, particularly during peak hours. Kerklaan also suggests turning off lights when you don't need them and making efficient use of washers and dryers by ensuring you have a full load.

You can find out what the IMO is charging utilities every day by visiting its Web site {but remember that these "official" prices they provide do not include the price of imported electricity}

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