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Electricity rates will vary by household and season

Board unveils price framework
`Smart meter' to apply three fees

Toronto Star - Jan. 18, 2005
by John Spears

Consumer electricity prices will vary from season to season according to the amount of power a household uses, says the Ontario Energy Board.

The board also says that consumers with "smart meters" that measure hour-by-hour power consumption will pay three different rates for power, depending on the time of day it is used.

But consumers will have to wait a little longer to find out exactly what prices they'll be paying when the new price regime kicks in this spring.

The energy board's plan released yesterday is only a framework, with blanks left when numbers need to be filled in. The proposal will apply to consumers who have not signed fixed price contracts with retailers.

Among the features of the new pricing regime:

  • Householders with ordinary meters will continue to face a two-price system. They'll pay a lower price for a basic amount of power, and a higher price for any power used in excess of the basic amount.

    The basic or "threshold" amount of power may vary from season to season under the energy board's new plan, but the board hasn't decided what it will be.

    Currently, consumers pay 4.7 cents a kilowatt-hour for the first 750 kilowatt-hours of power they use each month, and 5.5 cents per kilowatt hour for additional power. That covers the energy portion of the bill, which makes up about half the total.

  • Consumers with sophisticated "smart meters" that measure what time of day power is used will face a three-tier pricing system. They'll pay more for power used during period of high demand. But again, no specific prices are suggested.

The energy board can't set prices until Ontario Energy Minister Dwight Duncan decides what rates to charge for power produced by Ontario Power Generation's nuclear and large hydro-electric generators. One expert has estimated that price could be anywhere from 4.5 cents to 5.3 cents a kilowatt-hour.

Julie Girvan, a consultant often hired by consumer groups, said the board seems to be moving toward the system that gas utilities use. They charge consumers an estimated price for several months, and then adjust it with a credit or debit to consumer's accounts to bring it into line with actual prices.

Tom Adams, executive director of Energy Probe, noted that the energy board seems to have shelved the idea of "critical peak pricing." That would allow the energy minister to set a special, short term price a day in advance as a signal for consumers to cut back consumption if it appeared the electricity grid might be under too much stress. If critical peak pricing is abandoned, there's little need to install expensive "smart meters" in every home, as the government proposes, Adams said. Instead, much less expensive meters would do the job.

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