TORONTO, Oct. 18 /CNW/ - Today the Ontario Energy Board (OEB) released electricity commodity prices that take effect November 1, 2010.
Regulated Price Plan (RPP) prices, reviewed semi-annually, are reflected on the "Electricity" line of residential and small business consumer bills.
The new tiered RPP prices and the decrease from current prices are as follows:
- 6.4 cents per kWh up to 1,000 kWh each month (Down 0.1 cents); and
- 7.4 cents per kWh above that (Down 0.1 cents).
Despite a projected rise in market prices over the next 12 months, tiered prices are decreasing because electricity demand was higher than expected during the summer, which resulted in a lower price impact of some fixed generating costs, as well as a decrease in payments made to coal and gas-fired generators.
Effective November 1 for residential consumers, the seasonal threshold below which the lower tiered price applies will change from 600 kWh to 1,000 kWh per month. The threshold for non-residential RPP consumers stays at 750 kWh throughout the year.
Primarily as a result of that threshold change, residential consumers using 800 kWh of electricity a month will see their electricity bills decrease by approximately $2.80 per month, which is about a 2.6% impact on the total bill.
Time-of-use (TOU) prices are changing in two pricing periods and remaining the same in the third as follows:
- Off-peak Price at 5.1 ¢/kWh (Down 0.2 cents)
- Mid-peak Price at 8.1 ¢/kWh (Up 0.1 cents)
- On-peak Price at 9.9 ¢/kWh (no change)
The estimated bill impact with the change in TOU prices and forecast changes in general consumption patterns over the three TOU pricing periods is a decrease of $1.21, or about a 1.1% decrease in the total bill, for a residential consumer who uses 800 kWh of electricity a month.
As part of its commitment to ensuring that TOU pricing is fair to consumers and appropriately encourages shifting electricity use away from higher priced peak periods, the Board is initiating a consultation process to review the methodology used for setting TOU prices. Preliminary work on this review, which was identified in our 2010-2014 business plan, began in the summer. As part of the consultation, in the near future the Board expects to release an analysis of the current TOU pricing structure and methodology compared to practices and experience elsewhere.
RPP prices are based on a 12-month forecast and are designed to provide stable and predictable electricity pricing as well as to ensure that the price residential and small business consumers pay recovers the payments made to generators that supply the electricity they consume.
The Ontario Energy Board regulates the province's electricity and natural gas sectors in the public interest. It envisions a viable and efficient energy sector with informed consumers served by responsive regulatory processes that are effective, fair and transparent.
For more information, please refer to the attached backgrounder, visit the OEB website at www.oeb.gov.on.ca or contact our Consumer Relations Centre at 416-314-2455 or toll-free at 1-877-632-2727.
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Backgrounder
October 18, 2010
| About the RPP |
Both tiered and time-of-use (TOU) prices form part of the OEB's Regulated Price Plan (RPP). The RPP is designed to ensure the price that residential and small business consumers on the RPP pay for electricity recovers the payments made to generators that supply the electricity they consume. RPP prices are set to recover the total cost of that supply, regardless of which of these prices (tiered or TOU) distributors use to bill for the electricity consumed by their RPP customers. RPP prices, reviewed semi-annually, are reflected on the "Electricity" line of residential and small business RPP consumer bills, representing about half the total bill. Consumers who buy their electricity from a retailer pay the commodity price set out in their contracts and are not affected by changes in RPP prices. A residential or small business customer that has a retail contract will also see a separate line item on their bill for what is called the Provincial Benefit. For customers on the RPP, the Provincial Benefit is already factored in to RPP prices. The Provincial Benefit principally accounts for differences between the market price of electricity and prices paid to regulated and contracted generators. |
| Pricing factors | Primary reasons why there is a change in RPP prices include:
|
| Bill impact (tiered) |
For RPP consumers paying tiered prices, the change in the seasonal tier threshold (from 600 kWh/month to 1,000 kWh/month) and the change in tiered prices results in a decrease of $2.80/month in the estimated bill for residential consumers using 800 kWh of electricity per month. This is about a 2.6% reduction in the total bill. |
| Bill impact time-of-use (TOU) |
For RPP consumers paying TOU prices, the different pricing time periods change from summer to winter and this can have a small impact on the bill. In addition, TOU consumption forecasts for the three TOU pricing periods can change from forecast to forecast. The estimated bill impact of today's change in TOU prices and of forecast changes in general consumption patterns over the three TOU pricing periods is a decrease of $1.21, or about a 1.1% decrease in the total bill, for a residential consumer that uses 800 kWh of electricity per month. |
| Setting TOU Prices | TOU prices are set to achieve a ratio between the different TOU pricing periods that both reflects the cost of RPP electricity supply while also providing an appropriate incentive to reduce overall consumption and/or shift consumption to lower priced periods. When residential and small business consumers reduce and/or shift some consumption to off-peak times, there can be a corresponding reduction in their own electricity costs. There can also be a corresponding reduction in costs for the system as a whole, by reducing the need for power that comes from the most expensive generators; that is, those generators that tend to run only during peak times. |
| TOU Review | The Board is committed to ensuring that TOU pricing is fair to consumers and appropriately encourages shifting electricity use away from higher priced peak periods. The Board is initiating a consultation process to review the methodology used for setting TOU prices. Preliminary work on this review, which was identified in our 2010-2014 business plan, began in the summer. As part of the consultation, the Board expects to release in the near future an analysis of the current TOU pricing structure and methodology compared to practices and experience elsewhere. More details on the consultation process can be found in a letter to all interested parties issued by the Board today. |
| Other Board initiatives | The Board has put into place improved customer service rules for electricity utilities. One of the new requirements is that, starting in April 2011, all utilities have to offer an equal payment plan to their residential consumers, which provides consumers with another tool to manage their electricity payments. Utilities are also required to carry out conservation programs, including programs that focus on reducing consumers' peak period demand on the electricity system. Lastly, the Board is working with utilities, social service agencies and consumer representatives to develop enhanced programs to help low-income energy consumers better manage their bill payments for the 2010-2011 heating season. |
| TOU/Smart Meter status | As of September 2010, there were approximately 4.3 million smart meters installed (92% of all residential and small business consumers on RPP) in Ontario. Of that number, 947,064 consumers were paying TOU prices. |
| For more information | RPP prices are one portion of total electricity bills and do not include other charges like delivery. For more information, visit the "Your Utility" section of the OEB's consumer website at www.oeb.gov.on.ca. |
Ce document est aussi disponible en français.
For further information:
| Media Inquiries Paul Crawford Ontario Energy Board 416-544-5171 |
Public Inquiries 416-314-2455 Or 1-877-632-2727 |
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