Ontario has a troubling history when it comes to delivering power to our cities and communities. Customers are furious about rising hydro costs with some rural consumers not even being able to pay it due to the incredibly high delivery charge. The need for power reform was never been greater and major system restructuring along with policy changes are needed.
Hopefully, this is about to change.
The new Ontario “Fair Hydro Plan”, being rolled out this summer, will be providing households with a 25% reduction on their monthly bills. Small businesses, farmers, and those living in certain rural communities may be eligible for even greater reductions.
In January, there was an 8% rebate introduced to deliver some sort of relief for struggling consumers, however, that 8% was simply a drop in the bucket compared to how high rates have risen in the recent decade. Why have they risen so drastically you ask? Here are a few reasons.
- Oversupply of energy
We are currently generating more power than we consume in Ontario, which causes our province to sell off the excess to the U.S., at rates we below production costs. Additionally, demand is low as more and more people and businesses are retrofitting equipment to be high efficiency as well as implementing renewable energy sources. So while the demand is low, the need for transmission and distribution is high.
- Time of use pricing
Smart meters had the goal of charging consumers for electricity based on the time of day (more expensive when demand is highest) with the goal of driving down consumption during those periods. The thorn here is peak demand, being charged for the peak period throughout the day and most businesses operate during on-peak hours.
The need to invest over $50 billion into generation, transmission, and distribution had added a considerable amount to our hydro bills. This major investment took place at once due to our governments failure to invest in proper maintenance and upkeep of much of our infrastructure over time.
- Coal fired plant closures
The decision was made to eliminate Ontario’s use of coal fired power plants would help shift towards cleaner, more renewable sources of energy has created major costs as well.
Some of the goals and methods to ensure this reduction takes place is as follows;
- Ontarios Fair Hydro Plan – Improve efficiencies and modernize the market in conjunction with the IESO and OEB
- Expanding the Rural or Remote Rate Protection program (RRRP) with the goal of providing relief on distribution charges
- Local Distribution Companies will be able to distribute the Affordability Fund to customers who do not qualify for low-income programs
- First Nations consumers on-reserve will receive a 100% rebate on the delivery line on their bills.
- The Industrial Conservation Initiative (ICI) will expand from 1mW to 500kW.
Many of these programs will add relief to consumers monthly hydro costs, however, time will tell if these costs will be rolled into other tax stream or will provide overall relief for families, small business, and industry alike.