Ontario Electricity Rates Explained

The Mystery of Electricity Bills

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Do you ever wonder how much you are actually paying for your electricity?

There are so many lines and acronyms that it all just looks like nonsense with a price tag. Well it isn’t total nonsense, and the final number is found as follows:

Total cost = (Electricity charges + Delivery Charges + Regulatory Charges)/Electricity consumption(kWh)

But what are all those charges?

Today, I am breaking down the different sections of your Ontario Electricity bill, so you have a better understanding of where your hard-earned cash is going.

Electricity Charges

So, let’s start with the basics. Electricity charges are exactly what they sound like. They are the price you pay for the power you use throughout the month and are determined by either a time-of-use TOU rate or a tiered pricing system.

A Time-of-Use rate means that for each time of day there is a different price per kilowatt-hour. You can see the break down below:

Winter TOU price periods

November 1, 2020 TOU Prices

Off-peak(Weekdays 7 pm – 7 am, weekends and holidays)

10.5 cents/kWh

Mid-Peak (Weekdays 11 am – 5 pm)

15 cents/kWh

On-peak (Weekdays 7 am – 11 am and 5 pm – 7 pm)

21.7 cents/kWh

 

A Tiered pricing system means that you will pay a fixed price for electricity up to a certain level of usage. The current prices are displayed below:

Winter Tier Thresholds

November 1, 2020 Tiered Prices

Tier 1

Residential – First 1000 kWh/month

Non-residential – first 750 kWh/month

12.6 cents/kWh

Tier 2

Residential – Electricity used above 1000 kWh/month

Non-residential – Electricity used above 750 kWh/month

14.6 cents/kWh

 

So that is the first section of your bill, now let’s look at the second: Delivery Charges.

Delivery Charges

Delivery charges is a blanket term that covers many different costs. We’ll break them down individually below:

Customer Service Charges: This charge covers a variety of costs but mainly focuses on costs incurred during billing. These costs are meter reading, billing, customer service, and account maintenance.

Distribution Charges: These are the costs associated with building and maintaining the distribution system and includes things like power lines, poles, and transformer stations. Since, 2019 this has been a fixed charge for customers.

Transmission Charges: This may sound similar to distribution charges but are more specific in what they cover. Transmission charges cover the costs of transmitters operating and maintaining the high-voltage system that delivers electricity from generating stations to you, the customer. 

Line Loss Adjustment: When electricity is transmitted across any distance a portion of that electricity will be lost. The Line Loss Adjustment charge accounts for that loss and converts it into a monetary value. To determine the individual’s cost, your electricity usage is multiplied by an adjustment factor determined by the Ontario Energy Board.

Regulatory Charges

The final portion of your bill is regulatory charges. These cover a number of different costs related to the regulation of Ontario’s electricity market. Here is a breakdown of all of them:

Wholesale Market Service Charge: This charge covers the cost of services provided by the Independent Electricity System Operator or IESO. It also covers some of the costs incurred when a local utility connects renewable microgeneration systems to the grid. An example of this would be the Anorra, a microgeneration wind turbine.

IESO Administration Fee:  The administration fee is another charge that covers quite a few different aspects of electricity generation in Ontario. To start, it covers the costs of managing the high voltage power system and the operation of the wholesale electricity market. The charge also covers costs related to planning power generation, demand management, conservation efforts, and electricity transmission. In short, the administration fee covers the planning of energy use across the province.

Rural and Remote Electricity Rate Protection (RRRP): The RRRP is collected to subsidize certain electricity distributors in rural and remote areas. This is done because it is more expensive to provide services in those areas.

Renewable Connections: This charge covers some of the costs incurred by utilities associated with the connection of large-scale renewable (wind and solar) generation facilities.

Conclusion

So, there you have it. Your total electricity cost is likely much higher than the electricity charge. I hope that next time you open your electricity bill you will have a better understanding of what you are paying for.

If you enjoyed this article, check out this one on Microgeneration, or if you want to start generating your own clean energy and save on energy costs, check out our microgeneration wind turbine, the Anorra.

Thanks for reading!

To learn more about electricity in Ontario visit the Ontario Energy Board website.  

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