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Here are answers to some commonly asked questions about the Provincial Benefit.
What is the Provincial Benefit?
The Provincial Benefit ensures reliability by providing adequate generating capacity for Ontario. It accounts for differences between the spot market price and the rates paid to regulated and contracted generators. As a result, its value may be positive or negative, depending on the fluctuation of prices in the spot market.
The rate is set to reflect the difference between the spot market price and:
- The regulated rate paid to Ontario Power Generation’s baseload generating stations;
- Payments made to suppliers that have been awarded contracts through the Ontario Power Authority. These include new gas-fired facilities, renewable facilities (like wind farms) and demand response programs; and
- Contracted rates paid to Non-Utility Generators.
Who is affected by the Provincial Benefit?
This adjustment applies to business customers who pay the spot market price and customers who have signed a contract with a licensed electricity retailer. It appears as a separate line on the bill. For customers who pay the Regulated Price Plan, it is factored into the rate set by the Ontario Energy Board, and does not appear as a separate line item.
Why does the Provincial Benefit vary from month to month?
The Provincial Benefit increases and decreases in response to changes in spot market prices. Over the last year, the spot market price has been unusually low. This has been a result of low demand (due to the economy and the weather) and good availability of generation. The Provincial Benefit has been higher in order to cover the additional costs of the contracted and other regulated generation.
Once both costs are factored together – the wholesale price of electricity has remained reasonably constant.
How will I know what the Provincial Benefit is?
The Independent Electricity System Operator provides monthly updates on the most recent Provincial Benefit calculations. The Ontario Energy Board also offers information about your energy options.
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