The price that most residential and small business consumers in Ontario pay for their electricity depends on when they use it. Under time-of-use pricing, consumers pay higher prices for electricity when it is more expensive to produce — and lower prices when electricity is less expensive. This pricing framework gives many customers the opportunity to lower electricity costs by shifting usage to less expensive times of day. By adopting this approach, they are also helping to smooth out peaks in demand.
Three Time-of-Use Price Periods
There are three time-of-use price periods that vary according to the time of day and day of the week: on-peak, mid-peak and off-peak. These price periods also change by season. The winter price schedule incorporates both a morning and evening peak, reflecting increased lighting needs during the shorter days. By contrast, the summer peak takes place in the afternoon when air conditioning use is at its highest. In all, off-peak periods account for roughly 50 per cent of the week. Off-peak rates also apply on
holidays such as Canada Day.
How Time-of-Use Rates Are Set
Ontario Energy Board reviews time-of-use and tiered rates every six months. These regulated rates are based on projections of consumption - how much power consumers will use — combined with the estimated cost of power over that time period. If the previous projection was either too high or low, that will also be accounted for in the new rates.
New rates take effect May 1 and November 1 of each calendar year.
Current Time-of-Use Rates
7.2 ¢/kWh off-peak
10.9 ¢/kWh mid-peak
12.9 ¢/kWh on-peak
Other Rates — Tiered Pricing and Retail Contracts
Most residential and small business customers in Ontario are on time-of-use electricity pricing. The remaining customers are either on tiered pricing or have a contract with an energy retailer.
tiered pricing, residential and small business customers without a smart meter are allocated a certain amount of energy each month at a set price. When they pass that threshold, their rate goes up for all additional electricity used. There are different consumption thresholds for home and business customers.
Electricity consumers can choose to buy their power from a retailer. They will have
signed a contract enabling them to pay a fixed rate that is independent of time-of-use and tiered pricing. These customers also pay the
Global Adjustment in addition to their electricity consumption.
Small Business Threshold
Small businesses pay the same rates as residential customers. The billing class for small businesses changes when their average peak demand hits 50 kilowatts, which translates into electricity bills of approximately $2,000 per month and higher.
Other Electricity Charges
The electricity (commodity) charge is just one component of your bill. There are other charges on your electricity bill that reflect the cost of delivering the electricity, ensuring reliability of the power system, and managing your account.
This covers the cost of delivering electricity from the generator to your local distribution company (LDC), and then to your home or business. It includes the costs to build and maintain the transmission and distribution lines, towers and equipment and operate the provincial and local electricity systems.
Some of these charges are fixed and do not change from month to month, while others are variable and increase or decrease depending on the amount of electricity that you use.
The Regulatory Charge comprises two components which are approved by the Ontario Energy Board (OEB) — the
Wholesale Market Services Charge and the
Standard Supply Service Charge.
OEB website for more information about your electricity bill. If you have a contract with an energy retailer, see charges payable under a
Wholesale Market Services Charge
This charge represents the cost to administer the wholesale electricity system, operate the electricity market, and maintain the reliability of the provincial grid. These costs include:
Physical Limitations and Losses: These are losses that occur as electricity flows across transmission lines. The IESO also collects other costs incurred in operating the power grid, such as when it must take actions to avoid overloads on the transmission system in cases of surges in demand.
Energy Reliability: There may be occasions when the balance between generation and demand is affected by an unanticipated event, such as equipment failure or a surge in consumption. The IESO purchases a certain level of spare capacity or reserve that is available on short notice to restore the balance.
IESO Administration Service: The IESO charges an administrative fee to manage the power system and operate the wholesale electricity market in Ontario. The rate is less than one-tenth of a cent per kilowatt-hour.
The IESO has reduced its administrative service charge by approximately 16 per cent since the electricity marketplace opened in 2002.
OPA Administration Fee: This fee pays for the administration costs of the Ontario Power Authority. The OPA's mandate includes planning for generation, demand management, conservation, and transmission in Ontario. This fee does not include the costs payable under contracts for generation supply or for delivery of conservation and demand management programs entered into by the OPA.
Rural and Remote Electricity Rate Protection: This charge is used to partly offset the higher cost of providing electricity in rural and remote areas. The Rural and Remote Electricity Rate remained unchanged at 0.12 ¢/kWh effective Jan. 1, 2013.
Renewable Connections: Some of the costs incurred by a utility to connect renewable generation facilities can be recovered from consumers throughout the province. This cost recovery is subject to OEB approval.
Standard Supply Service Charge
This charge is designed to cover a portion of an LDC's administrative costs to provide electricity to customers who buy their electricity from them, instead of a licensed electricity retailer. These rates are set by the OEB and are the same for all LDCs across the province.
Debt Retirement Charge
This charge of 0.7 ¢/kWh has been set by the Ontario Ministry of Finance to pay down the residual stranded debt of the former Ontario Hydro.