Regulated Electricity Rates in Ontario

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Not long after the retail market for electricity deregulated in 2002, the Ontario Energy Board (OEB) developed the Regulated Price Plan (RPP), as a means of ensuring predictable and stable electricity pricing. The RPP is the price (set by the OEB) charged to you for electricity supply by your local utility, and is intended to reflect the true cost of electricity. Utilities do not make a profit on the sale of electricity supply to consumers. All Ontario residential and small business customers that consume less than 250 000 kWh per year are eligible for the RPP. Your RPP provider is different depending on where you live, but the price is the same throughout Ontario.

Did you know?
If your local electricity utility is your supplier, you will be paying the rate set by the OEB. The electricity utility does not gain a profit from the electricity supply, but rather passes on the price to the consumer.

How is the RPP Determined?

The Ontario Energy Board (OEB) sets energy rates and establishes peak periods for both types of regulated electricity rates (Time of Use and Tiered). It based on forecasts for the following year (12 months), which are made every six months. Prices are adjusted with each new forecast, taking into account the new forecast prices, any difference between previous forecasted prices and actual costs. The factors going into these price forecasts include:

  • The accuracy of the previous projection
  • The estimated amount of power the consumers will use
  • The types of power available, and at what costs
  • The projected price of fuel at the time

Is the RPP Based on Market Prices?

While the RPP is based on market prices, it includes several factors that move it away from being a competitively-determined price. The RPP reflects both the hourly Ontario energy price (HOEP - the wholesale price of electricity) and the electricity consumption patterns of RPP consumers. Residential consumers tend to use more electricity during peak demand times, which is when prices are higher than average, and tend to use less when total Ontario demand (and prices) are lower than average. Therefore, the market RPP price is slightly higher than the average HOEP. The RPP is also adjusted to include the GA and the various charges listed above, which move its price further from the market price.

Different Types of RPP Pricing

There are two types of RPP pricing, depending on what kind of meter you have: time of use (TOU) and tiered.

Time of Use (TOU)

Almost 9 out of 10 electricity users in Ontario are pay TOU prices. There are three TOU periods:

  • Off-peak, when demand for electricity is low.
  • Mid-peak, when demand for electricity is moderate. These periods are during the day, but not the most busiest times
  • On-peak, when demand for electricity is highest. These are the busiest time periods of the day, when people are cooking and using computers, televisions, air conditioning, or heating

The timing of off-, mid-, and on-peak periods changes depending on the season, as people use energy differently. However, these prices only apply to weekdays; throughout the year, weekends and holidays remain the cheapest times for energy consumption.

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Tiered Pricing

About 1 in 10 Ontario electricity users pay tiered prices. Tiered price customers pay a fixed rate for a fixed quantity of energy use, and a higher rate for additional energy use. The rates are different for residential and business users.

What Are the Advantages of the RPP?

The RPP has been designed to promote price stability and to reflect the cost of electricity generation. Utilities are required to pass on this cost to the consumer at no profit. Many of the charges that make Ontario electricity relatively expensive compared to the rest of the country are present on your bill, whether you are supplied by your local utility or by a competitive retailer. You may therefore find the RPP utility simpler to read, as many of these charges are blended into your electricity rates. Another advantage of the RPP is the peace of mind of knowing that you are not bound by a contract; you can switch to a competitive retailer at any time with little fuss and no fees.

Why Wouldn't I Want to Stick With the RRP and My Local Utility for My Electricity Supply?

Competitive retailers can offer a wider variety of product and payment options, including fixed price contracts, floating price contracts, and the option to combine electricity and natural gas on one bill. Though the RRP is designed to promote price stability, rates have increased sometimes at quite dramatic rates, so choosing a fixed-rate contract may be more convenient to you for budgeting purposes. Some competitive retailers also offer green energy options, which may be more desirable to you.

Can I change back to being supplied by my electricity utility?

If at any time you wish to change back to your electricity utility as your supplier, you may do so. If you have not verified your contract, if you decide within 30 days of receiving your first electricity bill, or (see Energy Consumer Protection Act 2010), you may cancel your contract without a cancellation fee. If you have already verified your contract you will have to pay a cancellation fee if you decide to cancel your contract more than 30 days after receiving the first bill under the contract. For most residential consumers the maximum cancellation fee that can be charged is $50 for every year (or part year) remaining on the contract.

 

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