How High Will May 1st 2016 Residential Electricity Hikes Be in Ontario?

Electricity prices in Ontario (not the delivery portion) are set twice per year, on May 1st and November 1st. Prices have increased rapidly the past couple of years, far beyond the rate of inflation in the province. It is already well into April, but price changes have not been announced yet.

What can we expect? On November 1st last year, Ontario electricity peak prices rose 8.7% and the year on year increase was 25%. Year over year off peak prices were less but still considerably over inflation. My guess would be to expect more significant increases in the summer day time peak periods versus off peak. With more and more wind production coming on line that is more likely to produce at night, the province would prefer to shift demand to off peak periods and continuing to crank peak rates would help somewhat with that. I'll guess another 10%. Industrial consumers are now more insulated from price increases, so the difference has to be made up from residential customers.

Why Doesn't the Media Report the Year on Year Ontario Hydro Increases? On Peak Electricity Pricing Up 19.2% Year on Year

With news that the electricity price increases coming May 1st for Ontario will be particularly high, I'm wondering why the media never reports the year over year increases. Ontario power prices are raised every May 1st and every November first, but the media usually only reports on the six month increase and doesn't bother looking at the yearly increase, which would be useful for comparing to Ontario's inflation rate.

This CBC article has the price increases coming May 1st and this Toronto Star article has the increases that happened on November 1st 2014.

For on peak pricing, the price per kWh is increasing on May 1st from 14 cents to 16.1 cents, a 2.1 cent increase or 15%. The on peak increase on November 1st was from 13.5 cents to 14 cents, a 3.7 increase. Thus the year over year increase, from 13.5 cents to 16.1 cents, is 2.6 cents or a 19.2% increase which is obviously significantly more than Ontario's inflation rate.

For mid-peak, prices will increase on May 1st from 11.4 cents to 12.2 cents, a 0.8 cents increase or 7%. On November 1st, the price increase from 11.2 cents to 11.4 cents, only a 1.8 percent increase. Year on year the increase was 1 cent or an 8.9% increase, again significantly above Ontario's inflation rate.

Finally for off-peak, the increase on May 1st is 0.3 cents, from 7.7 cents to 8 cents, a 3.9% increase. On November 1st, the price increased from 7.5 cents  to 7.7 cents, a 0.2 cent increase or a 2.7% increase. Year over year the increase was 0.5 cents from 7.5 to 8 cents, a 6.7% increase, which is well above Ontario's inflation but nowhere near the massive increase in on peak pricing.

The Ontario Liberals have crafted an electricity policy where prices have skyrocketed, despite relatively low natural gas prices and neighbouring states and provinces having seen no such crazy price increases. Starting in January, the 10% Ontario Clean Energy benefit will end, which will give an even bigger boost to electricity prices in Ontario. Unfortunately the media hasn't done a very good job of putting these prices in context.

For another post I'll look at the price increases over two years.

Ontario Hydro's Debt Retirement Charge. When Is It Over?

Yesterday on the Ontario subreddit, there was some comments about the debt retirement charge for Ontario electricity consumers. Curious, using only the least amount of google fu effort, I found this Toronto Sun article. Interestingly, the Ontario government is tying together or at least trying to the end of the debt retirement charge with the ending of the 10% Clean Energy Benefit subsidy:

The provincial government is trying to rejig hydro bills to ensure that customers aren’t hit with a sharp increase when the Ontario Clean Energy Benefit is phased out, Energy Minister Bob Chiarelli says.

The government is scheduled to end the benefit, a 10% break on hydro bills, at the end of 2015.
The plan was to also eliminate the debt retirement charge on hydro bills at the same time, he said Wednesday.

“It was scheduled to come off at the time the Clean Energy Benefit was coming off, and they would balance each other out more or less,” he said.

When the old Ontario Hydro was broken up into Hydro One and Ontario Power Generation in 1999, its $20.9-billion stranded debt was handed over to the Ontario Electricity Financial Corp.

Looks like that may not happen though:

Chiarelli said retiring that debt is taking a little longer than originally anticipated.
“The financial projections turned out not to be as precise as they were anticipated,” he said.

I would be curious to know the total amount that has been paid over the years for the debt retirement charge. No doubt it is quite high. 

Mainstream Media Wakes Up to Record Ontario Hydro Global Adjustment Fees

I made a blog post a little while ago (December 4th), about how the electricity surcharge, i.e. the global adjustment that gets added to Ontario electricity bills to cover Green Energy initiatives reached a record high in November.

Here's an article from the Toronto Star (December 13th) where they too mention the record high for November. So they're catching up to Surly Hamiltonian. Some good info:

"It’s a lot of money. In November, the total global adjustment payment came to $847 million. Of that, $192 million went to OPG, and the remainder to private power companies."

$847 million in one month? That's a colossal amount of money for Ontario considering the population is just shy of 13 million. That's a lot of money to be taking from the residents of Ontario and can't be helping consumption and further, for poor people is especially damaging.

How high will the global adjustment fee be in 2014? More wind is coming online and the big problem is when the wind blows strongly overnight when demand is low. That power has to be paid for and has been dumped to the Americans in the past for negative rates (i.e. the province pays the Americans to take our excess power). If overall Ontario power demand stays low, the global adjustment could go higher.

Average Monthly Global Adjustment for Ontario Electricity for 2012

In a previous post I calculated the average monthly global adjustment for Ontario in 2012 and I thought I would make a separate post. It ended up being 4.97 cents. I calculated the monthly average by adding up the 12 monthly values and dividing by 12; I didn't take into account the number of days in each month.

Here's the 12 monthly final numbers for 2012 in case they disappear from the website:

January 4.25
February 5.06
March 6.23
April 6.07
May 56.5
June 5.26
July 3.36
August 4.18
September 4.76
October 5.38
November 5.43
December 4.06

Ontario Electricity Global Adjustment for November 2013: Really High

The second estimate for the global adjustment for Ontario's electricity bills for November is out and it isn't good. The second estimate is usually quite close to the final value and for November it was 8.49 cents per kilowatt hour. That's significantly more than the 5.75 cents for the previous November and interestingly a big increase from October's final number of 6.34 cents. More wind power that gets a much higher than market price has come on stream in 2013 and Ontario has to buy it all, driving up the global adjustment.

If the final November number is anywhere close to the second estimate (and it usually is), the 8.49 cents is highest for any month in 2012 and 2013 (and maybe ever). The previous high was June 2013 at 7.04 cents.

Increasing from October is a little strange, as a high number usually comes from high output from solar and wind and low demand. November is usually significantly colder than October so there is usually more demand for electrical heat. However this year November wasn't that cold, but there were some windy days, including some that were uncharacteristically warm. In every month since April, this global adjustment number has been higher in 2013 than 2012. The first estimate for December is 7.61 cents which is considerably higher than the 4.63 cents in 2012. When the final estimates are in for 2013 I'll calculate the average for the year. For reference the average monthly rate for 2012 was 4.97 cents per KWh

Ontario Electricity Global Adjustment Watch: March 2013 Estimate

The global adjustment estimate for March 2013 is out on the IESO website. Curiously they're only predicting a value of 4.37 cents per kilowatt hour. That's strange because last year, the value for March was 6.23 and the highest for 2012. Also interesting is the estimate for January was 3.77 but the actual value ended up significantly higher at 5 cents.

Perhaps March is predicted as colder than usual so electricity demand from heating will be up and perhaps less windy and less sunny so expensive wind and solar production is down. March is usually a windy month, so it will be interesting to see if the IESO is right or colossally wrong.

Latest Global Adjustment Rates for Ontario Electricity

The Global Adjustment is an extra fee that Ontario electricity consumers pay that basically makes up the difference for the high rates that must be paid to wind farm power providers under contract and the wholesale price of power. That's a simplification, but there's more information here.

One of the interesting effects of the Global Adjustment is that it will be highest when the wind blows the most and demand is the least. The wind producers have to get paid and there is less cheaper power being used to lower the price. Here's the rates for the last nine months from the above site as of today:

January 4.25
Febuary 5.06
March 6.23
April 6.07
May 5.65
June 5.26
July 3.36
August 4.18
September 4.16

That's in cents per kilowatt hour. Note the March rate, a windy month without a lot of heat or air conditioning demand is close to double the July amount. So try to conserve power in March as you will end up paying more, even though perversely demand is low. HST is also applied to the Global Adjustment.

Also published at the above link is estimates for recent months. For October the estimate is 5.34 and 4.77 cents per kilowatt hour.

As more renewable solar and wind power comes online with guaranteed high rates per kilowatt hour, will the Global Adjustment go up? Good question. If overall demand trends down, then definitely, as less regularly priced power will be consumed and the renewable contracts still have to get paid. Another recession would be especially problematic with its concomitant reduction in power consumed. I'll watch for the January 2013 number of comparison