WHERE YOUR MONEY GOES
You receive your electricity from us, your local electricity distributor. So it’s only natural that when you have questions about the price you pay, you look to us.
But you may not be aware that we are just one piece of the puzzle that brings electricity from the generating plant to your home or business. And the distribution charge accounts for only a small portion of your total bill.
Local distribution charges amount to only about 20 cents on the dollar, or 20% of your average monthly bill*. Yet, your local electricity distributor is responsible for collecting the other 80% that goes to government fees, taxes and other electricity market participants.
Think of your local electricity distributor as a package courier. The courier does not originate or control the packages you receive, but is responsible for their safe and reliable delivery to you.
Ontario’s local electricity distributors have delivered electricity to our communities, homes, businesses and institutions safely, reliably, and in a financially responsible manner for over 100 years. We understand Ontario’s electricity system and are committed to providing quality services at a reasonable cost to Ontario consumers.
THE ELECTRICAL MARKET
In recent years, the electricity industry in Ontario has changed dramatically and it continues to evolve. Foremost among the changes is that as of May 1, 2002 the Government of Ontario opened the electricity market to competition.
In the past, Parry Sound Power (formally Parry Sound Public Utilities) was a public sector entity and one of our primary responsibilities was to purchase electricity from the old Ontario Hydro and sell it to customers within our service area. In the current electricity market, we are a Local Distribution Company (LDC), registered as a for-profit business corporation under the Ontario Business Corporations Act. Our primary functions are to build, own and maintain the electricity distribution system within our service area and to deliver electricity.
Customers now have a choice. By doing nothing you can automatically stay with Parry Sound Power as a Standard Service Supply customer. The electricity cost for Standard Service Supply is a pass-through rate that is the same as the price we pay for the electricity received from the Independent Electricity System Operator. Standard Service Supply customers who consume 250,000 kilowatt-hours (kWh) per year or less and other designated customers (as defined by legislation), currently pay 5.8 cents per kWh for the first 600 kWh of electricity they use per month. The commodity price for electrical usage above 600 kWh is 6.7 cents per kWh.
An alternative choice is to purchase electricity (the commodity only – approximately 55% of your current bill) from an Ontario Energy Board licensed retailer at a fixed contracted rate.
While the electricity marketplace continues to change, Parry Sound Power Corporation remains committed to delivering a safe and reliable supply of electricity to your home or business.
In 1998, the Ontario government passed Bill 35, the Energy Competition Act, which established the framework for a competitive market by:
• creating an independent, not-for-profit corporation called the Independent Electricity Market Operator, which would also create the rules for the operation of the electricity market;
• establishing that access to the province’s transmission grid must be non- dividing Ontario Hydro into several successor corporations including one owning generation assets (now called Ontario Power Generation), and another owning the transmission system and distribution assets (now called Hydro One);
• creating a financial corporation called the Ontario Electricity Financial Corporation to hold the debt of the old Ontario Hydro that cannot be serviced and retired by the successor companies;
• requiring the two new Ontario Hydro businesses and all municipal electric utilities to make payments-in-lieu of taxes to the provincial government;
• requiring all municipal electric utilities which transfer property (i.e., consolidate with one another) to pay a transfer tax equal to a portion of the fair market value of the property transferred; and
• requiring all municipalities to transfer the assets of their electric utilities to for-profit corporations (i.e., incorporated under the Ontario Business Corporations Act), eligible to earn commercial rates of return on capital, and whose shares would initially be owned entirely by the municipal corporations themselves. The Ontario Energy Board Act gave the OEB the power to license and regulate all market participants, and set transmission and distribution rates.
QUESTIONS FOR ELECTRICITY MARKETERS
If you are approached by a retailer, ask for their sales literature. Remember, you don’t have to sign a contract; by doing nothing you will automatically continue to receive Standard Service Supply from Parry Sound Power. Here are some suggested questions for electricity retailers:
• Ask for proof of license
• Ask for literature and read it carefully
• Ask what the length of the contract is, and if there is a penalty for canceling it
• Ask when service begins
• Ask how savings are calculated
• Ask what the price per kilowatt hour is, and whether it will vary
• Ask what other charges are included in the rate
• Ask for the name of the supplying company
• Ask if the company has a valid licence from the Ontario Energy Board
• Ask how long they have been in business
• Ask how many customers they have today
• Ask where their energy comes from
• If the environment is an important consideration for you, ask if you can purchase renewable power such as wind, solar or hydroelectric
• Ask for the terms of the agreement, e.g.
• what’s the length of the contract? when does the service start?
• what’s the price per kWh and will the price vary?
• how much less is that than today’s rate?
• how are savings calculated? how are they paid out and when?
• are there any signing bonuses or other promotions?
• how is the contract cancelled
Don’t be led to compare a ‘bundled’ electricity rate with an unbundled commodity (electricity) price. On top of the price quoted by the retailer – you will also have to pay for the delivery, regulatory charges and the debt retirement charge – not just the commodity portion.
THE PROVINCIAL BENIFIT
New Adjustment for Customers on Spot Market Pricing
With Bill 100, the provincial government has passed new legislation effective January 1, 2005 . This legislation introduces a new adjustment called “Provincial Benefit” that will be reflected on the bills of those customers currently paying the spot market pricing for their electricity.
What is the Provincial Benefit?
A competitive market sets the price of electricity generated in Ontario . Certain generators receive payments through regulation or contract that differ from the market price. Your portion of the net adjustment arising from these different payments is now included in certain bills as the Provincial Benefit.
The Provincial Benefit is a “true-up mechanism” or “global adjustment” designed to ensure the spot market price billed for electricity is the true cost of the electricity.
What is the reason for this change?
Under Bill 100 there will be a mix of power produced by Ontario Power Generation (OPG) “heritage assets” contracted at a set price. Initially the Ontario government will set these prices but ultimately the Ontario Energy Board will be responsible for setting the prices. Heritage assets or “base load” include nuclear generators and some hydroelectric generators. Other OPG assets and Non-Utility generators will be based on a variable competitive pricing scheme. The Provincial Benefit is designed to more accurately reflect the new financial architecture for this hybrid electricity system following the passage of Bill 100, the Electricity Restructuring Act, 2004.
Who does it apply to and when?
Effective January 1, 2005 , a new item titled Provincial Benefit appears on
bills for those customers who pay the spot market price for electricity, or for those customers who purchase their electricity through an energy retailer.
How is the Provincial Benefit calculated?
The Provincial Benefit is calculated by multiplying the line loss Adjusted Consumption figure appearing on your bill by the current provincial benefit rate. The rate is set by the Independent Electricity System Operator (IESO) each month. Depending on market prices, the provincial benefit could either be a credit or a charge.
The Ontario government established a set price limit of the output from Ontario Power Generation’s (OPG) unregulated generating assets (coal-fired and smaller hydroelectric) operations. Monies collected above this limit are to be refunded to customers who are not on the Regulated Price Plan in the form of an OPG Rebate. Future rebates will be paid out on a quarterly cycle. Consumers with a retail contract may or may not receive this rebate depending on the contract provisions.
Understanding the “Unbundled” Bill
Electricity Charge : This is the only portion of your bill that is subject to competition. It is the amount charged for the electricity consumed at Spot Market, Retailer, or, Fixed Pricing.
Transmission Charges : These are regulated charges for the cost to deliver the electricity from the generating station to Parry Sound Power Corp.
Wholesale Market Charge : This regulated charge is for the cost of the services provided by the Independent Electricity System Operator and for Rural Rate Protection fees.
Distribution Charge : This regulated charge recovers the cost of construction and maintenance of Parry Sound Power Corp’s electrical distribution system.
Monthly Customer Charge : This regulated distribution charge recovers the fixed monthly cost for billing, metering and other fixed costs.
Standard Supply Service Charge: This charge of 25 cents per month covers the administrative costs incurred by your utility in providing electricity to Standard Supply Service customers. Electricity that is bought from the utility – instead of from a licensed electricity retailer – is called “Standard Supply Service”.
What is the adjustment factor?
When electricity is transmitted over distances and passes through lines and transformers, a small percentage is lost naturally. Line losses are an unavoidable part of delivering electricity. So, we must purchase a small amount more than what you use. To determine the amount of electricity we need to buy for you, we use a calculation called an adjustment factor (formerly referred to as the total loss factor) to adjust your usage. These adjustment factors are reviewed and approved by the OEB.
How can I determine my adjustment factor?
The adjustment factor will vary according to your service type. The majority of our residential, general and seasonal customers have an adjustment factor of 1.0586. You can confirm this amount by looking at the ‘Adjusted usage in kilowatt-hours’ line item on your bill. For example, Adjusted usage in kilowatt-hours (100 x 1.0586) = 1,0586 kWh. The adjustment factor in this example is 1.0586.
What electricity charges are based on ‘Adjusted usage in kilowatt-hours’?
The charges for ‘Electricity’, and a portion of the charges for ‘Delivery’ and ‘Regulatory charges’ are based on your ‘Adjusted usage in kilowatt-hours’. These charges are calculated by applying the OEB-approved adjustment factor to the ‘Metered usage in kilowatt-hours’ line item.
What electricity charges are based on ‘Metered usage in kilowatt-hours’?
The ‘Debt retirement charge’ is calculated based on your ‘Metered usage in kilowatt-hours’. Also, a portion of the charges for ‘Delivery’ is based on your electricity usage before adjustment for line losses.
What is Parry Sound Power doing to reduce line loss?
Parry Sound Power is always looking at ways to improve the efficiency of its operations. Some of these include balancing the loads on our distribution system, using newer and more efficient conductors and equipment whenever possible to reduce electrical losses, and preventing theft of power.
As part of its demand side management program, Parry Sound Power will be investigating even more ways to reduce electricity losses within its distribution system.
Electrical loads such as electric heating and incandescent lights use “resistive” power, which is measure in kilowatts. Certain types of loads, such as electric motors, however, require magnetizing current to operate.In calculating your bill, Ontario utilities assume that the power factor should be above 90% of the kVA demand. In short, if your power factor is less than 90%, you are paying more for all demand based charges than you need to.
A qualified electrician or energy management consultant can provide you with information on how to correct your power factor – and reduce your power costs.