Why Kathleen Wynne might tackle hydro delivery charges to cut electricity bills
Premier Kathleen Wynne is signalling she may soon try to tackle the sky-high delivery charges that many Ontarians see on their hydro bills.
With her government bogged down by complaints about soaring electricity prices, Wynne and her advisers are scrambling to find ways to bring bills down.
Wynne telegraphed that delivery charges are in her sights during a speech last week, mentioning a letter she received from an Ottawa Valley man she named only as Lloyd,
"He wrote to me about delivery charges that make up 50 per cent of his bill," Wynne told a business audience in downtown Toronto. She said Lloyd recently installed energy-efficient windows, and "feels like he's being punished for the investments that he made."
Wynne is phoning some of the people who write to her about electricity, including Lloyd.
"He has every right to be angry; that shouldn't be happening," she said. "At the end of the day, what people like Lloyd should be paying for is the electricity that they use."
On average, the delivery charge makes up nearly 30 per cent of a typical residential hydro bill, but the amount varies widely from place to place. Different local hydro distribution companies charge different rates, unlike the cost of electricity generation, which is standard for all residential hydro customers in the province.
A typical Hydro One customer in a medium-density area pays nearly $68 a month for delivery — more than double the delivery charge for a Thunder Bay Hydro customer. The difference adds up to $409 a year.
Questioned by reporters after her speech, Wynne affirmed that delivery charges are on her radar.
"The delivery charge is something that comes up repeatedly," she said. "I am hearing it consistently as I talk to people across the province."
But Wynne declined to offer details about the changes she's considering.
"There are so many people who'd like us to deal with the delivery charge, but we've not necessarily landed on how to do that," she said.
"We have to really pull that apart and figure out how do we make sure that there's a fairness across the province in terms of the costs that people are bearing," she said. "We actually have not made those decisions, so I am not going to pre-empt that process."
Households that don't heat with electricity consume on average 750 kilowatt-hours (kWh) per month. Here's how delivery charges vary around the province for such a household, according to the Ontario Energy Board's bill calculator:
Right now delivery charges rise when a household uses more electricity. But the Ontario Energy Board has ordered local utilities to transition to a flat delivery charge per household within the next eight years.
The biggest savings from a flat delivery charge would go to households with the highest bills — those that heat with electricity.
Hydro One's customers are divided into three categories for delivery charges: urban, medium density and low density (rural). The utility says most of the 330,000 low-density customers heat with electricity, typically consuming 2,000 kWh per month.
Such a rural customer's monthly delivery charge alone would be $143 (on a bill totalling $400). That bill is already subsidized by $60.50 per month, paid for from regulatory charges levied on all residential electricity users in Ontario.
The government has one new source of revenue it could use to subsidize high electricity users: funds from the cap and trade program to limit greenhouse gas emissions. The argument could be made that since Ontario's electricity generating sector has made significant cuts in carbon emissions in recent years, heating homes by electricity is greener than other methods.
Whatever action she takes, Wynne is promising it will come quickly.
"We are going to be bringing forward some of the changes that we are going to make before the budget," she said.
The budget date has yet to be announced, but Finance Minister Charles Sousa has indicated it will be in the spring after the federal government tables its budget.
