Ontario raises electricity price threshold to 12.8 cents per kilowatt-hour

Ontario nudges up electricity price threshold

Monday, June 1, 2020

Time-of-use electricity rates remain suspended in Ontario until the end of October. However, as of today, residential, small business and farm customers will pay at a rate of 12.8 cents per kilowatt-hour (kWh) in place of 10.1 cents/kWh. The latter was the lowest electricity price threshold of the three-tiered time-of-use rate structure, which was shelved earlier this spring in response to the COVID-19 outbreak.

“Since March 24, 2020, we have invested just over $175 million to deliver emergency rate relief. This investment was made to protect the people of Ontario from a marked increase in electricity rates as they did their part by staying home to prevent the further spread of the virus,” Greg Rickford, Ontario’s Minister of Energy, observed last weekend as he announced the new price, to be known as the COVID-19 recovery rate. “This fixed rate will continue to suspend time-of-use prices in a fiscally responsible manner.”

The new rate aligns with the Financial Accountability Office (FAO) of Ontario’s recent calculation of the average that residential households were paying under the time-of-use pricing regime before COVID-19 forced a vast number of them to spend the entire day in their homes. The FAO also estimated it would cost the Ontario government a further $316 million to keep the rate at 10.1 cents/kWh until August 31.

Along with the five-month assurance of the new rate, the provincial government has earmarked $17 million to subsidize utility bills for account holders experiencing COVID-19-related financial stress. Residential customers can apply for a one-time grant through the $9-million COVID-19 Energy Assistance Program (CEAP), while $8 million will be available for struggling small business operators. The Ontario Energy Board (OEB) has also extended its order prohibiting electricity and gas utilities from disconnecting customers until July 31.

Beginning in November, customers will be offered flexibility to opt back into a time-of-use pricing scheme or to choose tiered pricing, which will tie rates to certain levels of consumption. The Ontario Energy Board will devise and announce the prices for both options in the coming months.

“We recognize that businesses and families are living with a great deal of uncertainty, and they need to know what they can expect when they open their electricity bills every month,” Rickford said. “The new COVID-19 Recovery Rate will provide stability for Ontario electricity consumers, while we work to re-open our province and restart our economy.”

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