Many condominium corporations and rental housing landlords in Ontario received a six-month reprieve from a looming hydro cost hit earlier this week when Minister of Energy Greg Rickford announced that large accounts specifically linked to electricity used in buildings’ common areas will remain eligible for the Ontario Electricity Rebate (OER) until April 30, 2021. Common area accounts registering more than 50 kilowatts (kW) of demand or 250,000 kilowatt-hours (kWh) of annual consumption had been scheduled to lose the benefit — currently a 31.8 per cent pre-tax discount on electricity consumption and regulated transmission/distribution charges — on November 1.
Now, they’ve been granted an extension that comes with an improved rate since the provincial government intends to increase the rebate apportionment to 33.2 per cent on November 1. That’s likely to be particularly welcome, at least in the short term, as hydro rates for all residential, farm and small commercial customers are slated to rise on the same date.
“As we recover from COVID-19, our government remains focused on supporting Ontarians by keeping the cost of electricity affordable,” Rickford said, as he also outlined a planned new program to improve energy efficiency in low-income households along with expanded eligibility criteria for one-time grants through the COVID-19 Energy Assistance Program.
COVID-19-prompted hiatus of flat rates ends October 31
Nevertheless, the fall/winter schedule of the Regulated Price Plan (RPP), which the Ontario Energy Board likewise revealed this week, reintroduces time-of-use rates at higher price points than prior to the COVID-19-prompted hiatus that will end on October 31. Notably, the peak rate, applying from 7 to 11 a.m. and 5 to 7 p.m., will jump from 20.8 cents per kWh at the beginning of this year to 21.7 cents/kWh for fall 2020/winter 2021. Pending new rates for off-peak hours at 10.5 cents/kWh and the mid-peak period at 15 cents/kWh compare to 10.1 cents/kWh and 14.4 cents/kWh previously.
For the first time, RPP customers can alternatively opt for tiered prices, with higher rates kicking in after the first 1,000 kWh of monthly consumption for residential customers or 750 kWh for non-residential customers. That will be set at 12.6 cents/kWh and 14.6 cents/kWh on either side of those thresholds.
The OEB estimates either choice should result in bills that are about 2 per cent higher for the average residential consumer, even when accounting for the upward adjustment in the rebate. Rate increases are attributed to the need to collect a greater share of the global adjustment — the opaque envelope of locked-in costs for contracted supply, nuclear facility refurbishment and conservation and demand management (CDM) programs — from RPP customers because demand has dropped across the entire electricity system, and also to make up for the shortfall that accumulated over the past 7+ months while customers have been charged flat rates.
“The OEB has decided to spread collection of this shortfall over two years to ease the impact on consumers,” its backgrounder on the new rates reports. “If the collection had been spread over 12 months, as is typically the case, the electricity costs recovered through RPP prices would have been roughly 1.6 per cent higher.”
Rebate withdrawal based on OEB’s interpretation of enabling regulation
Many condo boards and rental housing landlords had been bracing for an upward spike on their hydro bills due to the OEB’s interpretation of how the Ontario Electricity Rebate should be applied. In a memo issued last December, the OEB determined that common area accounts surpassing 50 kW of demand or 250,000 kWh of annual usage would not qualify after the one-year transitional period expired on October 31, 2020, even though the rebate would apply on all the same electricity-using elements for any amount of consumption in bulk-metered buildings where a single account covers all residential suites and common areas.
In a follow-up explanation provided to a rental housing landlord earlier this year, the OEB’s industry relations liaison pointed to the wording of the enabling regulation — enacted in October 2019 to facilitate introduction of the new more substantive replacement for the previous 8 per cent provincial rebate — for the seeming inequitable treatment of buildings with the same functions and types of occupants.
While most readers see the section as an affirmation that occupants of large multi-residential buildings are entitled to the same rebate that hydro account holders in single family dwellings receive, the OEB draws further nuanced distinctions around the regulation’s reference to “solely in respect of a multi-unit complex” that contains at least two qualifying units and in which at least 50 per cent of the units qualify.
“Applying the eligibility criteria set out in the Regulation, the entire building, including the common areas, of a residential condominium building that is bulk-metered by a distributor (whether sub-metered or not) would qualify for the OER as long as there are at least two qualifying units, and that at least 50 per cent of the units in the building are qualifying units,” the OEB’s explanation states. “If the same building was individually metered by the distributor (i.e. unit smart metering), each account would have to be assessed on an individual basis as to whether it meets the eligibility criteria (i.e. the 50 kilowatt demand or 250,000 kWh annual consumption). In this case, if the common area account(s) did not meet the thresholds, these accounts would not qualify for the OER because it does not contain any qualifying units.”
Ramifications flow through to condo fees
For condo owners, the ramifications of that interpretation flow directly to their fees. For example, the common area account for Toronto Standard Condominium Corporation (TSCC) #2112, a 32-storey, 342-unit tower in the city’s north Yonge Street corridor, typically records about 200,000 kWh of monthly consumption — presenting the condo board’s budget committee with the challenge of where to find the funds to cover a 30+ per cent increase on that bill.
“In our case, the hydro cost for common areas represents 7.5 per cent of our total expenses,” reports Maryam Maleki, a member of that committee. “Cutting the rebate would result in a 2.5 per cent increase in our total expenses, if all the other expenses remain constant.”
Many other condo boards throughout the province have been facing similar challenges.
“We provide our clients with templates that have the OER timing in them. So impacted sites were calling me to say: Hey, I think your template is wrong because our costs look like they are going up like crazy,” recounts Rob Detta Colli, manager of energy and sustainability with Crossbridge Condominium Services. “I’d explain: ‘No, the templates aren’t wrong’, which then leads to another explanation about what’s happening with the OER.”
The newly announced rebate extension does not overturn the OEB’s interpretation, but it does give those who question its logic more time to make their case. That includes a range of stakeholders from condominium boards and unit owners to rental housing landlords and investors to energy efficiency advocates concerned about potential negative impact on the uptake of unit sub-metering.
Barbara Carss is editor-in-chief of Canadian Property Management.