Toronto Hydro customers face 18% rate hike in 2016

Power bills for Toronto Hydro’s residential customers are set to increase by 18% in May compared to the same time last year.

Toronto Hydro’s residential customers will pay 18% more each month to cover their power bill compared to last year, according to a report by the Consumer Policy Institute.

The report combined the various increases that Toronto Hydro customers will see on their monthly bill, including the cost of generation and distribution, as well as the cost of provincial policies.

When taken as a whole, the average hydro bill will increase by about $25 each month, or about 18%.

The most recent inflation figures for Ontario show that inflation over the past year was 1.6%.

“Toronto Hydro residential ratepayers continue to see their bill increase at a rate far faster than inflation, meaning they’re using more of their paycheque each month to cover their hydro bill,” says Brady Yauch, an economist and Executive Director of the Consumer Policy Institute. “The combination of rising generation costs and the OEB’s recent approval of Toronto Hydro’s massive capital spending program mean higher rates for customers.”

The study’s figures contrast those from a recent news release from the Ontario Energy Board (OEB) – the province’s energy regulator – that said power prices on May 1st will increase by “about 2.5%”, or $3.13 per month.

The OEB’s figures only account for the price that consumers pay for generation, which typically amounts to around 50% to 70% of the total bill – depending on how much power that customer consumes.

The OEB also measures the percentage and dollar amount increases from when it last set rates in November, six months ago. A more accurate comparison – which would align better with annual cost of living increases – would be to compare prices to a year ago. Using that metric, the increase in generation costs for customers using the same amount of power as the previous year is 8.4%, or $6.86 per month.

When adding in other portions of the bill, the price increase becomes more dramatic.

The distribution portion of the bill, for example – which pays Toronto Hydro for the cost of delivering generated power to households – has jumped significantly over the past year as a result of the OEB approving a record, five-year capital spending program by Toronto Hydro. The average price paid by electricity customers for distribution has increased by around 15%, or $7 per month, over the past year.

The province also ended the Ontario Clean Energy Benefit (OCEB) program –which offered all electricity customers a 10% reduction on their monthly hydro bill (paid for by taxpayers) – at the start of the year. While some of that increase was offset by ending the Debt Retirement Charge, there was still a net increase to hydro bills as a result.

And finally, the OEB recently introduced the Ontario Electricity Support Program Charge (OESP), which is fee paid by all electricity customers to help low-income households pay their monthly hydro bill. This program adds just under a dollar to monthly hydro bills.

Download the full report.

Brady Yauch is an economist and Executive Director of the Consumer Policy Institute (CPI). You can reach Brady by email at: bradyyauch (at) consumerpolicyinstitute.org or by phone at (416) 964-9223 ext 236

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