Tuesday, August 16, 2011

Residential price increases since 2003

A longer story involving the early-morning electricity-user (noted in my posting below) also appeared on 15 August 2011 – this time on InsideToronto.com in an article entitled ‘Tim Hudak vows to slash hydro rates if elected’.  Two passages are worth noting.
First, there is a reference to one resident’s electricity consumption:  ‘"I get up in the middle of the night to do my cooking and to wash my clothes. I never use the dryer, I hang things outside to dry. I try and economize however I can, but it doesn't make a difference," she said Monday, pulling out her March electricity and heating bill totalling $1,698.85 - including $211 in Harmonized Sales Tax (HST) and $175 worth of Debt Retirement Charges. "I believe that's unreasonably high. It's a lot of money and a change would certainly be welcome."’   What was striking in this is that $175 in Debt Retirement Charges (DRC) suggests incredibly-large electricity usage!  The DRC is $7 per 1000 kWh.  Therefore, this cost suggests a consumption – in the month of March (?) – of 25,000 kWh.  Yes, it appears that she has electric heating as well, but it should be noted that, as a monthly consumption, this is large.  (The provincial average is about 800 kWh.)  Indeed, in work that we did recently, we looked at 1,020 households  and we found that, from this random sample, the largest user consumed 31,412 kWh IN ALL OF 2008 (average of 2,618 kWh a month).  This resident’s experience is unusual.  (Another interesting note is that we found – tentatively – that large users are ‘better off’ under time-of-use rates, as compared with the conventional two-tier rates.)
And, second, it was noted that:  ‘According to Hudak, hydro rates in Ontario have increased eight times by a total of 84 per cent since 2003, …’.  In a recent posting, I noted that my experience was an increase of about 30 per cent.  I wondered where the figure of 84 per cent came from?  I went to the historical prices in Ontario – solely for commodity (electricity) charges – and found that if you compare the higher tier price after 1 May 2011 (7.9 cents per kWh) with the government rate after 9 December 2002 (which was then the price throughout 2003) (4.3 cents per kWh), then you get a figure of 83.7%.  I think that that must be the source.  It is, therefore, a misleading comparison for at least two reasons:
1)      This is only the commodity charge, and the other (delivery, etc.) charges should be included to reflect the ‘final price’ to consumers.
2)      The ‘new cost’ (2011) only applies to those units of electricity consumed after the lowe-user threshold has been reached (600 kWh in the summer and 1,000 kWh in the winter).  Perhaps a blended value would be more correct.
And, of course, prices, as I noted earlier, were much higher in 2002 before parts of the market were closed.

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