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.

Comparing Billing Regimes

In The Guelph Mercury on Thursday, 4 August 2011, an article appeared entitled ‘Guelph Hydro Residents Must Call for Time-of-Use Rate Start Dates’.   The quotation to consider is the one from one of the city’s residents, who notes that, by moving on to time-of-use rates:  ‘…not changing his consumption habits could cost him “between $25 and $30” every bimonthly bill.’

Going to the OEB website, one can pull up a cost tool for Guelph Hydro.  Assuming that this customer is an average consumer (800 kWh), with that consumption ‘spread across time’ in a typical way (64:18:18 between off-:mid-:on-peak periods), then the move from ‘two-tiered rates’ (conventional rates) to ‘time-of-use rates’ would change the monthly bill from $109.08 to $110.74 – a change of $3.32 over two months.  Now, consider a ‘large’ user – perhaps 1,600 kWh a month, with consumption more concentrated in peak periods (50:25:25 between the aforementioned times).  Their monthly bill would go from $209.56 to $215.42 – a change of $11.72 over two months.  To get a change of $25 over two months, I put in a ‘very large user’ (1,800 kWh), and then made the ratio 40:32:28 (that is, a disproportionate share of use during peak periods).

Of course, many are comparing present bills (on time-of-use) with past bills (on the tiered system) – rather than present bills (on the tiered system).  As an exercise, I took out some past bills (I am in the Waterloo North Hydro service territory), and put them into the same OEB bill calculator.  (Note that I assumed a 60:20:20 distribution of consumption across the different time periods.) The results are as follows:

Year	Consumption (two months, in kWh)	Bill (at the time of consumption, for two months)	Hypothetical bill (under present time-of-use rules, for two months)	Total percentage increase	Average annual percentage increase
2010	1,637	218.82	226.98	3.73	3.7
2009	1,850	214.34	252.28	17.7	8.9
2008	2,067	218.16	278.06	27.5	9.2
2007	2,046	226.30	275.56	21.8	5.4
2006	2,170	249.73	290.30	16.2	3.2
2005	2,250	241.02	299.80	24.4	4.1
2004	1,980	207.76	267.72	28.9	4.1
2003	910	108.69	140.64	29.4	3.7
2002	1,368	192.04	195.04	1.56	0.17
2001	1,047	119.95	156.90	30.8	3.1
2000	1,113	111.25	164.74	48.1	4.4
1999	806	87.93	128.28	45.9	3.8

Notes to the table:

1) The period investigated is July to September in each year, with the period either being the middle of the month to the middle of the month (1999-2000, 2005-2010) or towards the end of the month to towards the end of the month (2001-2004).

2) Calculations were completed as follows:  Half of the bimonthly was inserted into the bill calculator, and the resultant value was doubled.

And two final observations about these data:

1)      If we did not have the ‘Clean Energy Benefit’, the difference would be higher.  Nevertheless, for me, I could say that my electricity bill has gone up by just under 4% from last year.

2)      I calculated the 2002 value repeatedly.  I then recalled that that was the period in which the market was open (May to November 2002), and when prices rose dramatically for Premier Eves.  I found it striking that prices now are similar to what they were nine years ago.