December 29, 2015
Fee plan will cost modest power users more: Critic
A “Robin Hood in reverse” plan to create a flat hydro distribution fee will force up the bills of the province’s most modest electricity users to the benefit of power guzzlers, Ontario Clean Air Alliance Chair Jack Gibbons charges.
Gibbons predicted many low-use customers will see bills rise 8-9% a year for several years, while their electricity-soaking neighbours enjoy a drop in distribution fees.
“The vast majority of people aren’t aware of it,” Gibbons said Tuesday. “It’s definitely a bad idea, a very bad idea. It’s Robin Hood in reverse — it will mean the small customers will subsidize large customers.”
The Ontario Energy Board (OEB) has ordered all utilities to establish a fixed distribution fee to deliver electricity to their customers.
Currently, the distribution charge on a hydro bill is split — one part is a set fee and the other part is based on how much power was used.
“For utilities, the current per-kilowatt-hour component of the distribution rate discourages conservation and the installation of small-scale renewables,” OEB Senior Manager Brian Hewson said in an e-mail. “Distributors must maintain their systems but conservation lowers their revenues and could impact investment in their local grids. Fixed rates give utilities revenue stability.”
All utilities begin to transition to a fixed distribution rate in January, a process that’s to take four years.
The OEB has demanded utilities create plans to protect customers from large bill increases, and some utilities have indicated that they will help smooth the transition for customers who would see their bills rise more than $4 a month, he said.
Low-income hydro customers can apply for help from the Ontario Electricity Support Program, he said.
“Although, customers who have cost-intensive electric heat and use more electricity than most, many of whom are low-income, will likely see their bills decrease with this change,” Hewson said.
The distribution fee covers the cost of delivering the electricity such as poles, wires and transformer stations, and every home on a street needs the services equally regardless of electricity use, he said.
Customers who use more power will be charged more on the electricity line of their bill, Hewson said.
Gibbons argues the change works against conservation and rewards electricity use which ultimately drives up everyone’s hydro bill.
“It makes absolutely no sense from a customer perspective,” Gibbons said