Time-of-use (TOU) and Regulated Price Plan (RPP) FAQ
- What are time-of-use prices?
- Why are there different prices and time periods?
- How much electricity does a typical residential consumer use in each of the off-peak, mid-peak and on-peak periods?
- How many consumers are now on TOU prices?
- What are the holidays for time-of-use prices?
- What is the RPP?
- How is the RPP set?
- What is the supply mix?
- What is the Global Adjustment
- Do RPP consumers have to pay the Global Adjustment? Where does it appear on their bills?
- November 1, 2012 RPP Adjustments:
TOU pricing better reflects the cost of electricity supply. Prices in the market rise and fall during the day based on demand and the type of supply available. When demand is lower, less expensive sources of electricity are used. When demand rises, more expensive forms of electricity production are called upon.
TOU prices take into account when, as well as how much electricity a consumer uses, as recorded by the consumer’s smart meter.
TOU prices are designed to encourage consumers to shift electricity use from high price periods (on-peak) to lower price periods (mid-peak and off-peak). They are developed as part of the Regulated Price Plan (RPP) for those with smart meters.
At the request of the Minister of Energy, the Ontario Energy Board developed an electricity price plan to provide stable and predictable electricity pricing, which ensures the price consumers, like you, pay for electricity better reflects the actual cost of producing the electricity.
Electricity prices charged per “kilowatt-hour” change throughout the day, like long distance telephone rates, to better reflect the changes in the costs to produce electricity at different times of the day.
One of the Ontario Energy Board’s goals through time-of-use pricing is to provide an incentive for you to shift some of your consumption away from periods of high total consumption (called “on-peak”) to periods of low demand (called “off-peak”). By doing that, you can save money on your bill.
Shifting electricity use will mean the higher cost electricity generators will be needed less. Some of those higher cost generators also create more air pollution, so relying on them less can also help benefit the environment. In the long run, lower peak demand will mean the province needs to build less new generation to serve that peak, lowering costs for all Ontarians.
3. How much electricity does a typical residential consumer use in each of the off-peak, mid-peak and on-peak periods?
Residential consumers typically consume about 64% of their electricity during off-peak hours, and about 18% in each of the mid-peak and on-peak periods.
As of September 30, 2012, about 92 per cent of RPP-eligible consumers were on TOU billing. Most of the remaining RPP-eligible consumers are expected to be switched to TOU billing by the end of 2012
RPP stands for Regulated Price Plan. RPP prices are set by the Board and apply to residential and small business consumers who buy their electricity directly from their local utility. The prices apply to each kilowatt hour (kWh) of electricity used by an RPP consumer, and are shown on the “Electricity” line of RPP consumer bills. RPP prices are reviewed twice per year and are adjusted as required on May 1 and November 1.
To calculate RPP prices, the OEB forecasts the cost to supply electricity to RPP consumers for the next 12 months. These forecasts, which assume normal weather conditions, include factors such as:
- forecast prices for fuel like natural gas and coal;
- how much electricity is expected to be supplied by each type of generation (nuclear, hydroelectric, coal, natural gas, renewable sources);
- how much electricity is expected to come from generators paid different prices (regulated, under contract, market prices.);
- forecast electricity demand or consumption; and
- the amount that needs to be recovered from or credited to RPP consumers as a result of any differences between the actual costs for the previous period and the forecast costs that were used to set the RPP prices for that period
The supply mix refers to the different types of fuel used to generate electricity. Examples include nuclear, hydroelectric, coal, natural gas and renewable resources (sun, wind, etc.).
The Global Adjustment accounts for differences between the market price of electricity and the regulated or contract prices paid to certain generators for the electricity they produce. These include nuclear, gas-fired and renewable generators (like wind farms) that have contracts with the Ontario Power Authority (OPA) and generators that have contracts with the Ontario Electricity Financial Corporation (OEFC), as well as Ontario Power Generation’s “baseload” generating stations that operate at or near capacity all the time to meet basic demand. The OEB does not set or approve the amounts paid by the OPA or OEFC to contracted generators, but it does set the amounts that are paid to Ontario Power Generation for electricity generated by its baseload facilities.
The Global Adjustment also includes the cost of OPA conservation and demand management programs. Those costs are not subject to OEB approval. Also covered by the Global Adjustment are any OEB-approved costs incurred by utilities to achieve their mandatory conservation and demand reduction targets.
All Ontario electricity consumers are required to pay their share of the Global Adjustment. For RPP consumers, a forecast of the Global Adjustment is included in the RPP prices and therefore it is not shown separately on the bill. Consumers who have a contract with an electricity retailer, however, see the Global Adjustment as a separate line item on their bills.
November 1, 2012 RPP Adjustments
TOU prices are changing as follows:
On-peak (from 7 a.m. to 11 a.m. and 5 p.m. to 7 p.m. weekdays) = 11.8 ¢/kWh (+0.1 cent)
Mid-peak (from 11 a.m. to 5 p.m. weekdays) = 9.9 ¢/kWh (-0.1 cent)
Off-peak (from 7 p.m. to 7 a.m. weekdays and all day on weekends and holidays) = 6.3 ¢/kWh (-0.2 cent)
The price change for consumers on TOU pricing is a decrease of approximately $1.02 on the “Electricity” line, or about 0.8% on the total monthly bill, for a residential consumer with a typical consumption pattern who uses 800 kWh per month.
12. What are the new prices for consumers paying tiered prices (from November 1, 2012 to April 30, 2013)?
Consumers who are not yet paying TOU prices pay tiered prices, which are changing as follows:
- For consumption up to the tier threshold: 7.4 ¢/kWh (-0.1 cent)
- For consumption above the tier threshold: 8.7 ¢/kWh (-0.1 cent)
The tier threshold increases for residential consumers during the winter period (1,000 kWh per month instead of 600 kWh). The tier threshold for non-residential consumers remains at 750 kWh throughout the year.
A kilowatt hour is a measure of the amount of electricity consumed in one hour. It is equivalent to using 1,000 watts of electricity for one hour.
The typical Ontario household uses about 800 kWh of electricity a month. According to the Independent Electricity System Operator, consuming 1 kWh of electricity is equivalent to surfing the Internet for five hours or baking one birthday cake. For more information, visit www.ieso.ca/imoweb/siteshared/images/One_KWh_Infographic-web.pdf.
The main reason for the decrease in electricity prices is that the actual cost of electricity for RPP consumers during April 2012 through September 2012 was less than the forecast cost that was used to set the RPP prices for that period. The difference has been taken into account in setting the new RPP prices.
Page last updated 2013-04-05