Your Electricity Bill on an Energy Contract
A Line by Line Comparison
Below are sample electricity bills for consumers on the Regulated Price Plan (RPP) tiered or time-of-use (TOU) pricing, and those who have signed a contract with an electricity retailer.
Depending on how you buy your electricity, the various charges on your bill can appear differently.
Compare your utility bill with a bill based on a contract with an electricity retailer using our bill calculator.
ELECTRICITY
This line of the bill shows the price you are paying for the electricity you used during the billing period. Low-volume consumers (households and small businesses) who buy their electricity from their utility pay either tiered or time-of-use (TOU) prices. These prices, referred to as Regulated Price Plan or RPP prices, are set by the OEB based on a forecast of how much it will cost to supply electricity to RPP consumers over the next 12 months. RPP prices are designed so that the price RPP consumers pay for electricity recovers the payments made to electricity generators for the electricity they produce (including both market costs and the Global Adjustment). Twice a year, the OEB reviews the forecast and, if necessary, adjusts prices accordingly (May 1st and Nov 1st).
Your utility buys the electricity it supplies to you from the wholesale market. The RPP prices you pay allow your utility to recover that supply cost. Utilities are not permitted to make a profit on the sale of electricity to consumers.
When electricity is delivered over a power line, it is normal for a small amount of power to be consumed, or lost, as heat. In calculating your electricity costs for the billing period, your utility adjusts your consumption to account for those losses, using an adjustment factor that is approved by the OEB.
DELIVERY
This line of the bill shows the cost of delivering electricity from generating stations across the Province to your home or business via the high voltage (transmission) and low voltage (distribution) electricity systems.
All the charges on the Delivery line of the bill are approved by the OEB. Some of the charges are fixed at a set amount per month. Others are variable and increase or decrease depending on the amount of electricity you have used. Delivery charges include:
- Customer Service Charge: A fixed monthly charge intended to allow your utility to recover the costs associated with meter reading, billing, customer service and account maintenance, and general utility operations.
- Distribution Charge: A variable per kilowatt-hour (kWh) charge intended to allow your utility to recover the cost of building and maintaining its low-voltage distribution system, including overhead and underground distribution lines, poles, and transformer stations. View utility electricity distribution rate applications and decisions.
- Transmission Charge: A variable per kWh charge intended to allow your utility to recover the charges it pays towards the operation and maintenance of the high-voltage transmission system that carries electricity from generating stations to the utility.
REGULATORY CHARGES
There are three components that, together, make up the amount shown on this line of the bill.
1. The Wholesale Market Service Charge covers the cost of services provided by the Independent Electricity System Operator (IESO) to operate the wholesale electricity market and maintain the reliability of the high voltage power grid. It also covers the administration costs of the Ontario Power Authority (OPA) and certain costs incurred by local utilities to connect renewable generation. Although the Wholesale Market Service Charge is set by the Board to allow these costs to be passed on to consumers, the Board does not set or approve all of the costs that are recovered through that charge. The description below notes which charges are approved by the Board.
Included within this charge:
- Physical Limitations and Losses: When electricity is delivered over a transmission line, it is normal for a small amount of power to be consumed, or lost, as heat. Also covered are other costs incurred by the IESO to operate the high voltage power grid.
- Energy Reliability: Sometimes the balance between generation and demand is affected by an unanticipated event, such as equipment failure or a surge in consumption. The IESO purchases reserve electricity that is available on short notice to restore the balance.
- IESO Administration Fee: The IESO charges an administrative fee to manage the high voltage power system and operate the wholesale electricity market in Ontario. The OEB annually sets the fee that can be charged by the IESO.
- OPA Administration Fee: This fee pays for the administration costs of the OPA, whose mandate includes planning for generation, demand management, conservation and transmission in the province. The OEB annually sets the fee that can be charged by the OPA. This fee does not include the costs payable under contracts for generation supply or for delivery of conservation and demand management programs that are entered into by the OPA.
- Rural and Remote Electricity Rate Protection: This charge is collected by the IESO to pay certain electricity distributors who provide electricity service in rural and remote areas. It helps to offset the higher cost of providing service to consumers in those areas. The charge is calculated annually by the OEB in accordance with rules set out in regulations.
- Renewable Connections: Some of the costs incurred by a utility to connect renewable generation facilities can be recovered from consumers throughout the province. This cost recovery is subject to OEB approval.
2. The Standard Supply Service Charge covers a portion of a utility's administrative costs to provide electricity to customers that purchase their electricity from the utility (i.e. customers that are not served by a retailer). This charge is set by the OEB and is the same for all utilities across the province.
3. Ministry of Energy Programs: This charge allows the Ministry of Energy to recover the costs associated with funding its conservation and renewable energy programs.
DEBT RETIREMENT CHARGE (DRC)
This 0.7¢/kWh charge is set by the Ontario Ministry of Finance and is used by the government to pay down the residual stranded debt of the former Ontario Hydro.
ONTARIO CLEAN ENERGY BENEFIT (OCEB)
The Ontario Clean Energy Benefit (OCEB) provides an automatic 10% rebate off of the total electricity bill for residential, farm and small business consumers. The OCEB is a government program intended to help consumers with the costs of building a cleaner, more modern electricity system, and will be in place until the end of 2015. Learn about the new Ontario Clean Energy Benefit: http://www.energy.gov.on.ca/en/electricity-prices/clean-energy-benefit/ or 1-888-668-4636.
ELECTRICITY (retail contract)
The price you pay for electricity is set out in your contract. You will also have to pay your share of the Global Adjustment for each month.
GLOBAL ADJUSTMENT
If you purchase electricity from a retailer, you will see a separate line item on your bill for the "Global Adjustment". The Global Adjustment accounts for differences between the market price of electricity and the regulated or contract prices paid to 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.
The Global Adjustment is calculated monthly by the IESO. Because a large portion of the Global Adjustment is calculated as the difference between the market price and regulated or contracted generation prices, it can be either a credit or a charge to consumers depending on fluctuations in the market price. However, it has been a charge since 2006.
CONTRACT PRICE
This is the electricity price set out in your contract. Retail contracts are often for a fixed price over a set number of years.
Page last updated 2012-01-06
