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Your Electricity Bill on an Energy Contract

A Line by Line Comparison

Below are sample electricity bills for consumers on 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. Descriptions for each line item are provided below.

Use our bill calculator to compare your utility bill with one you would see if you sign a contract with a retailer.

 

electricity bills

Electricity

This is the cost for the electricity you used during the billing period. Most Ontario consumers pay time-of-use (TOU) prices. TOU prices are set by the OEB based how much we expect it to cost to supply electricity to all households and small businesses you over the next 12 months. Prices are designed to recover the payments made to the electricity generators that produce the power (including market costs and the Global Adjustment). Utilities are not allowed to make a profit on the electricity they buy for their customers.

We review the prices twice a year, on May 1st and Nov 1st, and adjust them if necessary.

If you have signed a 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.

Contract Price
This is the electricity price set out in your contract. Typically, it’s a fixed price for a set number of years. The OEB does not regulate the prices offered by these companies.

Global Adjustment
This is shown on your bill as a separate item, calculated by the Independent Electricity System Operator each month. It can be either a credit or a charge depending on the changing market price; however, since 2006 it has generally been a charge.

The Global Adjustment reflects the differences between the market price of electricity and the regulated or contract prices that are 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). It also includes Ontario Power Generation's (OPG) “base load” generating stations that need to run at or near capacity all the time to meet basic demand. While the OEB does not set the amounts that the OPA and OEFC pay to contracted generators, we do set the amounts that are paid to OPG. (* Note: The Ontario Power Authority merged with the Independent Electricity System Operator on January 1, 2015.)

Lastly, the Global Adjustment reflects the costs of conservation programs. This includes both OPA conservation and demand management programs, which we do not approve, and the amount that individual utilities spend to meet their conservation targets, which we do approve.

 

Delivery

This is the cost of delivering electricity from generating stations across the province to your home or business through high voltage (transmission) and low voltage (distribution) power lines.

Delivery charges are approved by the OEB. Some of these are fixed at a set amount per month. Others are variable and increase or decrease depending on how much electricity you use. Delivery charges include:

  • Customer Service Charge: A fixed charge for costs relating to meter reading, billing, customer service and account maintenance, and general utility operations.
  • Distribution Charge: A variable charge for costs of building and maintaining the distribution system, including overhead and underground power lines, poles, and transformer stations. View utility electricity distribution rate applications and decisions.
  • Transmission Charge: A variable charge for the costs of transmitters to operate and maintain the high-voltage transmission system that carries electricity from generating stations to your utility.

Loss Adjustment
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 multiplies your electricity cost by an OEB-approved adjustment factor that accounts for those losses.

 

Regulatory Charges

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 certain costs incurred by local utilities to connect renewable generation. Although the Wholesale Market Service Charge is set by the OEB to allow these costs to be passed on to consumers, the OEB 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 OEB.

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.
  • 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.

     Fees set or approved by the OEB:

  • IESO Administration Fee: The IESO charges an administrative fee to manage the high voltage power system and operate the wholesale electricity market in Ontario.
  • OPA Administration Fee: This fee pays for administration costs related to planning for generation, demand management, conservation and transmission in the province. This fee does not cover the contract payments made to generators or costs for the delivery of conservation and demand management programs
  • 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.
  • Renewable Connections: Some of the costs incurred by a utility to connect renewable generation facilities (e.g. solar, wind) can be recovered from consumers throughout the province.
  • Ontario Electricity Support Program (OESP) Charge: This charge is collected to pay for the costs of the OESP. The program provides eligible low-income customers with a monthly credit on their electricity bills

2. The Standard Supply Service Charge: Customers who purchase electricity directly from their local utility, rather than a retailer, pay an administrative fee to their utility to cover these costs. This charge is the same for all utilities in the province and is set by the OEB.

 

Debt Retirement Charge (DRC)

This 0.7¢/kWh charge is set by the Ontario Ministry of Finance to pay down the remaining debt of the former Ontario Hydro. The Debt Retirement Charge was removed for certain residential consumption after Dec. 31, 2015. Learn more at Ontario.ca/DRC.

 

 

 

Page last updated 2015-12-31

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Ontario Coat of ArmsONTARIO ENERGY BOARD
P.O. Box 2319
2300 Yonge Street
Toronto, Ontario, Canada
M4P 1E4

1-877-632-2727 (toll-free within Ontario)
416-314-2455 (within Greater Toronto Area or from outside Canada)
Fax: 416-440-7656

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