Market:  Ontario

The new ONTARIO FAIR HYDRO PLAN (OFHP), which went in to effect on July 1st 2017 and aims to lower monthly electricity bills for RPP customers (under 250,000 kWh a year or under the Residential Property, Condo or Long Term care verticals), will see rates increase yearly to match inflation (2017 – 2021).

From 2021-2027, total electricity costs will increase yearly by 6.8% and from 2027 to 2045 total electricity costs are estimated to be 4% higher than they wold be without the OFHP.  

A well placed source, tells this plan is adding an additional 1.4 billion PER YEAR to the Global Adjustment costs to be absorbed by other customers that do not fall in the RPP category, which means Class A customers that don’t participate in curtailment and Class B customers.

• The FVSA (Final Variance Settlement Amount) impacting customers that move between RPP and spot market prices has been suspended as of July 1st 2017 until further notice.

What the Ontario Fair Hydro Plan Means for You

The OFHP will affect customers paying RPP prices, as well as customers paying spot market prices + Global Adjustment.

In addition to the targeted monthly bill reduction of 25%, there are other changes included in the OFHP that may impact you, such as the suspension of the FVSA mechanism.

If You Pay RPP Prices

The OFHP has set new RPP prices, effective July 1^st 2017, to reflect the approximate 25% bill reduction.

The tables below illustrate the new RPP prices in effect as of July 1^st 2017, for both TOU (Time-Of-Use) and Tiered pricing.

Rates will increase to match inflation for the next 4 years.

If You Pay Spot Market + Global Adjustment

For customers not paying RPP prices (instead paying spot market prices + Global Adjustment), they will see a reduction of their Global Adjustment charges, reflected by the new “GA Modifier”.

The GA Modifier is a 3.29 ¢/kWh credit ($32.90 per MWh) which will be reflected on your monthly bill as a reduction to your Global Adjustment charges.   The GA Modifier will be adjusted each year to reflect inflation.

Final Variance Settlement Amount

Normally, if you decide to switch the type of electricity rate you pay (either RPP prices or the spot market price of electricity) you will pay/receive a debit/credit when switching between rates. This debit/credit settlement amount impacts the savings you would experience, and often outweighs the benefits of switching rates.

The FVSA mechanism has been suspended as of July 1^st 2017, which means that switching between RPP prices or the spot market price of electricity will carry no debit/credit settlement amount.

This will provide more opportunities to switch between RPP and spot market prices to benefit from lower rates, depending on market trends and the difference between RPP prices and spot market prices.

What Happens Next?

Overall, the OFHP will allow customers to benefit from lower (than status-quo) electricity rates, and reduced total electricity bill costs for 10 years (2017 – 2027).

In 4 years, electricity bill costs are anticipated to increase by an average of 6.8% annually for 6 years, and surpass status-quo levels (2021 – 2027).

From 2027 – 2045, total electricity bill costs are projected to be an average of 4% higher than they would be if the OFHP had not gone into effect.

For more information on our Price Optimization Program:

https://onterraenergy.com/price-optimization/