Duane Hicks
The bad news: Fort Frances Power Corp. customers’ electricity bills will be going up in the new year, along with the rest of Ontario residents.
The good news: FFPC customers still enjoy the cheapest power in the province.
Due to several changes in hydro billing in Ontario, residential customers’ bills will go up an average of 13.5 percent, FFPC CEO and president Joerg Ruppenstein said during a quarterly report at Monday night’s council meeting.
The cost of electricity for general service customers, such as town facilities, will go up 16.9 percent, he noted.
In dollars and cents, this means the average FFPC residential customer will pay $11.67 more on their monthly bill starting in 2016.
But neighbouring Hydro One customers will pay an average of $16.08 more per month due to the transition.
One change is that the Debt Retirement Charge will be removed from bills as of Jan. 1.
Back when the former Ontario Hydro was broken apart in 2002 and the market was privatized, the stranded debt of that entity was passed onto all ratepayers.
The Debt Retirement Charge for FFPC customers was $.0047 per kilowatt hour (kW/h), whereas most Ontarians paid $.007 per kW/h (Fort Frances had a preferential rate due to the fact it was not connected to the rest of the province’s electricity system until the early 1970s and thus had a lesser share of the stranded debt).
While the removal of the Debt Retirement Charge is a good thing, it’s balanced out by a second change—the removal of the Ontario Clean Energy Benefit Credit from bills.
This credit is a 10 percent overall roll-back of your entire bill, which was introduced in 2011 to help temporarily offset the rising costs of electricity.
The 13 percent HST was applied to electricity bills in July, 2010, replacing the five percent GST.
Numerous costly government policy changes were implemented over recent years, including the phasing out of relatively cheap coal-fired electricity generation, which was replaced with renewable energy generation at a premium cost, noted Ruppenstein.
“We also had program roll-outs that were fairly costly, such as the ‘smart meter’ implementation that was mandated, as well as the transition to time of use rates,” he added.
Another change happening over the next four years is that the Ontario Energy Board has mandated that distribution charges move from a fixed variable model to a strictly fixed one.
Right now, the fixed/variable split on electricity pricing is a 63/37 split. Starting in 2016, this will move to 73/27 and then 10 percent year after year until it’s a 100 percent fixed charge as mandated.
What this means is a flat monthly distribution charge will be paid by all customers
regardless of how much or how little electricity is consumed.
This will benefit customers with large consumption, such as those with electric heat.
Conversely, it’s going to disadvantage those with low consumption.
“This also means potential for savings through conservation efforts is [reduced] as a smaller portion of the bill is now based on variable consumption,” Ruppenstein explained.
There’s a misconception the FFPC has total control over electricity bills, but the reality is it’s only in control of about 20 percent.
“Eighty percent is a flow-through and essentially all of these changes you’re seeing is from that 80 percent we have no control over,” stressed Ruppenstein.
A big part of this 80 percent is the global adjustment charge, which continues to balloon.
This charge reflects the difference between the market price of electricity and the regulated or contract prices that are paid to generators for the electricity they produce.
In other words, it reflects the excess payments made to generators above market price.
Global adjustment also fund the Feed In Tariff (FIT) program, which is part of the Green Energy Act, as well as conservation and demand management, and government power system planning decisions, such as the recent cancellation of the gas-fired generators that now has to be picked up by ratepayers.
For residential customers, the global adjustment charge is not seen as a separate line item on your bill but rather is rolled up into the commodity portion, which is roughly two-thirds of your bill, noted Ruppenstein.
The global adjustment came into effect in 2005 and was at first a credit, not a charge.
Over the years, however, FFPC customers’ portion of global adjustment charges by year has grown from $391,000 in 2006 to $2.7 million in 2009 to $4.6 million in 2015.
Still, the impact here is not as great as it could have been. The FFPC won a monumental campaign in 2011 to get global adjustment charge exemption on the volume of electricity that is associated with the historic power agreement.
What this means is that the FFPC was able to give back $1.9 million to its customers in the form of a one-time rebate for global adjustment charges incurred between 2005 and 2010.
Between 2006 and 2014, $23.2 million of global adjustment charges were directed at the FFPC customer base. With the exemption, the FFPC was spared $7.3 million and ratepayers here only paid $15.9 million.
Looking forward, it’s projected that between 2015 and 2032, the entire province has to pay $133 billion in global adjustment charges, which translates to a $57 million share for FFPC customers.
But thanks to the exemption achieved, that $57 million is reduced by $26 million.
Ruppenstein said the global adjustment exemption has increased to become worth more than the value of the historic power agreement—and that spread will continue over time.
“It’s good news for our customers,” he remarked.
Customer service
Meanwhile, with all the changes on the way, the FFPC is launching a customer service campaign to help residents save on their energy bills.
“We’re very concerned at the rising cost of electricity that our customers face so we’ve made some changes to our business, to our organizational structure,” noted Ruppenstein.
The FFPC has added a new position—technical customer service representative—for which Jeremy Nussbaumer was hired earlier this year.
“We’re going to be offering new services and new tools to our customers to help them offset or mitigate the rising costs of electricity,” said Ruppenstein.
These include:
•home inspections and analysis, such as thermal imaging for heat loss;
•electricity consumption and usage pattern data analysis to de-mystify which household appliances are consuming how much electricity;
•giving customers access to “smart meter” data (or e-billing) so they actually can see their hours of consumption;
•new customer education campaigns to help them understand and quantify electricity and its impact;
•launching a new website shortly;
•helping customers with upcoming technologies such as energy storage, electric vehicles, and in-home electricity generation; and
•launching a customer service tool kit that currently is being developed, including an appliance efficiency rating tool, an appliance operating cost analysis tool, a lighting retrofit savings calendar, a home heating cost calculator (by fuel type), and ultimately, a bill comparison calculator.
On a provincial level, the Ontario Energy Board also is launching the Ontario Electricity Support Program (OESP).
This program is available to all low-income customers who have accounts with electric utilities, unit sub-meter providers, and retail energy companies.
Customers can apply online at ontarioelectricitysupport.ca
The FFPC also mailed out an OESP bill insert to all its customers.
The program begins Jan. 1 and monthly credits can range from $30-$70 (depending on number of dependents, income level, and whether or not you have electric heat).
OESP is supported by ratepayers.
