Hydro bills expected to shrink soon

While Fort Frances Power Corp. customers have seen, or will see, a sharp jump on their recent power bills, the good news is that should change.
“The trend in the first couple weeks of October has shown the cost is going down,” said FFPC president and CEO Mark McCaig. “We expect winter energy prices to stabilize.
“But the bills [residents are] getting now, they’re paying higher rates than were anticipated for September,” he added.
McCaig said it was difficult to estimate the average increase per household, but people could find out for themselves by comparing the “cost of energy” portion of their bill with previous ones.
September figures from the Independent Electricity Market Operator (IMO) show the average price of electricity rose to 8.31 cents per kilowatt hour that month.
This is up from the 6.97 cents figure in August and 6.2 cents in July. By contrast, May saw a cost of only 3.01 cents.
The price hike was a result of hot weather in early September, causing more demand for power for air conditioning. That was magnified by an increasing number of hydro generators shutting down for scheduled maintenance, as is normal for that time of year.
McCaig noted this not only has affected consumers, but also local distribution companies (LDCs) like the FFPC.
For instance, total payments from LDCs to the IMO jumped to $1.1 billion last month, up from $860 million in August and $800 million in July.
This power must be paid for before LDCs collect from their customers, creating a cash strain.
“It’s just the way the invoices go,” McCaig remarked. “A lot of companies have been hit hard, and haven’t had the working capital to keep up.
“Our power invoices have been huge. We’ve managed to meet our obligations, but it’s been hard,” he added.
McCaig noted these enormous payments trickle down to customers as they have to pay the same price for electricity as do the LDCs—just a little later.
But the FFPC’s agreement with Abitibi-Consolidated softens the blow, with a monthly credit to customers and a year-end true-up, where the FFPC divvies up money in the power agreement account with customers in the form of rebates on their bills.
“It’s probably important Fort Frances still has bills 25 percent lower than anywhere else in the province,” said McCaig.
But whether or not similar hikes in electricity prices lie in the province’s future depends on whether or not more power generation initiatives are brought forth to the market, said McCaig.
He cited two nuclear plants in Pickering, which were supposed to go on-line once the market opened to competition in May, will significantly help out with the energy supply.