Hydro rates to drop

Residential and small business customers of the Fort Frances Power Corp. will see a total rate decrease of 5.8 percent beginning next month, according to two announcements made by the Ontario Energy Board in the past week.
Effective Nov. 1, the Regulated Price Plan (RPP) prices will dip from 5.3 cents per kilowatt hour to 5.0 cents per kilowatt hour up to the consumption threshold (the first 1,000 kWh) each month.
Those who use more than 1,000 kWh will see a price decrease from 6.2 to 5.9 cents per kilowatt hour.
The new prices represent a reduction of 0.3 cents per kilowatt hour, or a 4.8 percent decrease relative to the prices that went into effect back in May.
The impact of this price reduction on each consumer will depend on how much electricity they use.
The period from Nov. 1-April 30 marks the winter price period, where residential consumers can use more electricity at a lower price.
As in previous years, the amount of electricity charged at the lower price will change from the summer threshold of 600 kilowatt hours per month to the winter threshold of 1,000 kilowatt hours per month.
Non-residential consumers eligible for the price plan can continue to use 750 kilowatt hours each month at the lower price throughout the year.
The reduction in RPP prices principally is due to the need to reduce the surplus in the RPP variance account balance. As a result, a credit of 0.3 cents per kilowatt hour has been included in RPP prices to clear the variance account surplus over the next 12 months.
Another reason for the drop in electricity prices is the expected decrease in the cost of fuels, such as natural gas, used by some electricity generators, relative to the previous forecast.
The recent appreciation in the Canadian dollar is a major contributing factor since such fuels are purchased by generators in U.S. dollars.
The new price plan only applies to those under a regulated price plan, such as FFPC residential and small business consumers who use under 250,000 kWh/year and who buy their electricity from a utility. Consumers who currently buy their electricity from a retailer and pay their contract price will continue to do so.
The price plan is designed to ensure consumers pay what it costs to supply their electricity while smoothing the daily price variations that occur in the market.
When the OEB sets prices, it adjusts for past differences between what consumers have paid and what it has cost to supply them, and it incorporates a 12-month forecast for future electricity costs.
RPP prices are reviewed and can change twice a year at set dates in the spring and in the fall, taking into account a number of factors.
In a second and separate reduction, the OEB on Wednesday announced a decrease of one percent in the transmission rates in Ontario.
The uniform transmission rates approved will be in effect from Nov. 1, 2007 until Dec. 31, 2008.
The board decision has reduced uniform transmission rates by an average of roughly 12 percent over the period compared to previous rates, which should result in a one percent decrease in an average customer’s total electricity bill.
Transmission costs account for about eight percent of the average total electricity bill.
The effect of changes to transmission costs normally is reflected on the “delivery” line of residential consumer bills.
Transmission rates recover the costs of transmitting electricity from generators to large end-use customers or to electricity distributors.
For more information, visit the OEB’s website at www.oeb.gov.on.ca