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Understanding time-of-use billing for smart meters; OFA COMMENTARY

Simcoe Reformer: DON MCCABE, VICE PRESIDENT, ONTARIO FEDERATION OF AGRICULTURE - October 19, 2010

Many Ontarians are questioning the benefits of time-of-use as the province moves toward smart meters and time-of-use billing. While there's no question that hydro bills are on the rise, identifying all of the causes for hydro increases is key in better understanding how time-of-use meters will impact your hydro bill.

Currently there are 200,000 customers in Ontario who are using time-of-use metering. Very few of these are farmers.

OFA members who have noticed an increase in their hydro bills should look to alternate factors as to why their bills are on the rise.

Transmission and distribution rates rose at the end of May, increasing the average hydro bill by approximately nine per cent, with an additional increase of eight per cent in June due to the new HST. As renewable energy -such as solar and wind power -is added to the energy mix, rates will be impacted by one to three per cent.

A debt repayment fee is also attached to hydro bills across the province to account for power used over the past 25 years combined with a lack of funds set aside to invest in current and future supply. This adds up to more fees on your hydro bill.

When time-of-use metering comes into effect, there is a possibility that some Ontarians will have an added increase on their hydro bills -not because of a change in rates, but because many customers paid inaccurately low rates based on faulty meter readings in the past.

For a small portion of customers across the province, old meters were under-reading actual energy use. These customers were unknowingly paying less for their hydro than they should have. For these customers, smart meters may result in higher hydro bills than their old bills, based on more accurate readings on energy use. Likewise, customers who had faster meters will find a rebate on their hydro bills based on accurate readings on the new smart meters.

The OFA is working with Hydro One to determine the impact of time-of-use billing on Ontario farmers. This means actual hydro readings being done on a range of farm operations -- dairy, grains, poultry, swine, etc. -- and then calculations of time of use versus current one rate pricing. At this stage, the results look promising.

Hydro costs are currently based on a province-wide average for energy use during different times of the day for either off-peak or peak hours. Farmers tend to use less expensive off-peak electricity more often than the average consumer, yet farmers had to pay the median cost for power based on the provincial average.

With the new time-of-use rate structure, all customers will pay closer to the actual cost for the power they use. On average, most farmers will pay slightly less on time-of-use billing than they currently pay. Advantages for farmers will be modest with a savings in the range of one to five per cent.

However, the advantages for the power supply system will be substantial.

A savings of just five per cent on average would free up 1.5 gigawatts of power for Ontario -- the equivalent to building three large nuclear reactors at a cost of $4 billion.

Energy savings for members in the food processing sector will be even more significant.

The OFA supports a plan to move Ontario toward pricing for power that works for the province. We are working on recommendations that will provide solutions to drive our economy and work for our farmers, while still addressing Ontario's energy needs -- for now and into the future.