Ontario Power Prices are Rising Faster Than Inflation

Seek first to understand - Stephen Covey The 7 Habits of Highly Effective People.
I find this to be an enlightening piece of advice I try to follow as much as possible.

In August 2016 I wrote a blog entitled Ontario Power Prices Are Too High in which I describe my journey in understanding how electricity prices in Ontario have changed and how this is impacted on our household consumption and costs of power going back to 2003. I also outlined our success in reducing costs despite rising prices.

In a follow-up blog Ontario Power Prices Have Fallen written in May 2018, I noted that the Liberal government bowing to pressure, had in fact lowered power prices; our monthly bills fell by more than 25% as a result. Combined with a significant reduction in our consumption we are now reaping the benefits of by way of the lowest annual cost of electricity in more than 15 years.

As a starting point I updated the graphs from my last post for the missing information for 2018 and then adding in data for 2019 - keep in mind I am using a September to August annual cycle.

For example, for 2019 I include data from September 19th 2018 through to August 20th, 2019 as billed monthly by my local distribution company Alectra Utilities.

Chart 1: Annual Consumption and Cost 

The graph is pretty compelling; our annual power consumption peaked in 2010 at 21,263 kWh and in the ensuing 8 years has fallen to 9,695 kWh; a reduction of 11,568 kWh or (54.4)%.

Our annual cost of electricity peaked a year later in 2011 at $2,597 and has fallen to $1,333; a savings of $1,264 or (48.7)%.

Since there have been multiple changes in how power is priced in Ontario I have taken a simple approach of using the annual billed cost and divided this by the annual billed consumption to arrive at my annual Effective Cost of Power as represented in the chart below.

Chart 2: Our Cost of Power 2003 - 2019

Chart 2 shows that from 2011 to 2019 my cost of power rose from $0.126/kWh to $0.138/kWh; an increase of $0.012/kWh or  +9.5%. On the face of it that is not so outrageous - a little less than a 1.2% increase annually. But the cost actually spiked to $0.169/kWh in 2016; equivalent to a 6.8% increase per year. It was this spike in prices that was the catalyst for the government to intervene and roll back prices.

While the Liberal government fulfilled their promise to lower prices by 25% the new Conservative government has not lived up to their campaign promise to lower prices by another 12%.  

Chart 3:My Effective Power Cost (Feb 2013 - March 2020)

 

In fact power prices are once again rising faster than inflation...

To illustrate that point Chart 3 breaks down my effective power cost by invoice; bi-monthly until June 2018 and monthly thereafter. My September 2017 to August 2018 average cost of electricity was $0.135/kWh and September 2018 to August 2019 $0.138; up by 2.2%. So far my September 2019 to March 2020 weight average cost has increased to $0.149/kWh and that is an increase of 8.0%!

In November 2019 the government changed the way they bill for electricity.

Hourly power prices increased significantly;
Off peak   rates increased from 0.065 to 0.101 /kWh or 55.38%
Mid-peak rates  increased from 0.094 to 0.144 /kWh or 53.19%
Peak rates         increased from 0.134 to 0.208 /kWh or 55.22%

The HST rebate was rolled into the new Ontario Electricity Rebate(OER).
The OER amounts to a 31.8% reduction from the Total Electricity Charge before HST.

The government stated the change in billing was to better illustrate the true cost of electricity before rebates so consumers would have more transparency. In my mind the old bill had set rates for power and based on hourly usage my costs were pretty easy to figure out. Under this new system there is less transparency in being able to control costs in my opinion.

Since the majority of my power used is off peak and that rate went up the most it is not surprising my overall cost of power is trending higher - in fact much higher than inflation.