Understanding Natural Gas Pricing -Your Gas Bill.
Your natural gas bill includes several items including delivery (transportation
and distribution), a monthly fixed charge and a commodity charge. Natural
gas deregulation generally applies to the commodity price component
of your natural gas bill. The first three items are related to the transportation,
distribution and customer service costs to provide natural gas service
to your home. The distribution and monthly fixed charges remain regulated
and will not change whether or not you buy your natural gas from an
energy marketer or from your natural gas utility. The transportation
component includes the costs associated with transporting your natural
gas to your local natural gas distribution utility including the costs
associated with compressor fuel required to transport the gas from the
supply source to Ontario. The distribution costs relate to the storage
and distribution of the natural gas in Ontario and the Ontario Energy
Board determines this cost. The Ontario Energy Board also determines
the customer charge, which includes the utility's metering costs, safety,
and other customer related costs.
Natural Gas Supply and Transportation.
Natural gas is a key source of energy in North America. Canada currently
produces in excess of 20% of North American natural gas supply and exports
slightly more then 50% of Canadian production to the U.S. market. Ontario
is mainly supplied by Western Canadian natural gas, but there is a small
amount of Ontario production as well as some imports from the United
States. A pipeline transportation system has been developed to allow
natural gas to be delivered to multiple markets. This system allows
for efficient transportation of natural gas to the market. Because of
the extensive network of natural gas pipelines, natural gas prices tend
to change across North America at the same time and to a similar extent.
The price of natural gas at the wellhead is determined by the available
supply and current demand for natural gas.
The number of drilling rigs and the success rate in finding natural
gas determines natural gas supply. It can take from 6 months to 3 years
to obtain production from any new discovery well that is drilled due
to the need to build processing and transportation facilities to connect
to the transmission system. The demand for natural gas is determined
by weather, customer consumption patterns and industrial loads.
How your Utility sets a Gas Price.
Your natural gas utility does not make a profit from buying and selling
gas. The utility is only allowed to recover its prudently incurred purchased
costs. Your utility will forecast an annual price for natural gas and
then establish a purchasing strategy to manage to that price. Large
changes in natural gas prices, both up and down, cause the utility to
change its forecasted price. These changes in price are made after the
appropriate regulator (the Ontario Energy Board for the large utilities)
approves the new forecasted costs. Your utility's use of natural gas
storage helps to moderate the need to change prices. Approximately 25%
- 30% of natural gas consumed each winter in Ontario will be withdrawn
from Ontario based storage fields. This gas would be injected in the
storage field the previous summer. This has delayed the need for your
utility to pass through the large price increases it experienced up
until March 2001. Your utility uses a portfolio of long term and short
term purchases and it also fixes the price of some of its purchases.
While your utility tries to maintain a stable price, it needs to adjust
prices when market conditions change. Your utility will bill you for
the gas commodity based on the price it pays for natural gas as the
natural gas enters the transportation system into Ontario with a quarterly
or annual adjustment.
How Natural Gas Marketers set a Gas Price.
Natural gas marketers must be licensed by the Ontario Energy Board
to offer unregulated services to the residential market (consumption
of less than 50,000 m3 per year). Retail marketers are able to offer
long-term fixed prices based on competitive market conditions. This
competitive market includes offers by other marketers and the expected
price of natural gas in Alberta for the agreed term (usually a 3-5 year
period). The marketer will contract for supply from producers for the
term of your agreement. This allows them to provide a stable price.
The marketer will then contract with your distribution utility to arrange
distribution to your home. Your marketer will generally bill you based
on the contract price for the natural gas as the natural gas enters
the transportation system to Ontario (in the Union Gas service area,
marketers may also upon agreement with you, establish the price for
the transportation To You component of your bill). As noted previously
the cost of distribution service remains the same whether your utility
or your marketer provides the natural gas.
Is now a good time to sign with a Natural Gas Marketer?
Market conditions for natural gas prices are such that the 3 - 5 year
term price for natural gas is below the utilities' current price for
natural gas. This provides you with an advantage in signing with a retail
marketer until the utilities' prices decrease. The ability to fix your
gas price will allow you to budget your natural gas costs without the
concern of price adjustments or further price increases as it relates
to the commodity price component. But if natural gas commodity prices
fall, your contracted gas price will still be fixed.
Natural gas commodity prices react to expected supply and market requirements,
and your utility's price will reflect these changes. Natural gas prices
have historically followed a 9 - 18 month price cycle due to weather
(including the amount of rainfall to generate electricity), environmental
concerns and economic conditions. This would indicate that several periods
of high pricing are likely to occur during a 5-year term. Contracting
with a natural gas marketer will avoid these price changes. Customers
will need to determine how these price fluctuations will affect them
if they remain with their utility.
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FREQUENTLY ASKED QUESTIONS
When did the natural gas market become competitive?
In 1985, the Federal government and the provincial governments of
the western Canadian gas producing provinces opened the natural gas
industry to competition.
Is it mandatory to sign with a natural gas marketer?
No. You are not required to sign with a marketer, although the law
may change in the future. Check with your utility or call OEMA's toll-free
number above if you need more information on government legislation
regarding natural gas.
What are my options in a competitive market?
You may remain with your utility (Enbridge Consumers Gas, Union Gas
or Public Utility) or purchase gas from an independent marketer. If
you remain with your Utility, you will be billed at the regulated price,
subject to adjustments. This price is regulated by the Ontario Energy
Board (OEB). If you choose to purchase from a marketer, your gas will
continue to be delivered to your home by the utility. The utility will
also continue to provide you with emergency response services. Marketers
offer a variety of short and long term contract options.
What is agency, billing and collection - transportation
(ABC-T)?
Customers who have an ABC-T arrangement see the name of their marketer
and the price of their gas supply on their utility bills. The utility
collects the money from the customers and remits it to the marketer,
charging the marketer a fee for the service. ABC-T is an optional service
and the marketer may bill the customer directly instead. This billing
service combined with the Transportation service represents delivered
sales service to customers.
What are buy/sell or rebate programs?
A marketer purchases gas directly from a gas supplier (for example,
a gas producer in Alberta) on behalf of his customer. The marketer then
sells the gas back to the utility at the OEB regulated "buy" rate. The
utility delivers the gas to the customer and resells the gas back to
the customer at the OEB regulated "sales" rate. If the marketer purchased
the gas from the supplier at a price below the OEB regulated rate, the
customer can also realize a benefit by getting a share of that saving
(depending on their contractual arrangements with the marketer).
These benefits will usually be in the form of a cheque sent by the
marketer on an annual basis. Marketers no longer offer this program
to new customers and will not renew buy-sell contracts once they reach
their expiry dates.
What are the benefits of a fixed-price program?
If you choose a fixed-price for your natural gas over a fixed period
of time, you will have the benefit of knowing your future gas costs
for that time period. If gas prices rise above your fixed-price during
the term of your contract, you may benefit from having a lower gas cost.
However, if gas prices fall, your gas costs may be higher than they
would have been with another option. Gas prices offered by the marketer
may be higher or lower than the regulated utility gas price.
What is transportation service (T-service)?
Under a T-Service arrangement, a marketer purchases gas from a supplier
in Western Canada on behalf of their customer. The gas is then delivered
to the customer's utility. The utility delivers an equivalent amount
to the customer. These contracts run for at least one year.
What are the benefits of signing with a marketer?
By signing with a marketer, you can purchase natural gas for both
the price and terms that best suit your needs. You may have lower gas
costs because your marketer was able to purchase natural gas more cheaply
than your utility or because you might not incur the retroactive rate
adjustments that you are charged as a utility customer. About 1 million
Ontarians have signed long term contracts with natural gas marketers,
and most of those are paying substantially less than the utility's rate.
Is it a good deal?
We cannot advise you whether or not to sign with a particular marketer.
We can suggest that you comparison shop by checking their current rate
compared to the current rates other marketers are offering. Be sure
to check if there are any charges in addition to the rate. You can visit
the Energyshop.com Web site to compare marketers' rates.
What are the risks of signing with a marketer?
If you have chosen a fixed-price contract, it's possible that the
price you are paying may be higher than the market price for natural
gas. If your marketer goes out of business, your gas service will continue
but you may end up paying a higher price for the "back up" supply from
your utility unless your marketer has arranged for your supply to continue
under the same terms and conditions with a different company.
What happens if another company buys out my marketer?
Marketers can and do periodically buy out another marketer's customer
base. The new marketer must be licensed and takes over the obligations
of the original marketer. You should be notified of the new marketer's
address for service, telephone number and the consumer complaint resolution
process, if these have changed. As long as the new marketer fulfils
the terms you agreed to with the original marketer, your contract should
still be valid.
Is my contract still valid if I'm moving?
Check the terms and conditions of your contract. Some marketers require
that you continue purchasing from them if you remain in the same utility
area. If you move and your address changes and you wish to maintain
the contract, contact your marketer prior to moving and arrange to have
the contract terms and conditions carried over to your new address.
What is an administration charge?
The marketer may charge an administration charge. The utility charges
a customer service charge.
Who issues my bill ?
Currently the utility is still responsible for sending you your utility
bill. In the future, your marketer may provide this service.
What is a compressor fuel charge?
The compressor fuel charge (CFC) is the amount of gas used to push
your gas through the pipelines. The utility and marketer both charge
you a CFC. This charge is included in the gas supply charge. If you
are with a marketer, your contract will state whether or not this charge
is included in the price you pay for gas.
What will I be charged for my natural gas?
If the utility supplies your gas, it charges you the rate approved
by the OEB. This rate can change on a quarterly basis, with OEB approval.
If you have a contract with a marketer, you will be charged the price
you agreed to in your contract.
Is there a delivery charge?
This is a charge regulated by the OEB, which includes an approved
rate of return on the utility's investment. It covers the cost of piping
the gas from the Ontario border to your home or business.
Who pays the transportation charge?
If the utility supplies your gas, the utility is responsible for
charging the transportation charge. If you have a contract with a marketer,
the marketer may take responsibility for transportation. In the Union
Gas franchise area, marketers may already be responsible for your transportation
charges. Enbridge Consumers Gas has not yet unbundled the transportation
portion of the bill. Check your contract carefully to determine which
parts of your gas bill your marketer may be responsible for and which
parts of your bill your marketer allocates to the utility. Your marketer
should be able to explain the terms of your specific contract more clearly
if you need additional information. Your contract may also allow for
a marketer to take over responsibility for transportation, volume/load
balancing and delivery as the gas market continues to deregulate. (These
are all additional charges over and above the gas commodity.)
Who regulates utility pricing?
The utility price is regulated by the OEB. Marketers can offer you
variable competitive rates depending on the program and term you have
chosen. For current pricing, contact the marketer and request an Information
Package to enable you to make an informed decision. You can also browse
the energy shop pricing Website or look at our membership listing.
What is volume/load balancing?
This is a charge the utility currently includes in the delivery portion
of your bill to balance the volume of gases stored to meet the needs
of supply and demand.
Do these regulations apply to industrial gas users?
Current licensing regime and codes are for the protection of customers
that consume 50,000 m3 or less annually. Customers that consume more
that 50,000 m3 of natural gas annually usually have very tailored contracts
specific to their needs. Please contact OEMA for more information.
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As an Enbridge Gas Distribution customer, you have
two options:
Remain with Enbridge Gas Distribution as your natural
gas supplier.
Purchase gas from an independent energy marketer.
The choice is not unlike the one you make with your long distance
phone carrier -- you may either purchase your long distance service
through Bell Canada or purchase service from an independent broker.
Something to keep in mind about charges and your bill Keep in mind
that the arrangements you make with an energy marketer will affect only
the Gas Supply Charge portion of your gas bill. The Gas Supply Charge
reflects the cost of the gas you use __it typically accounts for about
40% of your total gas costs.
The Delivery Charge and Customer Charge which represents almost 60%
of your gas costs are not affected by your gas supply purchase choice.
And, whether you purchase your gas from an Energy Marketer or Enbridge
Gas Distribution, your Supply, Delivery and Customer charges are still
on one bill __ your monthly Enbridge bill.
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Your Options:
Enbridge Gas Distribution.
Enbridge Gas Distribution supplies natural gas at the rates regulated
by the Ontario Energy Board (OEB). As a regulated utility, we are limited
in the various prices we can offer to different groups of customers.
Therefore, we simply pass along our costs of purchasing natural gas
without a mark-up. Enbridge Gas Distribution earns its income from delivering
natural gas to customers, not from the sale of natural gas itself.
Independent Energy Marketers
If you choose to be represented by an independent energy marketer,
you will enter into a binding legal contract which allows this energy
marketer to act as your purchasing agent. Your energy marketer arranges
to buy natural gas on your behalf. Enbridge Gas Distribution will continue
to deliver natural gas to your home or business. You will still receive
all the services normally provided by Enbridge Gas Distribution and
the charges for your gas supply will still be included on your Enbridge
bill.
Buying your gas supply from an energy marketer gives you an opportunity
to choose from a variety of gas supply options. These options may include
the offer of a price discount, a rebate cheque or a fixed price over
a specific term.
We encourage you to shop around __ contact several energy marketers
and compare your options in order to obtain the best price and term
to suit your needs. Make sure you're comfortable with the term you choose
__ since you're committed to it, just like when you select a term for
a mortgage.
Regardless of your choice, your gas will continue to be delivered
by Enbridge Gas Distribution, and we will also continue to provide you
with emergency response services.
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Are the gas rates that consumers pay regulated?
The Ontario Energy Board (OEB) sets the rates that Enbridge Consumers
Gas, Union Gas and Natural Resource Gas can charge for selling, distributing,
transporting and storing gas.
The Ontario Energy Board Act, 1998 requires the OEB to set ?just and
reasonable? rates. Rates are set at the lowest level consistent with
safe, reliable gas service and the long-term viability of the gas utility.
The utility is allowed to recover only its prudently incurred input
costs of operating and maintaining its system and buying gas supply
for its customers, plus depreciation and a reasonable return on shareholder
capital invested in the system. When setting rates, the OEB considers
the views expressed by interested parties at public hearings.
For users who buy their gas supply from the local utility, the utility's
cost of gas supply is the largest of the above input costs and has the
most impact on their gas bills. The price that utilities have to pay
for gas supply is determined in a competitive wholesale market. As long
as the OEB is satisfied that the utility's purchasing strategy is appropriate,
it is allowed to recover its gas costs by means of the supply charge
billed to users who buy their gas supply from the utility.
All gas used in Ontario is distributed to users by local utilities,
including the three regulated by the OEB, municipally owned utilities
in Kingston and Kitchener, and a handful of smaller utilities. However,
gas consumers may buy the gas supply (or commodity) itself either from
their local utility or from various competing independent marketers.
The price marketers charge for gas is not regulated, since they operate
in a competitive environment.
Are utilities allowed to make a profit on the gas they
sell?
The following applies to you only if you buy your gas supply from
your local utility (i.e. not from a marketer).
Your total bill from the utility is higher than the amount the utility
paid to buy the gas supply you consumed. However, the total bill consists
of charges not only for the gas supply bought by the utility in Alberta
or other producing region, but also for the transportation of the gas
to Ontario and its storage and delivery to your premises.
The gas supply charge (sometimes simply called "gas charge"), one of
the gas-related items on your bill, consists only of the utility's cost
to buy the the gas you used, plus a very small amount to cover the costs
of running the utility's gas purchasing department. (The rate used to
calculate this charge and the other gas-related charges on your bill
are all reviewed and regulated by the Ontario Energy Board). Therefore,
the utility does not "make a profit" on buying gas and re-selling it
to you.
How are wholesale gas supply prices determined?
At the wholesale level, natural gas supply prices throughout North
America are determined by the competitive forces of supply and demand.
These prices fluctuate constantly. Short-term prices are particularly
volatile owing to factors such as the weather, which can affect not
only demand but also supply. For instance, a hurricane in the Gulf of
Mexico, or a snap deep freeze in western Canada, two of the largest
gas producing regions in North America, can affect the short-term price
of gas if production facilities and gathering pipelines are disrupted,
or damage is anticipated.
In the longer-term, gas prices are affected by population and economic
growth, the prices of substitutes such as fuel oil, and by environmental
policies. For example, greater demand for gas as an environmentally
preferred fuel for electricity generation has resulted in higher gas
prices.
Why have wholesale gas supply prices increased so dramatically?
North American demand for natural gas has increased owing to: strong
Canadian and U.S. economies; the construction of new electricity generation
plants using gas, an environmentally preferred fuel; and the need to
replenish the low levels of gas storage remaining after the 1999-2000
winter, in order to meet demand during the 2000-2001 winter.
The efforts of North American producers to increase supply, the market's
response to higher prices, have not yet managed to catch up to this
burgeoning demand. However, with producers drilling for gas at a record
rate in 2000, the gap is expected to diminish.
Finally, a tripling of world oil prices from 1998 to 2000 buttressed
gas demand even in the face of higher gas prices, since industrial users
which would otherwise have switched from gas to fuel oil could no longer
afford to do so.
How is the export of gas from Canada regulated?
The federal government, not the provinces, regulates energy exports.
Exports of natural gas, oil and electricity have to be authorized by
the National Energy Board (NEB). The NEB?s current export guideline
for gas is based on the premise that the market will satisfy Canadian
demand by making sufficient supply available at competitive prices.
Before approving gas exports, the NEB reviews Canada?s foreseeable requirements.
The NEB has not turned down any gas export applications in several years.
In 1999, Canada exported about half the gas it produced to the U.S.
What are the items on my gas bill?
If you have specific questions about your bill, please contact your
utility. The telephone number appears on the bill. Although different
utilities use different terminology, the components of a typical residential
bill are:
Gas or Gas Supply Charge:
This is equal to the volume of gas consumed multiplied by the price
charged by the gas seller (either the utility itself or a marketer).
The price is calculated at a point (e.g. the Alberta/Saskatchewan border)
in or near the region producing the gas.
Transportation and Delivery Charges:
The transportation charge (if listed separately) is the cost of transporting
the gas from the producing region (e.g., Western Canada) to your local
utility?s pipeline system in Ontario. It depends on the volume of gas
used and the transportation rates charged by TransCanada PipeLines and
other gas transmission companies. The delivery charge is the cost of
storing the gas as necessary and delivering it through the utility?s
pipeline system in Ontario. It depends on the volume of gas consumed
and the utility?s delivery rates. If there is no separate transportation
charge listed on the bill (as in the case of Enbridge Consumers Gas),
the cost of transporting gas to the local utility?s system is included
in the delivery charge.
Customer Charge:
This is a monthly fixed charge designed to recover part of the fixed
costs incurred by the utility to install and maintain customer dedicated
facilities such as meters and service lines, and to provide customer
specific services such as meter reading and billing. The amount of gas
used has no bearing on the customer charge.
Total Gas Charges:
This is the total of the above charges.
Goods and Services Tax:
The federal government levies GST at a rate of seven per cent on the
Total Gas Charges amount.
In addition, other items billed on behalf of a company other than
the utility, such as water-heater rental charges, may appear on your
bill.
How is expansion of the gas distribution system
financed and regulated?
When assessing a utility's application to extend gas service to a
new area, the Ontario Energy Board (OEB) considers whether the utility?s
additional income from the new customers is likely to fully offset the
cost of the expansion project in the longer term and, if this is not
the case, the extent to which existing customers? rates would rise to
pay for the expansion. If the OEB finds that the utilitys existing customers
will have to subsidize the proposed expansion project to an unreasonable
extent through higher rates, it may turn down the application. A utility
may ask potential customers in a proposed new service area to make financial
contributions to ensure the economic viability of the expansion project.
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[Note: The following are excerpts from different web pages, offering
information on Natural Gas deregulation. The site url is listed as a
reference and the date the selected portions were copied]
IMPORTANT:
(and Note the new kWh designation for Small User)
This Information From The OEMA at http://www.oema.org/elect101.cfm
Electricity Deregulation 101 Background of the
Electricity Industry in Ontario
Electricity in Ontario has been largely publicly owned. The Province
has controlled most of the generation and transmission capacity via
Ontario Hydro while the municipalities owned most of the distribution
service. Ontario Hydro provided distribution service to almost 1,000,000
rural customers. Ontario Hydro had the advantage of a large amount of
water-powered generation, especially Niagara Falls. This allowed for
Ontario's power rates to be a major attraction of industry and helped
to create the current manufacturing strength in Ontario. Economic growth
in the 70s and early 80s lead to the construction of additional generation
capacity based on nuclear power and fossil fuels, coal and oil. These
sources of power were also competitive against other sources of electricity
production. Delays in completion of several nuclear units and operating
concern with the older nuclear units increased the cost of the nuclear
units and reduced the electricity supplied by the older units. This
led to large, rapid price increases in the early 1990s. The plants built
by Ontario Hydro are now worth much less then the cost to construct
them. As the Ontario Government is responsible for this debt, the debt
must be recovered in electricity rates over the next 8 - 13 years. Deregulation
of electricity generation ensures that the ratepayers and taxpayers
in Ontario will not face this problem again.
What is Changing in Ontario? The simple
answer is everything. Ontario Hydro has been changed into the following
companies: Ontario Power Generation ("OPG")- They operate
the generation capacity previously owned by Ontario Hydro. They are
in the process of selling generation capacity to reach a target of only
35% of Ontario capacity in 10 years. OPG will be a major party bidding
to supply power to supply your utility needs. OPG will continue to be
owned by the Province. Hydro One - It operates the transmission and
distribution system previously owned by Ontario Hydro. Hydro One has
purchased over 90 municipal distribution companies to improve the efficiency
in providing services to customers. Hydro One will be a major customer
purchasing power from the power grid. It will continue to be owned by
the Province. Independent Market Operator (" IMO") - They
will serve to dispatch power in Ontario. The will receive bids to supply
and purchase power in the Ontario grid. Their dispatch is intended to
provide reliable power at the lowest possible price. This process will
result in a new price being established each hour. The municipal utilities
will average out these prices each month to determine the cost of power
to their customers. Ontario Electricity Financial Corporation - The
assets of Ontario Hydro are less then their debts. The difference is
called the stranded debt (approximately $20 billion) and this will be
recovered in a special charge to all electricity consumers at the rate
of $0.007 per kilowatt-hour until the debt has been eliminated. This
charge is to be in effect on June 1, 2001. The debt repayment will also
be funded by sales of OPG assets, and profits generated by OPG and HydroOne.
Ontario Power Safety - The safety of the electricity system in Ontario
will continue to be a Provincial responsibility. This separate organization
will monitor the operations and procedures of all generators, transmission
and distribution systems in the Province.
What else is changing? As part of the
deregulation process in Ontario, your local distribution company will
be changing from the utilities department at City Hall to a separate
business. In some cases small towns have merged with other near-by towns
to create a larger utility. Other small towns have sold the utility
operations to a larger utility. Most larger towns and cities have created
their own utility business and will continue to provide reliable electricity
services. All these new companies will provide services regulated by
the Ontario Energy Board.
Will electricity rates increase? Wholesale
electricity rates have been frozen for 7 years and will continue to
remain constant until the deregulated market opens. While deregulation
itself doesn't create a higher electricity price, the fact that prices
haven't changed as costs have increased at the old Ontario Hydro and
the debt needs to be recovered in electricity rates will create higher
prices for electricity until the debt is repaid.
What will be included in my new hydro bill?
A key component of deregulation is to separate the various components
of the service you receive on your bill. These items include: Items
regulated by the Ontario Energy Board ("OEB"): 1) Transmission
service 2) IMO costs 3) Debt service cost @ $0.007/kw-hr 4) Distribution
costs
Market based pricing: 1) Electricity
commodity
What choices will the business market have?
The most recent usage cap between regulated prices and wholesale or unregulated supply prices is 250,000 kWh.
Electricity consumers who use more than 250,000 kWh a year, or spend at least $2,000 a month, pay the wholesale market price for electricity, with the exception of specially designated consumers such as hospitals, universities and farmers.
How is the electricity commodity to be price?
Standard Service Supply by your utility Each distribution company will
offer a SSS service. The SSS service provides for the customer to pay
their utility's average purchase cost for electricity. There will also
be a rebate due to a special Ontario Government arrangement to limit
the price charged by OPG. In effect, OPG will only recover $0.038 per
kw-hr for 90% of their generation of the first 4 years of deregulation.
The funds available for the rebate will depend on the actual market
prices determined by the IMO and the capacity owned by OPG. The funds
available for rebate decline as OPG sells or leases assets to other
parties. The price established by the IMO is based on the bids to supply
and consume electricity in all of Ontario including imports and exports.
Ontario is blessed with ample hydraulic, nuclear and fossil fuel powered
generation capacity and each will have different cost and environment
effects. Each utility will purchase electricity on an hourly basis to
match customer consumption. The distribution company will have to select
one of three options to price electricity: 1) Use a reference price
set by the OEB, subject to retroactive adjustments, 2) Establish a fixed
price with a third party retailer, not subject to adjustments, 3) Pass
through of spot market prices.
Consumers may wish to ask their utility how the utility plans to provide
this service when comparing offers from electricity retailers.
Retail Marketers Retail Marketers' offers represent the commodity value
of electricity for the indicated term. Most offers reflect a stable
price for greater than 1 year. The time of consumption will not affect
your costs. Some marketers will also offer environmentally friendly
options like wind power, solar power and small hydraulic power that
may be priced at a premium, but provide a defined environment improvement.
Issues affecting Electricity Prices Canada is committed to decreasing
the level of greenhouse gas emissions resulting from burning fossil
fuels over the next 10 years. Electricity generation is a large component
of the greenhouse gases emitted in Canada and 25% - 35% of Ontario's
power are generated with fossil fuels. Hydraulic and nuclear generation
does not generate greenhouse gases but there are limited opportunities
to develop hydraulic generation and new nuclear power plants are not
considered economic. The cost of coal and natural gas will affect the
prices of power generated using the fossil fuels. Natural gas is considered
more environmentally friendly then coal, but natural gas prices are
expected to be high over the next 5 years while coal prices are relatively
low and are stable. Several key factors will affect the price of electricity.
The biggest impact will be the new process to determine price in Ontario,
which is based on the highest priced supply offer accepted by the IMO.
The next largest factor is the overall supply in Ontario versus the
demand. The supply is limited by the generation capacity in Ontario
plus the available imports. The demand is affected by consumption by
industries, commercial operations and individual consumers. The consumption
of electricity in Ontario can change by up to 50% during any given day.
The highest consumption is usually from 2:00 pm to 8:00 pm each day
and the lowest occurs from 11:00 pm to 5:00 am. Prices will be lowest
during the nighttime hours. Environment issues will affect electricity
costs in the future as companies decide on how to provide new generation
capacity and the federal and Ontario governments propose restrictions
on greenhouse gases. Restrictions on generation will increase the costs
of electricity. Energy conservation offers the double benefit of reduced
electricity purchases which reduce emissions and the potential to reduce
the price of electricity.
How to minimize your electricity costs: The simplest approach to saving
money is to minimize your consumption of electricity and, to a lesser
extent, the time when you use electricity. The hard part is you have
to do things differently then the past. Florescent lights consume 80%
less energy than a regular light bulb of similar brightness; use them
to replace lights that burn out. The cost of electricity will cycle
each day to reflect the costs of generating the last increment of power
required. You can help your utility have money by reducing consumption
in the peak periods from 2:00 pm to 8:00 pm weekdays. Conservation and
efficiency are long-term issues that will affect the cost of electricity
on Ontario. Additional information on these issues is available from
your local utility and their websites.
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