Your Hydro Bill Explained – Part 1

Over the past couple of months, we have been doing a lot of explaining of hydro bills to our customers, which is really not surprising if you’ve ever tried to make sense of one.  Regardless of who your local utility company is, your monthly hydro bill is enough to make anyone dizzy.  Did you know that there are typically between 7 to 9 separate lines of individual charges on your bill?  Digging into each one can lead to even greater confusion.  For example, take a look at Hydro One’s explanation for the “Delivery Charge” portion of your hydro bill:

*When electricity is delivered over a power line, it is normal for a small amount of power to be consumed or lost as heat.  Equipment, such as wires and transformers, consumes power before it gets to your home or business. Line losses are an unavoidable part of delivering electricity. Therefore, we must purchase a small amount more than what you use. To determine the amount of electricity that we need to buy for you, we use a calculation called an adjustment factor to adjust your usage. The adjustment factor is used to account for the line losses in the electricity system that are not measured by your own meter. The adjustment factor is approved by the Ontario Energy Board and will vary according to your service type.

And what the heck is the “adjustment factor”?  That’s a great question… and we will get to this rather peculiar line item in a future post, but for now let’s start at the beginning, which in the context of hydro bills would be the current rates for electricity usage.  So there we shall start.  In Ontario, most residences are on Time Of Use (TOU) Rates.  This means that the rates change throughout the day during established time periods.  It is worth noting here that the TOU time periods also change seasonally in summer and winter.  Since we have already made the transition to summer rates, we will focus here to start.

The chart below shows the current TOU rates in Ontario, which reflect the most recent rate increase that was introduced May 1st.

You probably recognize this image, as it has been widely published by the Provincial government over the past few years, but have you really had a close look at it?  This is what it is saying:

You pay twice as much between 11am and 5pm to do the same thing you would between 7pm and 7am.  For example, let’s say you run a load of dishes in the dishwasher after 7pm, and it consumed 3kWh (kilowatt hours) of electricity, your cost would be $0.24.  If you did the same thing between 11am-5pm, your cost would be $0.48.  Oh, but if only that were the end of it.  That is not the full story, however, as we have yet to add in all those other charges, from all those other line items.  The main thing to understand at this point, is that those extra charges are relative to the amount of hydro you use, and in some cases, the amount of money you are spending.  This means that the more you use, the more you pay in extra charges.  Of course we pay more if we use more kilowatt-hours, but we also pay more additional charges for using more kilowatt-hours.  There is no volume discount here ladies and gentlemen.

The summary of this is that we carry a heavier burden of the load of EXTRA CHARGES the more electricity that is used, particularly during PEAK HOURS.  As we begin to explain the extra charges, you will soon develop a better understanding of the true impact of using electricity during peak and mid-peak hours, and the benefits of generating your own power during these times.  For now, it is enough to understand that the province has set up hydro rates so that you are paying double during peak times vs. off-peak times.  Use wisely and when you start to dream of ENERGY INDEPENDENCE…do not hesitate to ask for help and get us involved early in the planning stages as very little happens by accident.