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FAQ: Electricity Market Overview

 

What changes have taken place in Ontario's electricity sector?

Ontario's competitive electricity market opened on May 1, 2002. On December 9, 2002, the government passed the Electricity Pricing, Conservation and Supply Act, 2002, that set the commodity price of electricity at 4.3 cents per kilowatt hour for low volume consumers and other designated consumers.

In December 2003, the government introduced the Ontario Energy Board Amendment Act (Electricity Pricing), 2003, which put in place a new interim electricity pricing structure, replacing the 4.3 cent per kilowatt hour (kWh) price cap as of April 1, 2004. Under the interim structure, residential, low-volume and other designated consumers were paying 4.7 cents per kWh for the first 750 kWh consumed per month, and 5.5 cents per kWh for consumption above that level.

Introduction of the Regulated Price Plan

In 2004, the Minister of Energy asked the Ontario Energy Board to develop an electricity price plan to better reflect the price paid to generators. The prices, which took effect April 1, 2005, were based on an OEB forecast of the cost of electricity over the next 12 months. On April 12th, 2006 the OEB announced new RPP prices effective May 1, 2006.

On December 9, 2004, the Government of Ontario passed the Electricity Restructuring Act, 2004, (Bill 100) which reorganizes the province’s electricity sector. The new legislation amends the Ontario Energy Board Act, 1998, and the Electricity Act, 1998.

 

What is the role of the Ontario Energy Board?

The Ontario Energy Board licenses all electricity market participants including generators, transmitters, distributors, wholesalers, retailers and the Independent Electricity System Operator (IESO) and the Ontario Power Authority (OPA). The Board approves the rates to be charged for the distribution and transmission of electricity in the province, as well as approving amalgamations, mergers, acquisitions and divestitures of distributors, and transmission line construction. The Board also approves the IESO's budget and fee schedule.

As part of its consumer protection role, the Board monitors markets in the electricity sector and reports to the Minister on the efficiency, fairness and transparency and competitiveness of the markets as well as reporting on any abuse or potential abuse of market power. The Board is responsible for reviewing market rules made by the IESO as well as hearing appeals of orders made by the IESO.

 

What happened to Ontario Hydro?

The former Ontario Hydro was broken into five separate, independent companies.

Two of the successor companies, Ontario Power Generation Inc. (OPG) and Hydro One Networks Inc. (HON) are commercial entities.

Ontario Power Generation (OPG) generates electricity and competes with other generating companies in the new marketplace.

Hydro One Inc. transmits and distributes electricity through its subsidiary, Hydro One Networks Inc. For more information on other Hydro One subsidiaries, please visit the Hydro One website at www.hydroone.com.

The three other entities are:

The Independent Electricity System Operator (IESO), a not-for-profit crown corporation that runs the electricity exchange for the sale and purchasing of power and arranges for the dispatch of electricity to regulated distribution companies. In turn, these distributors ensure electricity gets to your home.

The Electrical Safety Authority is responsible for setting the safety standards for wiring installations and equipment and appliance certification.

A crown agency, the Ontario Electricity Financial Corporation, is responsible for determining how electricity consumers will pay down Ontario Hydro's debt.

 

Why is it necessary to license electricity market participants?

The use of licences gives the Ontario Energy Board a regulatory compliance tool. Licences also provide market participants with clear requirements and regulatory certainty. Retailers are licensed to ensure they are financially solvent and technically competent.

 

How are consumers' rights protected in a competitive market?

A number of measures are in place to protect consumers. The Ontario Energy Board Consumer Protection and Governance Act, 2003, which came into effect on August 1, 2003, enhances and strengthens the Board's consumer protection responsibilities. As well, the Energy Consumers' Bill of Rights, which is part of the OEB Act, 1998, establishes a set of rules that electricity retailers must follow when entering into and renewing contracts with consumers.

All electricity retailers are subject to the provisions of the Consumer Protection Act, administered by the Ministry of Consumer and Business Services. And, all electricity retailers must be licensed by the Ontario Energy Board and obey a code of conduct. The OEB is able to investigate retailers, impose penalties, revoke or suspend licences and shut down retailers who operate illegally.

 

Who will bill me for my electricity?

If you have chosen to stay with your local utility, the utility continues to issue your bill. If you have signed a contract with a retailer, either the utility will issue the bill on behalf of the retailer or the retailer will bill you directly. If you have questions about who will issue your bill, you should contact your retailer directly.

 

Will I be able to determine the mix of energy sources that my retailer is offering?

Retailers selling cleaner sources of power are required to meet environmental disclosure regulations in order to be licensed by the Ontario Energy Board. A retailer claiming to provide more cleanly generated power will have to show you the mix of energy sources they propose to use and how it compares to the province-wide average.

 

Will extra power lines have to be connected?

Transmission and distribution of electricity continue to be provided by regulated transmission and distribution utilities. This means that the same wires are used to continue to deliver electricity to your home. It's just like long distance phone services - the wiring doesn't change.

 

Do I need a new meter or new wires into my home if I change suppliers?

In almost all circumstances, no, you do not. Your current meter and existing wires continue to be used. However, you should check this out with a new retailer, if you decide to change suppliers.

 

Who will maintain the meters at my home or business? What do I do if I believe my meter is not working properly?

Your local distribution company is responsible for maintaining your meter.

 

Who do I call if I have a service problem, outage or emergency?

You should call your local utility which still owns the distribution wires and poles and is responsible for delivering power to your home.

 

Who fixes power lines if they fail due to weather or accidents?

Your local utility is responsible for maintaining the power lines and ensuring that electricity is delivered to your home.

 

Does rural rate assistance continue in a competitive market?

Yes. Legislation maintains the government's commitment to preserve affordable and reliable electricity supplies in rural and remote areas. All customers continue to contribute and current customers on rural rate assistance continue to receive assistance at current levels as long as they qualify.

 

Where can I find out more information about the changes in the electricity market?

If you have additional questions or wish to learn more about the new electricity market, you can contact the Ministry of Energy at their toll-free number 1-888-668-4636, visit their Web site at www.energy.gov.on.ca, or e-mail your questions or concerns to the Ministry of Energy. You can also call your current electricity provider or call the Ontario Energy Board's customer service centre at 416-314-2455 or toll-free at 1-877-632-2727.

 


Related Information

FAQ: The Regulated Price Plan

FAQ: The OEB