December 16, 2020
On January 1, 2021, new Time-of-Use (TOU) and Tiered prices will come into effect for residential and small business customers under the Ontario Energy Board’s (OEB) Regulated Price Plan (RPP).
When the OEB sets RPP prices, it does so based on the forecast cost of supplying RPP customers with the electricity that they are expected to use over the next 12 months. The decrease in RPP prices for January 1, 2021 reflects a significant change in that cost of supply resulting from a decision by the Ontario Government to fund a portion of renewable energy contract costs.
Renewable energy contract costs are currently recovered from electricity ratepayers through the Global Adjustment (GA), and RPP customers pay their share of the GA through the RPP prices set by the OEB. As announced in the 2020 Ontario Budget, starting January 1, 2021 a portion of the contract costs for non-hydro renewable generation will be funded by the Province rather than being funded by ratepayers through the GA. This initiative, which is now supported by a regulation, represents a reduction of about $1.35 billion in the estimated cost of supply for customers over the RPP forecast period of January 1, 2021 to October 31, 2021. The RPP prices set for January 1, 2021 reflect that reduction.
Although RPP prices are decreasing, the impact of the reduced supply costs on the electricity bills of RPP customers will be offset by a reduction in the Ontario Electricity Rebate (OER) from 33.2% to 21.2% also effective January 1, 2021. The OER is a total pre-tax credit that is funded by the Province and appears at the bottom of electricity bills.