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2008 03 26
Toronto Hydro’s Anti-Green Rate Scandal
Toronto Hydro's archaic pricing policies are bent on destroying the city's position as a leader in sustainability. Why? A colleague of mine, Cameron Miller, discovered that Toronto Hydro customers are not treated the same when it comes to paying for electricity. Mr. Miller and his wife live in a condo in downtown Toronto. Retired now, they remain—more than ever—committed to reducing their environmental footprint. Like many Torontonians, they believe that conservation is essential to our city's viability, and should be rewarded by our community-owned utility companies.

It turns out that in Toronto being green makes one a bit of a fool—at least in the eyes of Toronto Hydro. Mr. Miller found out that he was paying more for his electricity than others who consumed far greater amounts. In fact, the more he reduced his use of electricity, the more he and others like him underwrite the excess consumption of others. Armed with proof, he went to the Ontario Energy Board. Here is his case:

This is about residential rates only.

But as Toronto Hydro has 500,000 residential accounts, at an average of 2000 kWh per bill, it’s quite an important piece of business. I’m not suggesting that I “discovered” the issue I’m speaking about. I’m just expressing my personal views, and want to thank the board for allowing me to do so.

I have selected 5 actual TH bills that friends of mine sent to me.

They represent quite a range of consumption. They also average close to the TH residential customer average of approx. 2000 kWh per bill.

image

My point is that the Customer Charge of $12.68/30 days regardless of kWh consumed is unfair, and discourages conservation.

I recently received a cheque for $5.22 from the CEO of TH, along with a very effusive letter congratulating me on reducing my electricity use by 10% compared to the previous summer. (None of these five bills is mine, but my consumption puts me between customers A and B.) So TH wants to be seen to be encouraging conservation, but its rate structure actually encourages consumption. Look at Customer E. He consumed 6000 kWh, fully 14 times the amount of Customer A. As thanks from TH, he gets a built-in 33% rate discount over Customer A, a huge volume discount. I’ll have to save an additional 10% next summer to get my $5.00 cheque, but Customer E gets his 33% volume discount on every bill all year long.

The Customer Charge, and here I quote from an e-mail from TH is for

- “fixed administration costs that do not change with your consumption. This monthly charge helps recover the administrative costs associated with providing services such as: meter reading, billing, customer service and basic connection costs. It's calculated as a daily rate then multiplied by the days of service within the current billing period.”


It strikes me that such administrative costs could well be less for a unit in a condo than for a detached house in Scarborough, for example. I’m in a 155-unit condo building, and condo buildings now regularly contain 200, 300, 500 living units. Are TH’s administrative costs for 500 condo units really as high as they are for 500 single-family dwellings? On the other hand, I will concede that some condo units are big consumers of electricity, so why not base the Customer Charge upon kWhs consumed?

image

Toronto Hydro would still collect exactly the same Delivery Charges as it currently does, only now they would be apportioned based upon consumption, which would be fairer, and would encourage conservation. Toronto Hydro’s total revenue would remain the same.

Customer A would save over $20.00 every bill, which is year-round encouragement to keep his consumption low. Customer E would no longer get his 33% discount, and he’d start paying the same rate as Customer A for his electricity, and his bill would increase by $50.00.

Let me conclude by saying that I find Toronto Hydro’s current residential rate structure discourages conservation. I believe that Toronto Hydro should change its rate structure to encourage its 500,000 residential customers to conserve electricity, rather than consume it.

if Toronto is ever going to meet its goal of being one of the world's leading sustainable cities it will have to begin by having people who use more pay more. We can no longer afford to have differential pricing policies that discriminate against small users of energy. Just the opposite. When will Toronto Hydro join the 21st Century on this issue by encouraging conservation?
[email this story] Posted by R Ouellette on 03/26 at 11:37 AM

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