Changes in the Energy Industry

For more than 75 years the electricity supply industry (generation, transmission and distribution) was essentially a monopoly. "Power at Cost" was the guiding principle for the industry, despite the fact that the cost of providing electricity in Ontario was rising faster than in other parts of Canada and the U.S.

During the past decade and especially in the last five years, an examination of what can be done to abate the rising costs was conducted in Ontario as well as in many other parts of the world.

The result was a growing worldwide trend to deregulate the electricity industry, similar to the changes that have occurred in the gas and long distance telephone industries. This happened in Ontario on May 1, 2002, when the energy portion of your electricity bill became competitive.

This meant Retailers licensed by the Ontario Energy Board could sell energy to customers across Ontario. Customers who did not choose to purchase electricity through a retailer, were supplied by their Local Distribution Companies(LDC). LDCs Hamilton Hydro and St. Catharines Hydro (now merged to form Horizon Utilities Corporation), do not “sell” electricity. Horizon constructs and maintains the distribution system that delivers electricity to the customer.

At the same time, some new charges (such as the debt retirement charge to pay off the debt of the former Ontario Hydro) were imposed by the provincial government and hydro bills were “unbundled.” Then and now, Horizon Utilities receives less than 25 percent of the total residential hydro bill.

Throughout the record hot summer of 2002, energy prices soared. Consumers complained to energy companies and the Ontario government about high electricity bills. In mid-November, the Ontario government pulled away from deregulation and froze the price most residential consumers pay at 4.3 cents per kWh. Other initiatives taken at the same time (and subsequently passed into law) included rebates for consumers, a simplified bill that would be common throughout the province, some subsidies for alternative energy projects and savings on energy-efficient appliances.

In April 2004, the price of electricity for residential and small commercial customers was changed to a two tier rate to more closely reflect the true cost of electricity and promote conservation. The pricing for the two tier rate changed again in April, 2005.

For additional information on two-tier pricing, go to www.oeb.gov.on.ca