Ontario electricity users should prepare for a price shock

A price hike for Ontario's electricity users, set into effect earlier this spring, will hit most consumers with the next round of billing. Some local electricity companies are warning their customers to 'be prepared.'

Energy price hikes have hit Canadians across the nation this year. The federal Consumer Price Index noted that electricity prices increased 5.8% in June - that's on top of a 4% increase applied in May. The high cost of living has been hitting Canadians, notably with food and shelter costs. Stats Canada said Ontario's "... consumer prices rose 1.6%..." in June, with Ontarians paying " ... more for electricity and telephone services." Stats Canada characterized the June cost of living increase as the "fastest rate of change" in Canada. And now, reports the Toronto Star, many hydro users in Ontario are being warned that their next bill could be a whopping 16% higher than the last bill they paid. The increase for any given household will differ, depending on how much electricity a household uses. The location of that household also plays a role because, according to Your Ottawa Region, some municipalities have implemented time of use billing. That means people with smart meters are paying more for their electricity. The basic rule of thumb is that those who use more electricity will pay more. The real cause of the increase, said the Toronto Star, is the HST, which came into effect in Ontario on July 1st. After the announcements earlier this year, some consumers forgot about the increases, getting a shock with their latest hydro bill. This is a result of the practice of issuing hydro bills once every two months. The billing practice has meant a lag between when the price increases took effect and when customers will feel the pinch. But other items on hydro bills have been increased besides the rates and taxes. Distribution costs were increased, and a special purpose charge has been added, reported the Exeter Times Advocate. The price increases are part of a plan Ontario set in place in 2006, according to the Electricity Distributor's Association. The rate increases are supposed to encourage distribution efficiency. Many consumers will be switched over to time of use billing by next spring, which means they will face another price increase. Price increases for essential services are the most difficult for people on fixed incomes, such as retirees and those relying on social assistance. As Canoe reported, London's Manager of Community Services, Ross Fair said

"The costs are going to impact on everybody, irrespective of their income levels. But lower-income residents, especially those relying on electrical heat in winter, will get hit even harder."

It is anticipated that business owners will pass along their increases to their customers, according to the Guelph Mercury, meaning a double whammy for consumers. The hot and humid summer conditions experienced throughout Ontario has had people turning up their air conditioning, and this is anticipated to make upcoming hydro bills higher than most people would expect. Consumers who signed up for fixed rate plans will not be affected by the increases. The C.D. Howe Institute recently released a paper calling for "Made in Canada" electricity policies that would increase Canada's competitiveness. Tips on reducing electrical use: Consumers are not completely helpless in the face of increases in electricity costs. There are steps that can be taken to reduce electricity bills. The first rule is to turn it off. This tip is easy to implement and incredibly effective. If you must have air conditioning, turn it off when you are not home. When using it, set the thermostat so that the temperature is in the 70's. Reduce your reliance on appliances such as clothes driers. If you must use a drier, consider going to a laundromat, where you pay a fixed price for the drier. Wherever possible, replace older fridges, stoves and other appliances with energy efficient appliances. If one has the means, solar-generated electricity is an option. The Ontario Power Authority has a website called Every Kilowatt Counts, gives more tips on conserving electricity use.