We want you to understand the charges on your electricity bill. The more you know about electricity rates, the easier it will be to make informed decisions about your energy usage or whether an electricity contract with an energy retailer is right for you.
Your electricity bill
Your electricity utility delivers electricity to your home or business and issues your bill. The bill includes the costs for the electricity that you use, the services your local utility provides and some other costs as outlined below.
Below are two sample electricity bills. One is for households and small businesses on time-of-use rates. The other bill is for households that have signed an energy contract.
Your bill includes a line item called Electricity. This is the cost of the electricity that you used during the billing period. Most Ontario residential and small business consumers that buy electricity from their utility are billed using time-of-use rates. Learn more about managing your costs with electricity time-of-use rates. Fewer than 1 in 10 customers are billed using tiered rates. These rates vary depending on how much electricity you use.
The Ontario Energy Board currently sets these rates in accordance with the government’s Fair Hydro Plan Act, which came into effect on June 1, 2017. Learn more about this legislation.
The Global Adjustment
Most electricity generating companies get a guaranteed price for the electricity that they produce. The Global Adjustment is the difference between that guaranteed price and the money the generators earn in the wholesale marketplace. The Global Adjustment also covers the costs of some conservation programs.
All electricity consumers have to pay a share of the Global Adjustment. The time-of-use and tiered electricity rates charged by your electricity utility already include an estimate of the Global Adjustment. If you sign up for a contract with an energy retailer, you have to pay your share of the Global Adjustment on top of the contract price. The Global Adjustment will also appear as a separate line on your bill (see above sample bills).
Use our bill calculator to compare the electricity rate charged by your utility with the contract price offered by an energy retailer.
This is the cost of delivering electricity from generating stations across the province to your home or business through high voltage (transmission) and low voltage (distribution) power lines.
The Ontario Energy Board sets delivery rates for electricity utilities in the province. Some of the delivery charges are "fixed," meaning the same amount no matter how much electricity you use in each month. Other charges vary depending on how much electricity you use.
Delivery charges include:
- Customer Service Charge: A fixed charge for costs related to meter reading, billing, customer service and account maintenance, and for general utility operations.
- Distribution Charge: A variable charge for the cost of building and maintaining the distribution system, including overhead and underground power lines, poles and transformer stations. Utilities file detailed rate applications with the Ontario Energy Board if they want to change this charge. By 2019, for most customers the distribution charge will be a fully fixed charge.
- Transmission Charge: A variable charge for the costs of transmitters to operate and maintain the high-voltage transmission system that carries electricity from generating stations to your utility.
- Line Loss Adjustment: It is normal for a small amount of power to be lost as it travels over the utility's power lines to your home or business. In calculating your electricity costs for the billing period, your utility multiplies your electricity cost by an adjustment factor that accounts for those losses. They do this using an adjustment factor that is approved by the Ontario Energy Board. The charges for losses are included on the Delivery line of your bill.
Why delivery rates vary
If you compare utility bills in different parts of the province, you may notice that delivery rates vary. These differences are the result of:
- The age and condition of each utility’s equipment
- The size of the utility service area
- Customer density, and location of customers relative to one another
- The number of residential customers compared to the number of businesses and industrial customers
- The geographic location of customers and the complexity of maintaining distribution equipment within the region. For example, it can be more costly to maintain equipment in more rural or cottage areas due to the terrain.
The following charges are grouped together under the line item called Regulatory Charges:
The Wholesale Market Service Charge includes the cost of services provided by the Independent Electricity System Operator (IESO) to operate the wholesale electricity market and maintain the reliability of the high voltage power grid. It also covers certain costs incurred by local utilities to connect renewable generation. Although the Ontario Energy Board sets the wholesale market service charge, it does not set or approve all of the costs that are recovered through that charge. Here are more details about what is included in the wholesale market service charge:
Amounts that are NOT set or approved by the Ontario Energy Board:
- Physical Limitations and Losses: When electricity is delivered over transmission lines - from generators to the high-voltage transformers - it is normal for a small amount of power to lost as heat.
- Energy Reliability: Sometimes the balance between generation and demand is affected by an unanticipated event, such as equipment failure or a surge in demand. The IESO purchases reserve electricity that is available on short notice to restore the balance.
Amounts that are set or approved by the Ontario Energy Board:
- IESO Administration Fee: The IESO charges an administrative fee to manage the high voltage power system and operate the wholesale electricity market in Ontario. The fee also covers the costs related to planning for generation, demand management, conservation and transmission in the province. This fee does not cover the contract payments made to generators or costs for the delivery of conservation and demand management programs. Costs for contracts and conservation programs are included in the Global Adjustment and are reflected in the Electricity line of your bill.
- Rural and Remote Electricity Rate Protection (RRRP): This charge is collected by the IESO to pay certain electricity distributors who provide electricity service in rural and remote areas. It helps to offset the higher cost of providing service to consumers in those areas. On June 1, 2017, the Ontario Fair Hydro Act came into effect. It removed some of the cost of the RRRP from electricity bills, and instead funds the majority of this program through taxes.
- Renewable Connections: Some of the costs incurred by a utility to connect renewable generation facilities (e.g. solar, wind) can be recovered from consumers throughout the province.
Ontario Electricity Support Program (OESP) Charge: This charge is collected to pay for the costs of the OESP. The program provides eligible low-income customers with a monthly credit on their electricity bills.On June 1, 2017, the Ontario Fair Hydro Act came into effect. It removed the cost of OESP from electricity bills, and instead funds this program through taxes.
Standard Supply Service Charge: In addition to the wholesale market service charge, these Regulatory Charges also include a Standard Supply Service Charge. If you purchase electricity directly from your local utility, you pay an administrative fee to the utility to cover these costs. This charge is the same for all utilities in the province. The Ontario Energy Board sets this charge.
Starting January 1, 2017, the Ontario government is providing an 8% rebate on your electricity costs, equal to the provincial portion of the HST. For more information visit the Ontario government website.
Calculate your electricity bill
Use our bill calculator to estimate your monthly electricity bill. You can also compare your current bill with a contract offer from an energy retailer.