Electricity Charges Explained

In Ontario's electricity marketplace, the cost of producing, selling, transmitting and distributing electricity is broken out on the retail electricity bill. Here's a brief overview of current electricity charges and how they appear on your residential bill.

Low-volume and designated consumers pay a set rate of 5.0 ¢/kWh for electricity consumed below the threshold in a month and 5.9 ¢/kWh for each additional kWh. The current threshold for residential consumers and other designated consumers is 600 kWh/month. More information about electricity in Ontario is available on the Ministry of Energy Web site.

The wholesale market price for electricity is based on supply and demand. Suppliers submit offers to sell electricity and wholesale buyers submit bids to buy electricity. The IESO then uses these offers and bids to match electricity supply with demand, and establishes the Hourly Ontario Energy Price, or HOEP. This is the price paid by wholesale customers.

You can view the Hourly Ontario Energy Price on the IESO Web site where the price for the day is graphed on an hourly basis.

This charge covers the cost of services required to operate the electricity system and run the wholesale market.

The Wholesale Market Services Charge is made up of the following:

• Physical Limitations and Losses
  Physical limitations of the transmission system impose costs that are charged to wholesale customers. For example, when electricity flows across transmission lines, the resistance in the lines causes them to heat up, consuming power in the same way as a filament in a light bulb. This is referred to as transmission line losses. Most other sectors incorporate losses into the overall price of the commodity. The IESO also collects other costs incurred in operating the power grid, such as when it must take actions to avoid overloads on the transmission system. Power imports that cost more than the hourly market price are also covered in this charge.


• IESO Administration Service
  The IESO charges administrative costs to operate the wholesale electricity market and manage the electric power system in Ontario. The rate is less than one-tenth of a cent per kilowatt-hour.


• Energy Reliability
  There may be occasions when the balance between generation and load is affected by an unanticipated event, such as equipment failure or emergency. Spare capacity that can be called upon on short notice is required to restore the balance in the case of such an event. This spare capacity is called operating reserve and is one of the main components included in this category.


• Rural or Remote Electricity Rate Protection
  This charge is used to partly offset the higher cost of providing electricity in rural and remote areas. The rate is fixed at one-tenth of a cent per kilowatt-hour and is established by regulation.

These charges to utilities and some large consumers cover the cost incurred by transmission companies to construct and maintain the high-voltage transmission lines needed to transport electricity from generating stations to utilities or consumers. These charges are passed on to consumers and are frozen at current rates.

This is a charge of 0.7¢/kWh to pay down old Ontario Hydro debt and is collected on behalf of the Ontario government. The Ontario Electricity Financial Corporation is responsible for the management and retirement of Ontario Hydro's outstanding debt. This charge is passed on directly to the end customer.