Linking costs to the electricity bill

The following figure illustrates how electricity costs align with a residential bill. Click the image for a larger view.

Linking Costs to the Electricity Bill
Source: OPA and OEB

As illustrated above, your electricity bill includes the following charges:

1. Electricity: the charge for the electricity you used during the billing period. This is calculated in one of three ways:

  1. Time-of-use prices: using data obtained from your smart meter, you are charged a different price based on the time of day you use electricity.
  2. Tiered prices: you pay a price set by the Ontario Energy Board for the electricity you use up to a certain threshold and a higher price after the threshold is passed. Price adjustments are made twice a year to reflect actual pricing in the prior period. 
  3. Contract with an electricity retailer: consumers are free to contract with an electricity retailer, in which case you agree to pay a fixed price for electricity for the duration of the contract. 

This part of the bill is your share of all payments made to generators for the production of electricity, as well as the costs for all conservation programs in the province. The Ontario Energy Board sets time-of-use or tiered prices that impact the electricity line on bills for consumers on the Regulated Price Plan. These prices are adjusted every six months to help make electricity prices more stable and predictable for consumers.

The global adjustment cost for the Regulated Price Plan customers is included in time-of-use and tiered prices. The Ontario Energy Board does not regulate prices charged for competitive services such as contracts offered by electricity retailers. In monthly bills for customers with an electricity retail contract, the global adjustment price is shown as a separate item. See the OEB website for more information.

2. Delivery: the cost for the wires and poles used to deliver electricity from the generators to consumers, as well as billing, metering and customer service. It covers the costs of the high-voltage transmission system and low-voltage distribution system.

3. Regulatory charges: the operation and administration costs for the electricity system. These costs include OPA and Independent Electricity System Operator administration costs (also referred to as fees or operating budgets) and the rural and remote electricity rate protection plan. These rates are set by the Ontario Energy Board.

4. Debt retirement charge: this charge of 0.7 cents per kilowatt-hour (kWh) has been set by the Ontario Ministry of Finance to pay down the residual stranded debt of the former Ontario Hydro.

5. Ontario Clean Energy Benefit: this provides a 10 percent rebate off the total electricity bill for the first 3,000 kWh/month of electricity used. The benefit is effective until December 31, 2015.

The Ontario Energy Board website also provides a detailed explanation of these charges using a sample electricity bill.

See typical historical residential bills.