An estimated 78,000 seasonal customers could see their electricity bills double in the near future, says the Federation of Ontario Cottagers’ Associations. On September 17, the Ontario Energy Board announced that it will be eliminating Hydro One’s seasonal rate class.
Hydro One’s rate classes determine how much an Ontario resident pays for electricity based on their location and usage. Approximately 148,000 customers fall under the seasonal rate class, nearly half of them are cottagers, according to FOCA. To qualify for the seasonal rate, the property cannot be the owner’s primary residence, and the owner must reside there for less than eight continuous months a year.
There is no word yet on when the restructuring will take place, but the OEB has tasked Hydro One with drafting a report that includes bill mitigation measures to protect customers from receiving the increases on one large bill. This report is due on October 15.
Terry Rees, the executive director of FOCA, advises cottagers to contact Hydro One to determine whether they fall under the seasonal rate class, and if they do, how they will be affected. “There may still be opportunities to intervene or an opportunity for public input,” he says. “We’ll certainly be following this and letting everyone know what the opportunity is to weigh in if there is one.”
According to Rees, the seasonal class rate was first implemented approximately 40 years ago. “It was put in place…because, at the time, the Ontario Energy Board felt that as a group of customers they had very similar load characteristics, lived in kind of the same places, and had similar costs, they would be considered as one big group.”
But in March 2015, the OEB determined that the seasonal rate class had become outdated and decided to eliminate it. Instead, all Hydro One customers will be moved to fully fixed distribution rates. This process was delayed due to a major rate application filed by Hydro One in 2017, and not resumed until mid-2019.
The OEB is now ordering Hydro One to move all seasonal rate customers into residential rates, with cottagers falling either under the medium-density zone or low-density zone. As defined by Hydro One, a medium-density customer resides in an area that contains 100 customers, with at least 15 customers for every kilometre of power line. While a low-density customer is someone who resides in an area not covered by urban high or medium zones.
“Depending on how you get reassigned as a customer, you’ll now be charged a different rate,” Rees says. If reassigned as a low-density customer, you will likely have to pay a higher rate. According to the OEB, more than half of the current seasonal customers will see a monthly bill increase in the range of $5 to $79. If you’re reassigned as a medium-density customer, however, you could see a decrease in your monthly bill in the range of $8 to $38, depending on your consumption.
This is because, in terms of equipment and delivery, it costs more to service isolated customers in rural locations. But Rees says the OEB has also introduced a fixed distribution cost, designed to make sure everyone pays their share to maintain the infrastructure, such as poles, power lines, and the grid, regardless of whether they use the electricity. “There is an eight-year phase in which bills are going up. For typical cottager use, they’re going up something like $12 every year for eight years,” Rees says. Combined with the reassigning of density classes, this means that some customers who only spend a couple of months at their property each year could see their monthly electricity bills increase by 100 per cent.
FOCA has fought against the restructuring of rate classes and was given an opportunity to submit their reasoning after the 2015 decision, arguing that it is going to be a significant hardship for a number of the OEB’s customers. But, ultimately, the OEB determined that “the fact that there are impacts associated with the elimination of the seasonal class does not render the decision to eliminate the class incorrect.”