Ontario energy rates have been an ongoing topic of controversy—and anguish—one the Wynne government has been making promises to attempt to rectify. For many, skyrocketing electricity rates are a deep concern when it comes down to the affordability of basic costs of living. But how stuck are you in your energy rate plan? Can you compare energy rates to get a better deal, or is there a way to navigate your specific rate plan so you can make the most of the savings it may offer?
How do Ontario energy rates work?
Ontario began deregulating its natural gas market in 1985, alongside the rest of Canada. Then, within 13 years of that act, in 1998, Ontario passed the Energy Competition Act. The restructuring of the province’s energy market had begun, a restructuring that would lead consumers to more competitive pricing for a broader variety of energy options. Starting in 2002, homeowners and businesses alike have not only been able to compare energy rates among providers, but also among competitive retail companies and local utilities whom offer provincially regulated rates.
How can you take advantage of your choice of energy rate plans?
The competitive market is designed to provide consumers with cost-saving choices by allowing them to compare energy rates and choose the electricity and natural gas plans that best suit their consumption needs. When it comes to comparing energy rates, you have a number of options to choose from:
Regulated Rate Providers offer consumers protection against market instability. Regulated rates are mandated by the Ontario Energy Board and then charged by your utility provider: users can compare energy rates between Hydro One, Enbridge, Gas, or Union Gas.
Hourly Ontario Energy Price (HOEP) allows consumers to benefit from the rise and fall of energy prices based on supply, demand, economic factors, etc. It’s more of an investment opportunity that allows you to invest in energy like you do stocks and bonds to try to gain the most out of your energy consumption when the prices are at their lowest. How does it work? The IESO (Independent Electricity System Operator) organizes the market so consumers can always purchase the cheapest available HOEP. The HOEP is determined by the MCP (Market Clearing Price), the price point both buyers and sellers agree upon. The MCP is updated every five minutes, and every hour the previous 12 MCPs are averaged out to determine the hourly price. The HOEP allows businesses who use large amounts of electricity to purchase their power wholesale. Homeowners who compare energy rates and choose the HOEP option are generally participating in the Time-Of-Use plan.
Time of Use (TOU) pricing provides consumers with regulated rates that are based on the HOEP, but they also factor in costs like transmission costs, Global Adjustment, fees, etc. While TOU pricing introduces more cost fluctuations, it allows consumers to pay the cheapest rates based on fluctuations in energy surplus, availability, etc., and it also enables consumers to better control and compare energy rates by monitoring when they use their energy. Broken down into three categories, consumers pay Off-Peak prices when electricity consumption is at its lowest (7pm to 7am), Mid-Peak prices when demand is moderately high (7am to 11am and 5pm to 7pm, or 11am to 5pm in the winter), and On-Peak prices during primetime electricity demand (11am to 5pm, or 7am to 11am and 5pm to 7pm in the winter), when demand and pricing are both at their highest.
Regulated Price Plan (RPP) rates allow you to pay a Tiered Pricing Plan when comparing energy rates that are mandated by the Ontario Energy Board. It provides fixed, stable pricing that also factors in fluctuations in consumption, so you pay a regulated price for consumption up to a certain threshold, and then pay a higher rate for consumption if you exceed that point.
