Electricity rates for some Ontario cottagers could jump if plan goes ahead, Hydro One says

Thestar.com
August 21, 2019
Shawn Jeffords

Hydro One says electricity rates for some seasonal cottagers could jump by nearly $1,000 a year if Ontario’s energy watchdog makes good on a plan to eliminate a customer class geared to them.

The utility said Tuesday that the Ontario Energy Board -- which regulates the sector -- has asked it to cut a seasonal customer category that applies specifically to cottagers.

Hydro One’s vice-president of customer care said the utility opposes the change, which he said would mean over half of its customers -- 84,000 cottagers -- would see their rates jump.

“Really, it comes down to an issue of affordability for our customers,” Imran Merali said. “Eliminating the class will result in significant increases, and the magnitude of the increase is not something that is good for our customers.”

Hydro One said the OEB ordered it to mitigate the impact of any potential change larger than 10 per cent a year, which means incremental increases would be brought in until a customer is paying the new rate. The utility said it could take a decade to ease customers into the new rates.

The OEB said the seasonal class isn’t working because all users in it aren’t paying their fair share.

“The OEB’s concern was that the distribution rates charged to seasonal customers are not reflective of the cost to serve them,” spokesperson Mary Ellen Beninger said in a statement.

Hydro One has proposed an alternative plan that would keep the seasonal class in place and cap distribution rates for some high-volume users in 2021. That plan would allow more affordable rates for those who use their cottages for longer periods of time.

“Hydro One does not profit from either of the proposed solutions,” Merali said. “There are not incremental profits that will go to Hydro One under the Ontario Energy Board’s proposal or under the alternate proposal we recommended.”

The utility said the OEB’s proposal would mean moving cottagers to other rate classes. It filed a report last month with the energy watchdog that said the negative impact of the change would outweigh the benefits.

“The elimination of the seasonal class, results in only a small benefit for some seasonal customers at the expense of large negative impacts for other seasonal customers,” the report said.

Hydro One said moving seasonal customers to a residential class would lead to an increase of $68 a month for 78,000 customers, and a reduction of $7 a month for roughly 70,000 customers.

The executive director of the Federation of Ontario Cottagers’ Associations said the change, if it moves forward, will have a large impact on thousands of the group’s members.

“That’s not in anyone’s budget,” Terry Rees said of the potential price hikes. “It’s going to definitely cause some people to take a look at their living situation.”

Rees said the association has been advocating for a “reasonable and fair” system for all throughout the regulatory process.

“We want something our members can understand and that doesn’t push the bounds of affordability,” he said.