FOR IMMEDIATE RELEASE
[La version française suit le texte anglais.]
DECISION TO FREEZE TIME-OF-USE ELECTRICITY PRICING TO SAVE TYPICAL RESIDENTIAL RATEPAYER $34
TORONTO, May 22, 2020 - The Financial Accountability Office (FAO) has released a new report reviewing the impact of the government’s decision to lower the cost of electricity for residential and some commercial (mainly small businesses and farms) customers during the COVID-19 pandemic by suspending time-of-use (TOU) electricity pricing.
Under TOU pricing, ratepayers are charged a different price for electricity depending on the time of day and day of the week. With the suspension of TOU pricing, the price of electricity has been set at the lowest “off-peak” rate of 10.1 cents-per-kilowatt-hour (c/kWh).
The suspension of TOU pricing will save a typical residential ratepayer $34 and a typical commercial ratepayer $98 from March 24 to May 31, at a cost to the Province of $175 million. Of the $175 million cost, $138 million will subsidize residential ratepayers and $37 million will subsidize commercial ratepayers.
Looking ahead, after May 31, the Province may consider extending the suspension of TOU pricing given that most COVID-19 containment measures currently remain in place. The FAO estimates that extending the suspension of TOU pricing to August 31 would cost an additional $316 million for a total cost to the Province of $491 million. Extending the TOU pricing suspension to December 31 would cost a total of $849 million and to March 31, 2021 would cost a total of $1.1 billion.
To learn more, read the full report here.
- The suspension of TOU pricing will reduce the average price paid for electricity by 3.0 c/kWh for approximately 4.7 million residential ratepayers and 2.6 c/kWh for over 400,000 commercial ratepayers.
- In response to the COVID-19 outbreak containment measures, residential electricity demand has increased by 5 per cent while commercial electricity demand has decreased by 11 per cent.
- In total, including the suspension of TOU pricing and the Province’s existing electricity subsidy programs, the Province is now projected to spend $5.8 billion in 2020-21 subsidizing electricity prices.
About the FAO
Established by the Financial Accountability Officer Act, 2013, the Financial Accountability Office (FAO) provides independent analysis on the state of the Province’s finances, trends in the provincial economy and related matters important to the Legislative Assembly of Ontario. Visit http://www.fao-on.org/en/ and follow us on Twitter at https://twitter.com/InfoFAO.