Tuesday, April 27, 2010

Economics: Prepare for Electric Anger

TORONTO, ONTARIO - I received the highest electric bill I've ever received since moving to Toronto today. That would be bad enough, but prices are only going to go up. My case should be milder than average, so my prediction is that there is going to be outrage in the population over the increasing rates.

Part of the increase comes from the new Time-Of-Use rates that now cause electricity used at peaks--like dinnertime--to cost 9.6 cents per kilowatt-hour instead of the 5.6 cent flat rate seen before. I've managed to shift 66% of my electricity usage to times with the lowest, 4.8 cent rate, something most people will not be able to do, and my raw charge for electricity has still gone up by about 10%. Most people will see a larger increase from Time-Of-Use rates, as I predicted in my first posting on this topic.

However, there are huge increases elsewhere. The delivery charge compared with the same period last year is up 32%. The regulatory fee has almost doubled, up by 70%. The debt retirement charge is up by a similar amount, by 66%. Combine all this with slightly increased electrical usage over last year (I didn't realize 2009 was that warm), and my bill is up nearly 56% over the same period last year.

That's an outrage to an unemployed person trying to make ends meet. But, it gets worse. Right now, the electrical bill is subject only to the GST. As of 1 July, it will be subject to the HST, raising the cost by another 8%. Then, the provincial government has approved a 7% increase in rates. So, I can expect that--if nothing else happens--my late 2010 electrical bills will be 65% higher than in the same period of 2009. That's completely unmanageable, and there isn't even a carbon tax yet!

For those who think privatization is the answer, let me remind everyone what happened when my water heater rental was sold from a public utility to a private company. It used to cost $4.95. Two years after privatization, it costs $9.98, and will go up even more with the HST. That's more than doubling in two years--absolutely outrageous. However, as a renter, I have no recourse as I can't buy it and I can't convince my landlord to buy and amortize the cost in a rent increase. This actually makes Toronto Hydro look good by comparison.

There's going to be anger about electric rates in Toronto, and it will be an issue in the mayoral election. Just wait until the summer.

No comments: