Fair Hydro Plan UPDATE: Buildings eligible for the 8% HST rebate will be eligible for Fair Hydro Plan reductions
As promised, we are providing an update on the Fair Hydro Plan once we receive new information. We asked our Manager of Energy and Sustainability to take us through the impact of the announcement made of electricity price reductions effective May 1st.
BB (Brookfield Blog) – Back in March, the Ontario government announced a 25% reduction, on average, for all residential customers. What is the status of that?
Rob – That March announcement was a bit sneaky. 25% sounded great, but condos were already getting an 8% HST reduction as of January 1st, so the announcement was really telling us about a 17% reduction that was coming.
BB – Let’s go back to that March 2017 announcement for a bit. Our March blog post suggested that boards not reduce their budgets by 17% at that point? Some of our boards questioned this because they saw the announcement as straight forward. Is this straight forward?
Rob: Oh goodness, no, this is complicated! Condominiums can have different utility rate classes to which there are sub-categories based on their usage – under 50 kW, 50 to 999 kW. We dive in and analyze every press release along with all the background information and the associated regulations to see exactly how it impacts each of our customers, whether their condominium has 30 suites or 300 suites. This allows us to give site specific support to our customers and our managers – I keep getting told we are way ahead of any other management company on this.”
BB – OK, so let me understand this. Condos are already getting the 8% HST, has there been any news on the remaining 17% then?
Rob – Yes, one of our big questions was answered with an announcement made April 20th (click here for link). The Ontario Energy Board announced a price reduction effective May 1st for some condos. You have to read it very carefully though – although the announcement talked about a 17% bill reduction, the real impact will be that some condos will see their bills drop by about 9%.
BB – Ah, so the 17% mentioned in the April 20th press release is not the same 17% we were waiting on.
Rob – Correct! The April 20th announcement included the 8% HST reduction again, so stripping that way from the 17%, you end up with a 9% drop from their total bill. That’s still really good.
BB – Yes, that’s still good. Why do you say that only “some” customers will see this reduction?
Rob – The May 1st reduction is only applicable to some condos because the announcement was specific to condos billed on the RPP, or the Regulated Price Plan. About half of our customers are on the RPP. The other half are on hourly pricing, which is known as the HOEP. You know you are on the HOEP is you see the words “Global Adjustment” on your bill – the hourly price is added to the GA to get to your total electricity rate.
BB – OK, hold on! So buildings that are on hourly pricing will not get the 9% reduction on May 1st?
Rob – Unfortunately, that is correct – I told you this was complicated! This is exactly why we urged condos to not rush in and reduce their budgets by 17% back in March.
BB – Is Brookfield doing anything to support their clients so that all buildings will see a reduction at some point?
Rob – Absolutely. We started advocating for the equitable treatment of condominiums back in March, and the Ministry has been receptive – we have worked well with them in the past. There was industry speculation that condos were going to get left out because the building itself fits into a commercial classification, and the 25% reduction was intended for residential. We received reassurances directly from the Ministry and the Ontario Energy Board that any building that is eligible for the HST rebate will be eligible for the Fair Hydro Plan reductions. Bill 13 defines all condominiums as eligible, so it is logical to expect non-RPP condos will see a reduction too. We are told it will take longer than May 1st because they need to pass some regulations – look for them to be in place by July.
BB – That is complicated. For the non-energy experts of us out there, can you summarize your current recommendation for condos doing their budgets now?
Rob – I’ll try! Some buildings will see a reduction later than others, but I’m confident enough to say all condos will see the 9% bill reduction that was announced on May 1st. So the recommendation is that all buildings can use our current budgeting templates that incorporate the May 1st change – I’ve just updated them all.
BB – If my math is right, condos are already getting the 8% HST, and then they’ll see what I’ll call the May 1st 9% reduction at some point. That only adds up to 17%. Are condos going to see another 8% to get them to the total 25% that that was in the announcement back in March?
Rob – That’s the next big question. If I were setting the budget, I’d not feel comfortable to include any other reductions at this point – there are too many unknowns, and percentages leave a lot of wiggle room for interpretation. For example, the 25% reduction was announced as an average for the entire province – it’s reasonable to assume that some will get more than 25%, some will get less than 25%. Will the reduction will be higher in northern Ontario than it will be in southern Ontario? Here’s another example directly from the May 1st press release – they quote that the 9.1 cent per kWh rate is a 15% reduction based on what the rate would have been in place if the government had not taken action. However, 9.1 cents per kWh is only a 12% reduction from the current rate of 10.3 cents per kWh. I think it is prudent for a board to assume that the “extra 3%” reduction claimed on the May 1st press release will be considered part of the 25% average reduction.
BB – Fun with percentages! Only an engineer would have found that “extra 3%”. Can we assume you will update the blog if there are further updates?
Rob – You can count on further updates. All of this pricing stuff has little do with my day job of reducing the energy our clients use, but I realized a long time ago you had to understand the bill to get to the dollars – a lot of people ignore that part because it’s complicated.
BB – I think you mentioned that it’s complicated a few times. Thank-you for your time.