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Ontario Energy Board Proposal for Fixed Monthly Electricity Bills is Unfair to Condominiums

Ontario Energy Board Proposal for Fixed Monthly Electricity Bills is Unfair to Condominiums

Ontario Energy Board Proposal for Fixed Monthly Electricity Bills is Unfair to Condominiums Brookfield has worked to reduce the amount of electricity used in the common areas of our client buildings by nearly $3.5 Million since mid-2010. We also work to reduce our clients’ utility costs within their own suites. One issue impacting condominium suite electricity bills was discussed on the front page of the Toronto Star June 17th, 2014 titled – Energy board proposal for fixed hydro rates called “Robin Hood in reverse”.

Currently, electrical utilities (for example, Toronto Hydro) recover the costs of distributing electricity to their residential customers through the “Delivery” line, via a combination of a fixed monthly “Customer Charge” and another charge (called “Distribution”) that varies relative to the amount of electricity used in that suite. The Ontario Energy Board (OEB), who regulates Ontario’s utilities, wants to eliminate the variable aspect of the above two charges – they propose to move to one fixed charge. The OEB reasons that since the costs to connect one residential customer are identical as connecting another residential customer, then it makes sense to have one fixed cost to provide a connection to the grid. Said another way, the utility’s costs to serve a residential customer are not dependent on how much that customer consumes, so the utility’s revenue should not depend on the customer’s consumption.

While the reason for the change is rational from that perspective, Brookfield’s response to the OEB was negative mostly because:

a) Adding to the fixed portion of distribution decreases accountability for consumption, and provides consumers with fewer tools for managing their costs; and

b) The proposed methodology is unfair – it penalizes households that consume less than the average Ontario consumption of 800 kWh per month, which represents 90% of the suites in Brookfield’s portfolio.

While reducing the number of customer tools to manage costs is a step backwards in promoting conservation, we saw the unfairness issue as having the swiftest and most negative impact on condominium owners. Brookfield’s views were mirrored by Oakville Hydro’s comments when they stated “multi-unit residential customers whose electricity consumption is considerably less than the average typical (residential) consumption will be significantly disadvantaged.”

Brookfield was the only residential property management company that forwarded a comment to the OEB, and a copy of our letter can be found here - Brookfield OEB Comment. We cannot be certain how the OEB will proceed in this matter. However, the OEB received more comments than they usually receive on a policy initiative, and the vast majority of the comments echoed Brookfield’s view that there was much more work required before the residential rate structure was changed.

Read more on the reaction to the OEB proposals.