Hydro Ottawa Rates Change January 1, 2013

Hydro Ottawa Rates Change January 1, 2013
Effective January 1, 2013, Hydro Ottawa’s distribution rates have
changed. The bill for a typical residential customer, using
800 kWh per month, will increase by approximately 0.58 percent
or $0.66 per month. Small commercial customers consuming
2,000 kWh per month and having a demand of less than 50
kilowatts will see their monthly bill decrease by about $5.35.
Components of the Electricity Bill
Distribution charges cover the cost of building and maintaining
our infrastructure. With this change, Hydro Ottawa’s distribution
charges represent 20.4 percent of the total bill for a typical
residential customer. We pass on the remaining charges, without
mark-up, to respective parties on behalf of our customers.
Our distribution rates are set by the Ontario Energy Board, based
on applications submitted by Hydro Ottawa. The rate-setting
process is open and transparent, with opportunities for public
In Hydro Ottawa’s rate application, major Hydro Ottawa
business priorities included the need to continually invest in
our infrastructure to keep services reliable; and the need to
prepare for the industry-wide challenge of an aging workforce by
continuing to grow our trades apprenticeship programs.
Hydro Ottawa’s distribution rates have remained stable over the
past several years, helping our customers to manage their costs.
OEB industry comparisons have consistently shown that Hydro
Ottawa’s operating, maintenance and administration costs are
below the provincial average and we continue to make efficiency
How to reach us ...
For the most effective and timely response to your
customer-related inquiries, please contact
Information on power outages is available 24/7 at
613-738-0188 or www.hydroottawa.com/outages.
Distribution Charge (paid to Hydro Ottawa), 20.4%
Electricity Generation Charge (paid to generators of hydroelectric,
nuclear, fossil-fueled, wind, biomass, biogas and solar electricity), 52.0%
Debt Retirement Charge to pay the debt of the former Ontario Hydro
(paid to the Provincial Government) 4.4%
Regulatory Charges for administering system and funding programs
(paid to Independent Electricity System Operator, Ministry of Energy) 4.1%
Transmission Charge (paid to Hydro One), 7.6%
Harmonized Sales Tax (paid to Federal and Provincial governments), 11.5%
*For a typical residential customer using 800 kWh per month.
Distribution Sector Panel Releases Report
Page 2
Let’s Talk Electricity!
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Hydro Ottawa Raises Record Amount for United Way
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Electricity Sector News
Distribution Sector Panel Releases Report
In April 2012, the Ontario Minister of Energy established the Ontario
Distribution Sector Review Panel to advise the government on how a
restructured distribution system could lead to “price stability, a more
efficient and reliable system configuration, as well as fairness and
value for money”.
On December 13, the Panel released its report after consulting with
more than 80 stakeholders including Local Distribution Companies
(LDCs), industry associations, consumer groups, unions, government
ministries and agencies, financial and investment organizations and
individuals. Key recommendations include:
Regional Distributors
The Panel recommends that today’s 73 LDCs should be consolidated
into 8 to 12 regional distributors that are large enough to deliver
improved efficiency and enhanced customer focus, while at the same
time maintaining a strong connection with their local communities.
Of these 8 to 12 distributors, two would be in northern Ontario – one
in the northeast and the other serving the northwest – leaving 6 to 10
regional distributors in southern Ontario. New regional distributors in
southern Ontario should have a minimum of 400,000 customers.
The new regional distributors must have boundaries that are
contiguous. Consolidation should be completed within two years of
the provincial government’s acceptance of the recommendations of
this report.
Hydro One
There should be no across-the-board sale of Hydro One Networks’
distribution assets, the Panel states. The creation of the new system
of regional distributors will be facilitated by the merger of Hydro One
Networks’ assets with those of the other existing distributors. The
Ontario government should give clear and unambiguous direction to
Hydro One to lead and engage in the discussion of the merger of its
distribution assets with the appropriate interested utilities.
The discussions will be based on a fair, market-based evaluation of
assets, according to the Panel.
The owners of the current LDCs will get shares in the new regional
distributors they voluntarily create in proportion to the valuation of
the assets they contributed. LDCs that are amalgamated through
mandatory mechanisms will have their assets valued at book value.
Ontario Government
The Panel recommends that the provincial government should
appoint a Transition Advisor to oversee the consolidation process.
The Transition Advisor will advise the government on the progress of
achieving complete consolidation. The Transition Advisor will not act
as a facilitator among LDCs in the creation of the individual regional
The Ontario government should enter into discussions with the
federal government to facilitate removal of the transfer tax on the sale
of LDC assets to private investors, the Panel recommends.
Local Distribution Companies in Eastern Ontario.
Source: Independent Electricity System Operator
Cost Savings
Any funds from the disposal of excess utility assets would be
re-invested in the regional distributors to strengthen the system,
the Panel recommends, and not used for dividends or other nonelectricity purposes. It also expects that savings from the increased
efficiency of the new regional distributors would be shared between
the shareholder and customers. Given the requirement for significant
capital investments, the Panel expects that much of the savings
accruing to the shareholder will be reinvested in the electricity
distribution system.
The membership of the Board of a regional distributor should have
at least two-thirds independent directors, says the Panel. It believes
a Board with 100 percent independent membership would be
As for affiliates currently owned by LDCs, the Panel recommends that
they would not be included in any consolidation.
Overall Savings and Benefits
The consolidation of LDCs into regional distributors will result in an
estimated cost savings of $1.2 billion (after transaction and transition
costs are paid) at net present value over the first ten years. The Panel
says this would equate to a $70 annual saving for Ontario electricity
The panel also states that consolidation would allow LDCs to avoid
$1.3 billion in infrastructure investment over the first 10 years,
resulting in a 5 percent reduction in depreciation and return on capital
when compared to the continuation of the status quo – which it says
is worth $300 million in present terms.
Let’s Talk Electricity!
Electricity plays a role in almost everything we do each day,
whether at home or at work. It is a major driver of our economy,
a source of jobs and investment, and a contributor to Canada’s
competitive advantage. Yet most people know very little about
how it is made, how it gets to them, how to use it efficiently and
manage the bill, and what value it provides.
To help our customers and all our stakeholders better understand
the product we distribute and the services we provide, Hydro
Ottawa has created the Let’s Talk Electricity Fact Book. It’s a
great source of information about electricity, including:
the broader context of its importance to Canada;
how electricity is made and distributed in Ontario; and
a detailed focus on the business of Hydro Ottawa, the
services we provide our customers, and the value we bring to
the community.
Here is just a small sampling of the facts that you will find in our
Let’s Talk Electricity Fact Book.
Canada’s electricity sector contributed $28.4 billion to the
nation’s economy in 2011; employs more than 108,000
Canadians; and had net exports of $1.7 billion.
Electricity makes up about 3 percent of the average
household expenditure in Canada, and costs on average only
$3.74 per day for a typical Hydro Ottawa customer.
Hydro Ottawa plans to invest $100 million annually between
2012 and 2016 to maintain, replace and enhance our
In Ontario, emission-free nuclear and hydro power made up
79 percent of all electricity generation in 2011.
Hydro Ottawa is the third largest municipally-owned electricity
distributor in Ontario; and we are also the largest municipallyowned producer of green power.
We have provided dividends of $121.3 million to the City of
Ottawa since 2005, while growing shareholder equity in the
company by $104.3 million.
Since 2001, the average household electricity use in Ottawa
has declined by more than 100 kilowatt hours per month, and
now averages only 650 kilowatt hours monthly.
About half of all power outages are caused by weather,
loss of power from the provincial grid, vehicle collisions and
animal contacts.
View the Fact Book online at www.hydroottawa.com/factbook.
Increasing our Energy Literacy
Energy decisions affect all of us, but most people have relatively little
understanding of how energy is created, how it gets to the customer,
and how to use it wisely.
Increasing energy literacy was the major theme of a recent speech by
Rosemarie Leclair, the Chair and CEO of the Ontario Energy Board,
to a breakfast hosted by the Ottawa Business Journal and the Ottawa
Chamber of Commerce.
“In my discussions with industry and consumer leaders alike over the
past year, one theme has come up repeatedly: consumers’ lack of
understanding of the industry, the energy bill, what drives costs and
how the value of energy compares to other services,” she told the
“I believe that closing that information and education gap has to be
a top priority for the Ontario Energy Board and others in the energy
sector, if we are going to maintain consumer confidence in our energy
This is a theme that Hydro Ottawa has embraced, not only through
our website, but also through recent products such as the Let’s Talk
Electricity Fact Book and a series of in-depth backgrounders on
electricity subjects that is now under development and that will also
be available on the website.
As for the Ontario Energy Board, Leclair said the regulatory body is
revamping its consumer outreach website and feedback forms after a
year of consulting with Ontario residents to better align the interests of
the energy sector with the interests of consumers.
“Enabling energy literacy is an ambitious undertaking, but it is
one that we believe is essential to aligning public policy, utility and
consumer interests and maintaining consumer confidence in Ontario’s
energy system,” said Leclair.
Hydro Ottawa raises record
amount for United Way
Hydro Ottawa’s United Way workplace campaign has raised a
record $201,950 to help create lasting change in our community.
Over the past 12 years, Hydro Ottawa’s campaigns have
raised more than $1.2 million through employee donations and
corporate matching dollars. Hydro Ottawa’s 2012 workplace
campaign is the largest donor among the more than 100
companies in the Construction, Manufacturing and Services
The company’s matching dollars are directed to Hydro Ottawa’s
Brighter Tomorrows Fund, a community investment program that
supports frontline agencies that serve people who are homeless
or at risk of being homeless. The funds are invested in energyefficient technologies or products.
The company’s United Way achievements would not be possible
without the leadership of its employee volunteers and strong
support from employees across the company.
More than 300 employees pledged to support Hydro Ottawa’s
2012 United Way Workplace Campaign.
“The enthusiasm of this workforce is outstanding. I am proud
to see Hydro Ottawa employees give generously to help the
community we serve,” said Bryce Conrad, President and Chief
Executive Officer of Hydro Ottawa.
Small Business Lighting Program Boosted By Councillors
In October, Hydro Ottawa approached City Councillors to help
spread the good news about our saveONenergy Small Business
Lighting program, which offers an incentive of up to $1,000 worth
of energy-efficient lighting and equipment upgrades.
The City has already achieved excellent results by participating in
this program. City-owned facilities are now saving almost 672,000
kilowatt-hours of electricity annually, and reducing their electricity
bills by close to $58,000 a year, through lighting upgrades.
A number of councillors posted articles on their websites, and 13
councillors tweeted about the program. In fact, there were 19
direct Tweets and 21 re-Tweets.
Traffic on our website pages on the Small Business Lighting
program tripled during the campaign period compared to the
preceding months.
Here’s hoping that translates into more participation in this
great program, more energy efficiency, and more bill savings for
Ottawa’s business community.
For more details on how to participate, please visit