Ontario Market Structure Update
The Ontario power market is constantly changing and even in a deregulated market structure, there are regulatory factors that can affect your energy supply choices, as well as the final price you pay for power. Three important regulatory items that have impacted or continue to impact Ontario’s deregulated market structure include: the OPG Rebate, the Regulated Price Plan and the Provincial Benefit.
OPG Rebate
Businesses in Ontario that pay the market price for electricity had also been receiving the Ontario Power Generation (OPG) Rebate, or the Ontario Non-prescribed Assets (ONPA) Rebate, since February 2005. This rebate mechanism was created by the Ontario Government in an effort to mitigate the risk of price abuse by the OPG and protect Ontario customers from price volatility. The rebate applied to the OPG’s non-prescribed generation, which accounted for about 20 percent of Ontario’s power generation assets.
The OPG Rebate however ended on April 30, 2009, and businesses who were used to receiving capped pricing on a portion of their supply now have several factors to consider when formulating energy buying strategies and planning energy budgets. Click here for more information.
Regulated Price Plan (RPP)
On Nov. 1, 2009, Municipalities, Universities, Schools, Hospitals ("MUSH" customers) and other public-sector consumers will no longer be eligible for the Ontario Regulated Price Plan, or RPP. As a result, these customers will be rolling onto an hourly pricing model, which means a greater alignment between the cost of electricity and the time that it is being used. Customers who have been maintaining budget certainty through the RPP structure will likely need to start thinking about an energy procurement plan to minimize their market exposure, since hourly rates can fluctuate due to many factors. Click here for more information.
Provincial Benefit
The Provincial Benefit, also known as the Global Adjustment, is the difference between the spot market price and the rates (per kilowatt hour) that have been guaranteed to regulated and contracted generators for providing adequate generating capacity to the province. The Provincial Benefit may be a credit or a charge—depending on whether the market price of electricity is higher or lower than the fixed rates paid to these generators. As a result, the Hourly Ontario Energy Price (HOEP) and the Provincial Benefit have an inverse relationship in such a way that higher HOEP prices will likely result in the Provincial Benefit being a credit whereas lower HOEP prices will likely result in the Provincial Benefit being a charge to customers.
For customers paying the spot market price, as well as those receiving their supply from a retail supplier, the Provincial Benefit is passed through as a separate line item on their bill, separate from their supply price. Click here for more information.
