Ontario’s Fair Hydro Plan Legislation Passes

May 31, 2017

Today, Ontario passed the Fair Hydro Act, 2017 -  legislation that will lower electricity bills by approximately 25% on average for all residential consumers and as many as half a million small businesses and farms, starting this summer (after July 1, 2017). This includes the eight per cent rebate introduced in January and already applied to residential and small business electricity bills.

Lower-income Ontarians and those living in eligible rural communities will receive even greater reductions, as much as 40 to 50 per cent. As part of the plan, electricity commodity rate increases for four years will be held to the rate of inflation.

The legislation will:

  • Enable the Independent Electricity System Operator (IESO) and Ontario Power Generation (OPG) to work together to spread out the costs of Ontario’s clean energy investments over a longer period of time, which ensures that the costs of these investments are allocated fairly among current and future ratepayers. This will be accomplished through refinancing a portion of the Global Adjustment (GA), resulting in significant and immediate rate reductions.
  • Modify the Ontario Electricity Support Program (OESP) to ensure it is funded by government instead of ratepayers, reducing bills for all.

In addition, the Fair Hydro Act:

  • Enhances the Rural or Remote Rate Protection (RRRP) program to provide distribution charge relief to about 800,000 customers and shift costs from ratepayers to provincial revenues. This includes customers served by local distribution companies (LDCs) with the highest rates.
  • Provides on-reserve First Nations household with a 100 per cent credit of the delivery line on their monthly electricity bills.

Setting Prices

The Ontario Energy Board (OEB) sets electricity prices for eligible residential, small business and farm customers. This happens twice a year, on May 1 and November 1. Rates are set based on a forecast of the demand for electricity and how much it will cost to supply the province with electricity.

On May 1, 2017, the OEB reduced electricity rates across the province for all Regulated Price Plan (RPP) eligible customers, which included a portion of Ontario’s Fair Hydro Plan. This means households, small businesses and farms are seeing savings sooner than expected.

With the passage of this legislation, the OEB is now required to lower rates again within 15 days after Royal Assent to meet the government’s commitment to cut electricity bills by 25% on average for all households and as many as half a million small businesses and farms.

Some Quick Facts:

  • Ontario’s Fair Hydro Plan will also improve energy sector efficiency and modernize the province’s electricity market, building on the collaboration of the Independent Electricity System Operator (IESO) and the Ontario Energy Board (OEB).
  • In April 2017, the Industrial Conservation Initiative (ICI) was expanded to include electricity consumers in the manufacturing and greenhouse sectors with an average monthly peak demand of greater than 500 kW and less than 1 MW.
  • On May 1, 2017, the OEB reduced electricity rates across the province, including a portion of the proposed Fair Hydro Plan. The OEB will have 15 days after the legislation comes into force to update rates to reflect the full benefit of the Fair Hydro Plan – delivering a 25 per cent on average reduction for all households and half a million small business and farms.
  • The province has expanded the OESP, providing 50 per cent more support in the form of monthly credits for people with low incomes and increasing eligibility, effective May 1, 2017.
  • The province is also establishing an Affordability Fund that will be accessible to LDCs for customers who do not qualify for low-income conservation programs and who are unable to undertake energy efficiency improvements without financial assistance.

Access additional background information on the proposed Fair Hydro Plan legislation.