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Comparing the RPP with Contract Prices

It's complicated because of rebates and deficits.

The Regulated Price Plan (RPP) is not a fixed or capped rate.    Its purpose is to smooth out the impact of the volatile spot market, so it is set for 6 months at a time.   However, if electricity costs your utility more than they are charging you, a deficit builds and will eventually be charged to you. If the price is set too high, a surplus will build and be factored into the next price setting. The RPP is set based on expected electricity prices, plus a number of adjustments, including the Provincial Benefit.

Fixed Price Contracts are fixed for the term of your contract. In addition, you will be subject to the Provincial Benefit, which is already factored into the RPP.

To compare the RPP with a Fixed Price

  • Take the fixed contract price.
  • Compared with

    Start with an RPP average of 6.9 cents. (May 1 2010)
    What will the RPP be? Estimates are that it will go up by between 10 and 25% per year.

    Assuming price increases of 10% per year.

    2011 - 7.6
    2012 - 8.3
    2013 - 9.2
    2014 - 10.1

    If spot market prices increase at a faster rate, then the RPP will also, though slightly delayed.

    Note 1: The provincial benefit has varied hugely in recent years since it is based on the spot market price. These variations will create some short term anomalies, but over a long term contract it is designed to even out since the full Provincial Benefit is built into the RPP.
    Note 2: When you sign up to a contract you are opting out of the Regulated Price Plan. If there is an RPP deficit to pay off, it will be charged as an exit fee and if there is a surplus it will be paid to you. It is calculated as your annual consumption times the exit fee. If there is a surplus, you will receive a credit.Current RPP Variance Account

    More Details

    As a residential customer, you are a Designated Consumer, (applies to single family or multi-res buildings). You will be paying the following:

    • 6.5¢ / kWh for the first 1,000 kWh per month, per account or multi-res suite for the months of November through March, and for the first 600 kWh for April to October;
    • 7.5¢ / kWh for remaining monthly use.
    • This price is set until November 1, 2010, but is not a fully fixed price. If the cost to your utility is more than this, the deficit created will be built into next year's price.
  • "Designated Consumers" are residential dwellings and any account under 250,000 kWh per year. ( municipalities, universities, schools, hospitals and registered charities are no longer Designated Consumers as of November 1st, 2009 ).
  • Rebates and adjustments - Where do you fit?

    If you are on the Regulated Price Plan (RPP), all price adjustments are already factored into the rate. If you are not eligible for the RPP, or you opt out of the RPP, you will see the adjustments on your bill.

    OPG Rebate (aka ONPA) ended April 30, 2009.

    Consumers not eligible for the price cap have received a rebate, called the OPG rebate. This was payable to all consumers of electricity, except those who have specifically assigned it to a marketer, and will contue for a couple of quarters after April 30th since it is paid about 6 months after it is earned.

    Provincial Benefit

    n order to guarantee an adequate supply of electricity ihn Ontario, the provincial agencies fellt it necessary to sign supply contracts with some generators. These are for nuclear, water power, or renewable energy such as windmills. The Provincial Benefit was initially envisioned as a rebate, as indicated in its title, and it has occasionally been a rebate in its history. It guarantees that Ontario consumers will pay a set price for that electricity. If the market price is over that, the difference is returned as a rebate. If the market price is les than that, there is a surcharge. There are also a number of other adjustments factored in, such as older Non Utility Generation contracts and newer renewable generation. The rebate is the difference between the market price and about 6 cents. If you want more detail on the rebates, please go to the Independent Electricity System Operator (IESO) site.

    Note: The Provincial Benefit, despite its name, is not necessarily a rebate. If the spot market rate is below the set revenue level, this will in fact be a surcharge.

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