As instructed by the OEB, Hydro One has responded with their 'Final customer education and communication plan' regarding the implementation of the elimination of the seasonal class'.

The details of the Plan are available on the OEB website at:

    https://www.rds.oeb.ca/CMWebDrawer/Record?q=CaseNumber=EB-2021-0110&sortBy=recRegisteredOn-&pageSize=400

The specific document is dated 2022-01-26    EB-2021-110

The Balsam Lake Coalition has submitted our concerns with the plan as Hydro One is not specific about who the 'Key Stakeholders' will be and we feel strongly that BLC should be included in all of those communication initiatives. 

Should you or your organization want to be included in this effort we would encourage you to contact the OEB and advise them of you wishes.

 As instructed by the Ontario Energy Board, Hydro One has grouped the questions directed to the Board regarding the plan to eliminate the Seasonal Rate Class into 13 categories. They have crafted detailed responses to those 13 questions and we have attached a link to the OEB website where you are welcome to review the questions and Hydro One's response.

In our view, the responses are generally accurate and complete. Should these responses generate any further questions, feel free to leave a note on our Blog here. We will respond in a timely fashion.  The deadline for written submissions on this issue was mid-March, however the Board will still receive your correspondence but it will not form part of the formal proceedings.

HONI_Elimination of Seasonal Rates_Responses to PO_20210426

 

Ontario Energy Board Hearing on eliminating Seasonal Rate Class

 

As instructed by the Ontario Energy Board (OEB), Hydro One has mailed information letters to all of its Seasonal Rate Class customers. The purpose of the letter is to inform all of Hydro One’s Seasonal Rate Class customers of an imminent change in their rate class.

In 2015, the OEB agreed with the Balsam Lake Coalition (BLC), that in fact, the Seasonal Rate Class was inappropriate as a unique Rate Class and ordered Hydro One to eliminate this unique Rate Class. After 6 years, Hydro One is finally moving forward on this order. As the letter states, the OEB will not reconsider its decision to eliminate Seasonal Rate Class.

While the letter is factually correct, BLC feels that some clarifications and elaboration would be appropriate. On page 2 of the letter Hydro One presents a table of potential bill impact on Seasonal customers when they are moved into their respective density-based rate groups. The monthly consumption numbers are shown as an average of a 12 month consumption pattern but we know many Seasonal customers, particularly in the R2 class, only consume electricity for 5 months of the year (mid-May to mid-October).

A customer with an average of 350 kWh/month consumers 4200 kWh/year or 840 kWh/month for the 5 months they use the property. Hydro One is required to build their network to deliver to the peak load demand not just the average so while a 350 kWh/month average looks quite modest it is a significant power consumption over the 5 months of active use. The same analysis holds true for the customer with very small consumption but here too a yearly average of 50 kWh/month is really a 5 month consumption of 120 kWh/month. Of the 150,000 Seasonal class customers about 2/3 consume less than 4200 kWh/year yet a full 1/3 (50,000) consume above that rate. This is a significant group of customers who are paying excessive rates to support the high-cost low-volume consumers largely in R2 territory.

The bottom line here is that ALL remote density customers (R2) are very-high cost customers - especially those classified as Seasonal. Their rates should reflect that cost – not be lumped in with low-cost Seasonal customers in medium density territory (R1).

We appreciate that delivering service to R2 customers is costly. The ‘permanent’ residents in R2 territory receive two rate subsidies to help mitigate that cost while presently those customers who are classed as Seasonal do not qualify for those subsidies. . The Balsam Lake Coalition believes that an appropriate form or rate mitigation should apply for ALL customers within the R2 territory and that residency criteria are simply inappropriate and discriminatory. Many ‘permanent’ Hydro One customers satisfy the residency requirement but are in fact, snow birds, who leave their Ontario residence for extended periods during the winter months. These customers enjoy permanent resident hydro rates but in fact are just as ‘Seasonal’ as the traditional cottager next door. A Hydro One customer is a Hydro One customer.

The Balsam Lake Coalition  will intervene at the upcoming hearing to advocate for appropriate measures to minimize the cost impact on ALL Seasonal customers.

 

The intent of this article is to provide some background to the issue of Seasonal Hydro Rates.

If you own a second residence in Hydro One territory and it is not your principal residence, then Hydro One classifies you as a Seasonal customer. All Seasonal customers are lumped together in one category regardless of their density and all pay the same delivery rates.

Permanent residents are assigned their class of service based on the customer density of the community in which they live. There are 3 service classes for permanent residents - Urban, Medium density (R1) and Low density (R2). It has been established that Hydro One’s costs are most closely aligned with customer density and so customers in Urban territory pay the lowest rates while customers in Low density (R2) pay the highest rates. Medium density rates are in between Urban & R2. Because of the significant cost to serve customers in R2, a subsidy is paid to those customers by assessing a small surcharge on all Hydro One customers.

 

Seasonal customers are not defined by density but instead by Hydro One’s definition (principal residence? Sleep there how many nights/week?, etc.)  But there is only one class of Seasonal customer although they are served in all three density zones. The result is that the Seasonal customers in the low-cost territory (Urban & R1) are subsidizing the delivery rates for Seasonal customers in the remote (R2) territory. Seasonal customers in R2 territory are not eligible for the subsidy provided to permanent residents.

The Balsam Lake Coalition (BLC) has argued to eliminate the Seasonal class and to fold those customers into their density –based rate groups (Urban, R1 & R2). In 2015 the Ontario energy Board (OEB) agreed with BLC and ordered Hydro One to eliminate Seasonal class. Hydro One has yet to implement that order. In the fall of 2020 Hydro One submitted a plan to bring about the elimination of Seasonal class and the Board is now considering that plan. We are hopeful that the OEB will convene a process in the near future to finalize the implementation of that plan.

FOCA has taken a position that the status quo should be maintained arguing that the elimination of Seasonal class would impose significant cost increases on the Hydro bills for some 80,000 customers in R2 territory. What they don’t discuss is the extent of the subsidy being paid by some 70,000 Seasonal customers in Urban and R1 territories. We feel that component of the issue needs to be considered by all cottagers, not just those in Hydro One’s remote (R2) territory.

BLC does not support maintaining the status quo and, unlike FOCA, we have proposed and alternative rate strategy that offers immediate relief to those Seasonal customers in Urban and R1 territory yet protects the R2 Seasonal customers from excessive rate increases. The link below is to the BLC submission to the OEB proposing a fair and equitable solution to the elimination of Seasonal Class. Cut and paste the link into  your browser to read that submission.

https://drive.google.com/file/d/1b1P_bSCJwoEf5KPHOT8bm7pFng91x3bs/view

 

You may be aware that Hydro One’s (H1) delivery rates for Seasonal Class (SC) customers, (most Ontario cottage owners) are currently under review by the Ontario Energy Board (OEB). Recently there has been some misinformation circulated, to the effect that if the SC was eliminated, then Hydro rates would double for 80,000 SC customers. We believe some clarification is in order.

H1 has 3 residential rate groups that are determined based on density zones i.e. Urban - UR, Rural –R1 and Remote- R2, & 1 special customer group called Seasonal Class (SC) which is not determined by a density zone but rather on criteria such as how many nights one sleeps in their cottage per year & how many houses they own etc. All SC customers are located within the 3 residential zones & therefore are situated in many cases next door to permanent residents who have significantly lower  delivery rates for the same amount of power. Most cottage owners fall into the SC category. Today, SC rates are up to twice the rates for permanent residents in R1, R2 & UR density zones & well above H1’s costs to service them.

The Balsam Lake Coalition (BLC) is an intervenor group at the OEB & has argued against this unfair rate structure for 9-10 years. In March 2015 the OEB agreed with BLC and ordered H1 to eliminate the SC & move the customers to their respective, residential density zones. H1 has used a variety of procedural arguments & tactics to delay implementation of OEB’s elimination order until the present day (over 5 years). The OEB has proposed to hear input, at a future hearing, from all interested parties for the final outcome and/or elimination of the SC. BLC will continue to advocate for fair & equitable rates for all SC customers.

Be informed- contact the OEB or BLC for further information.

OEB: tel.- 1-877-632-2727;  416-314-2455;   Email – publicinformation@oeb.ca

Read Hydro One's submission:

 Hydro One's October 15, 2020 Report

BLC: Email – balsamlakecoalition@gmail.com

Balsam Lake Coalition

This past year we have worked to gain an understanding of Hydro One's rate structures and how they arrived at a pricing model for Seasonal customers that has a consumption component that is three times that of regular urban customers. Hydro One claims that Seasonal customers don't contribute adequate revenue to cover their costs in that the service is provided for 12 months of the year but many customers only use the service for 6-8 month of the year.
While this may be true for some Seasonal customers it is absolutely not true for many others who use their recreation property 12 months of the year. Hydro One's assumption is that Seasonal Class customers consume on average 6000 kilowatt hours of electricity per year where the average Residential customer consumes 9600 kilowatt hours per year. As a result, if your consumption is significantly above 6000 kwh/year, you are severely penalized with a rate structure that is highly inequitable. Conversely, if you are an Urban customer consuming less than 9600 kilowatt hours per year, your contribution to HON costs are significantly understated.

The Balsam Lake Coalition (BLC) has applied for and was granted intervenor status in the current Hydro One Networks (HON) rate case that is now before the Ontario Energy Board (OEB). Of considerable interest to BLC are the conclusions drawn from HON's Density Study that was commissioned in 2011 and delivered in 2012. The study looked at three density classes of customers - High, Medium and Low. The study concludes there is a clear and significant relationship between customer density and HON costs. HON has assumed/established that Seasonal customers lie between Medium and Low density territories and have therefore assumed a Revenue to Cost ratio of this density. We know from anecdotal evidence that many Seasonal customers reside in Urban-like territories or in Medium density territories (like those of Balsam Lake) where the Revenue to Cost ratio is much more favourable than in the Low density areas.
We have challenged HON's assumption through formal interrogatories and will await HON's response to our questions.

After a number of preliminary steps, the process will likely move to oral hearings at which point we intend to represent BLC with our follow up questions and to push for a more equitable implementation of the Density Study findings.

We have been working in concert with other advocacy groups and have received immeasurable assistance from them to date. We thank,

Consumers Council of Canada; http://www.consumerscouncil.com/
Energy Probe Research Foundation: http://epresearchfoundation.wordpress.com/

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