FAQ

What is the Provincial Benefit? 

The price of generation in Ontario is set by a competitive market. The Provincial Benefit accounts for differences between the spot market price and the rates paid to regulated and contracted generators. As a result, its value may be positive or negative, depending on the fluctuation of prices in the spot market.

Some additional information about the Provincial Benefit includes:

The rate is set to reflect the difference between the spot market price and the regulated rate paid to Ontario Power Generation’s baseload generating stations;

• Payments made to suppliers that have been awarded contracts through the Ontario Power Authority include new gas-fired facilities, renewable facilities (like wind farms) and demand response programs; and
• Contracted rates are paid to Non-Utility Generators.

Who does it apply to and when?

Effective January 1, 2005, a new item called the Provincial Benefit began appearing as a separate line item on the bills of business customers who consume more than 250,000 kWh per year and/or those that pay the wholesale price.  It also applies to those residential customers who signed a contract with an electricity retailer. 

How is the Provincial Benefit calculated?

The Provincial Benefit has increased and decreased in response to changes in the spot market prices. 

So far in 2009, the spot market price has been unusually low. This has been a result of low demand and the availability of generation. The Provincial Benefit has been higher in order to cover the additional costs of contracted and other regulated generation.

Once both costs are factored together – the wholesale price of electricity has remained reasonably constant.

The IESO provides monthly updates on the most up-to-date Provincial Benefit calculation. For more information go to: www.ieso.ca