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What is the Provincial Benefit?
The price of generation in Ontario is set by a competitive market. Certain generators receive payments through regulation or contract that differ from the market price. Your portion of the net adjustment arising from these different payments is now included in certain bills as the Provincial Benefit
Who does it apply to and when?
Effective January 1, 2005, a new item titled Provincial Benefit appears on bills for those customers who consume more than 250,000 kWh annually and for some other “low volume” customers who were eligible but elected to exit the fixed electricity price plan introduced by the Ontario government in November 2002.
How is the Provincial Benefit calculated?
The Provincial Benefit is calculated by multiplying the line loss adjusted Billed Usage kWh figure appearing on your bill by the rate(s) as posted on the IESO web site: www.ieso.ca.
In addition to the present Energy Rebate that appears quarterly on your bill, this initial Provincial Benefit calculation will be based on a varying daily adjustment rate determined actual volume of electricity distributed to each customer each day using by the applicable daily IESO rate*, with exception of those customers not measured by an interval meter where a weighted average adjustment rate will apply.
*Each month the IESO will take into account the amount of each type of regulated or contracted generation injected into the IMO-controlled grid, the regulated price or contract costs for that generation, and any offsetting market revenues. The total global adjustment for the month is then applied to the settlement statement for the last trade day of the month for all market participants who have withdrawn energy from the grid during the month (except exporters).
How does this affect the Energy Rebate adjustment?
Under former legislation, all customers who pay the wholesale price for electricity were entitled to, and received on their Enersource Hydro Mississauga bill, an adjustment titled Energy Rebate calculated on a quarterly basis based on a formula known as the Business Protection Plan Rebate (BPPR). See “How is theEnergy Rebate adjustment calculated?” described further below.
What is the reason for this change?
Under Bill 100 there will be a mix of power produced by Ontario Power Generation (OPG) "heritage assets" (such as the generators at Niagara Falls) contracted at a set price and other OPG assets that will be based on a variable competitive pricing scheme. The Provincial Benefit will more accurately reflect the new financial architecture for this hybrid electricity system following the December 9, 2004 passage of Bill 100, the Electricity Restructuring Act, 2004. Other new Regulations have amended financial adjustments and payment flows under the Electricity Act, 1998 (specifically section 25.33 – Global Adjustments and section 25.34 – Payment).
How is the Energy Rebate adjustment calculated?
The Business Protection Plan Rebate was designed to encourage a greater level of competition in the market by addressing Ontario Power Generation position in the market, which currently, is responsible for roughly 70 per cent of generation in Ontario. Customers who pay the wholesale price for electricity have been eligible for a rebate under this plan. The corresponding Energy Rebate, roughly half the difference between the market price and was based on the Average Weighted Price of electricity minus the Price Cap (3.8¢/kWh) divided by two multiplied by your Billed Usage kWh.
If, for example, the weighted average price for the quarter was 5.4 ¢/kWh and your organization used 100,000 kWh during the same period. The rebate would be calculated as: (5.4 ¢/kWh – 3.8 ¢/kWh)/2 x (100,000 kWh) = $800(1) . While the rebate was paid out on a quarterly basis, the calculations were cumulative over the year. This means that when it comes to determining the second quarter payment, the first quarter results are incorporated into the sum. So if the average price over the first and second quarters was 4.9¢/kWh and your consumption totaled 210,000 kWh. The rebate payment you would receive for the second quarter would be: (4.9 ¢/kWh – 3.8 ¢/kWh)/2 x (210,000 kWh) - $800(1) = $350.