A local baker says that rising hydro rates are going to put her out of business.

Business owner struggles with rising hydro rates

A local business-owner says rising hydro rates are going to put her out of business. The small Prescott-Russell business-owner, who asked not to be named, has seen her energy costs triple in the past year alone.

“I noticed that my bills were getting crazy. I called Hydro 2000 to ask them what was going on and they told me my bills were going up because the rates had increased. They said they would be going up again November 1,” said the baker. She told The Review that she is worried that the additional increase will put her out of business.

Last November, the business owner’s monthly hydro bill was $966. As of March 2016, her monthly bill had climbed to $1,727.50. It continued to rise. As of September 19, the bakery’s current bill clocked in at $1,349. As a result of the increases that took effect in May, she is now paying 18 cents per kWh during peak periods, 13.2 cents per kWh during mid-peak and 8.7 cents per kWh during off-peak hours. No upgrades or major changes were made to the building and business remained relatively constant, with a four-to-six per cent increase since the previous year.

The Ontario Energy Board encourages consumers to use power when electricity market prices are lower. Time-of-use prices vary based on when electricity is used and they are typically lower during the evening. Most small businesses can’t alter their hours of operation to benefit from these lower rates.

In the case of her business, stoves and fridges are running all day. Turning them off during peak hours isn’t an option.

“It’s unfortunate. Every year my (business) gets a bit bigger. I’m doing all of the right things to grow my business and do my job, but I can’t keep up. Rising hydro costs are going to put small companies out of business,” she said.

She is currently looking at the possibility of moving her company out of Prescott-Russell, to a more populated location near Ottawa.

The business owner will still face rising energy costs, but says she hopes that a wider clientele will ensure that her ovens are always full, reducing costs.

“It’s crazy. Businesses are cutting back on labour because they can’t afford to have people help them, because they have to pay their hydro bills. You work hard and the harder you work, the less you put in your pocket,” said the business-owner.

Ontario Energy Board (OEB) spokesperson Paul Crawford confirmed on Friday that energy prices are adjusted on May 1 and November 1 of each year. He could not confirm if the rate would increase this year. He said the new prices would only be available in mid-to-late October. The OEB reviews its electricity prices twice each year. Prices are based on forecasts from the Independent Electricity System Operator. The OEB says that prices are designed to recover the actual cost of electricity over the forecast period.

These price changes only affect households and small businesses that buy their electricity from their local utility and have a smart, or interval meter. The OEB says that customers who have signed a contract with an energy company do not pay these rates.

Household consumption has been declining and the OEB suggests that this decline is a result of successful conservation programs. It may also be because some Ontarians simply can’t afford the cost of turning on their lights. OEB statistics show that a typical Ontario household uses about two-thirds of its power during off-peak hours, when electricity rates are lowest. The remainder is spread in near equal amounts between mid-peak and on-peak times.

In April, the OEB announced new time-of-use (TOU) electricity prices for households and businesses. The increases took effect on May 1 and added about 2.5 per cent to the total bill, for a household that consumes 750 kWh per month.

The OEB blamed the rate increases on a budget shortfall. They said that a milder than expected winter in 2015, combined with energy conservation initiatives taken on by consumers meant that Ontarians consumed less electricity during the winter of 2015/2016.

“As a result of lower usage, Regulated Price Plan (RPP) prices did not recover the full cost of serving RPP customers. One of the main reasons prices are increasing in May is to recover this shortfall,” said the report issued by the OEB.

The impact on small business and households was higher bills.

This past summer, energy consumption increased in Ontario by 7.2 per cent in comparison to last year, said Chuck Farmer, the director of stakeholder and public affairs for the Independent Electricity System Operator (IESO).

Approximately 9.8 per cent of the increase was attributed to off-peak hours and about 2.8 per cent was used during peak hours, said Farmer.

“The 7.2 percent increase translates into an increase in distributors consumption of 2.15 Terawatt Hours (TWh) over the previous summer (June to August). The increases correspond with the higher temperature differences between this past summer and last year’s summer. August saw the highest increase in temperature and accounted for 1.29 TWh of the increase. June and July experienced increases of 0.43 TWh and 0.42 TWh respectively,” said IESO representative John Cannella.

The IESO is a Crown corporation responsible for operating the electricity market in Ontario. It provides electricity to power utilities, which then distribute the power to customers. The IESO is one of eight independent system operators in North America.


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