New Adjustment for Customers on Spot Market Pricing
With Bill 100, the provincial government has passed new legislation effective January 1, 2005 . This legislation introduces a new adjustment called “Provincial Benefit” that will be reflected on the bills of those customers currently paying the spot market pricing for their electricity.
What is the Provincial Benefit?
A competitive market sets the price of electricity generated in Ontario . 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.
The Provincial Benefit is a “true-up mechanism” or “global adjustment” designed to ensure the spot market price billed for electricity is the true cost of the electricity.
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" contracted at a set price. Initially the Ontario government will set these prices but ultimately the Ontario Energy Board will be responsible for setting the prices. Heritage assets or “baseload” include nuclear generators and some hydroelectric generators. Other OPG assets and Non-Utility generators will be based on a variable competitive pricing scheme. The Provincial Benefit is designed to more accurately reflect the new financial architecture for this hybrid electricity system following the passage of Bill 100, the Electricity Restructuring Act, 2004.
Who does it apply to and when?
Effective January 1, 2005 , a new item titled Provincial Benefit appears on
bills for those customers who
pay the spot market price for electricity, or for those customers who purchase their electricity through an energy retailer.
How is the Provincial Benefit calculated?
The Provincial Benefit is calculated by multiplying the line loss Adjusted Consumption figure appearing on your bill by the current provincial benefit rate. The rate is set by the Independent Electricity System Operator (IESO) each month. Depending on market prices, the provincial benefit could either be a credit or a charge.
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