Do you have an electricity contract?

April 18 2007 by Ellen Roseman

When Ontario’s electricity market was deregulated in 2002, almost one million people signed fixed-price contracts with Direct Energy, Ontario Energy Savings Corp. and other electricity marketers. The government later pulled the plug on deregulation and the fixed price didn’t take effect. But the contracts are still in place.

The five-year contracts come up for renewal, starting in May, and you may find your contract is automatically rolled over for another year unless you take steps to cancel it.

Here are your options:

* Do nothing. You’ll be in a one-year contract at more than 9 cents a kilowatt-hour.

* Sign a new five-year contract with your current supplier at a rate of 8.8 to 8.9 cents a kilowatt-hour.

* Tell your current supplier you don’t want to renew and sign a five-year contract with the lowest-cost supplier at 8.49 cents a kilowatt-hour.

* Go back to your local utility’s regulated price plan. The rate is 5.3 cents for the first 600 kilowatt-hours and 6.2 cents for the rest (averaging about 5.8 cents).

Why sign a contract when the regulated price plan (RPP) is much lower? Here’s a response from Ian MacLellan of Energyshop.com:

To compare the contract with the RPP, you should deduct about 1.5 cents for the rebates that a customer gets on a contract but are already factored into the RPP. So, you’re looking at 5.8 cents for the RPP and 7 cents to 7.49 cents for the contract.

Locking into a fixed-price contract is still a valid decision, but the considerations are:

* What will happen to electricity rates after the October election?

* How fast will rates increase with rising oil and gas prices? What about the Auditor-General’s report that electricity from the Bruce Nuclear plant will cost 7.1 cents?

The message we want to get out to people is this: Read your renewal notice carefully. And do your homework before getting into a new contract.

1 comment

  1. don watterson

    Apr 21 2007

    Dear Ellen, I am a retailor that uses automatic debit. At the end of the day we do a settlement that transfers the funds to the bank and the next morning it shows online the funds in the account, except for Friday, Saturday and Sunday. That money is not credited until the following Monday after 5 p.m. I can’t believe the computor at the bank is shut off because if I pay a bill with a checque it is debited from the account almost instantly. Where does that money go for almost 4 days? It has always driven me a bit crazy just like the cost of a book. On the back of the book the price will be in Canadian and U.S. dollars but it does not reflect the exchage rate. Cheers