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What does the Delivery Charge on Hydro bills pay for?

According to the 2011 census, there were 4,887,510 private households in Ontario.

Let’s say each home pays a $50 per month delivery charge on their electric bill.  I’m using $50 as the base amount because people in condos probably don’t pay that much, while rural residents pay $75 and in many cases  upwards of $100 per month.  So let’s just use $50 as our starting point.

4,887,510 households x $50 = $244,375,500 EVERY MONTH.

That’s $244 MILLION just for delivery charges every single month.  Hydro One describes the delivery charge as:

 “Hydro One includes the cost of delivering electricity to customer’s properties on their bill under the Delivery Charge. A portion of the delivery charge is calculated at a fixed amount. The rest of the charges increase or decrease depending on the amount of electricity you use. For an average medium density residential customer who uses 750 kWh a month the Delivery Charge represent approximately 39% of the total bill. Hydro One owns and is responsible for this portion of the bill.”

What they fail to say is that rural residents pay far higher delivery charges than their urban counterparts, even though, in many cases, rural ratepayers live right next to where the electricity is produced, i.e. industrial wind turbines or the Bruce Nuclear Power plant. I would think that if you live right next door to say,  Bruce Power, that your delivery charge would be practically nil.

So, they want us to believe that it costs the hydro companies 1/4 of a billion dollars to deliver our electricity to us every month, in many cases through lines that have been installed for decades.

Now, let’s take the Global Adjustment fee.  For an explanation of what that is, click here….

The electricity bill that we used as an example had a charge of $106.54.  Let’s assume that the Global Adjustment fee is spread out evenly throughout the province to all ratepayers.  And we know it varies each month.

4,887,510 x $106.54 = $520,715,315.40 for one month.

That’s $520 M plus $244 M totals 3/4 of a BILLION dollars every single month JUST for those two charges.  That doesn’t even include the actual cost of the electricity or the other charges (i.e. regulatory charge) and taxes.

Is there an energy expert out there who can explain to us exactly what the 1/4 of a billion dollars for delivery charges every month is used for?  (Besides the exorbitant salaries of the CEO’s and other staff who are on the Sunshine List.)

 

 

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3 Comments on “What does the Delivery Charge on Hydro bills pay for?”

  1. Bruce Posch September 13, 2016 at 11:41 pm #

    Ironically, rural Ontarian customers of Hydro One pay higher delivery charges, which subsidize urban customers with public utilities such as Toronto Hydro. Hydro One customers pay for the grid which crosses farmers fields taking electricity to urban centers. The power lines which cross my farms were put up in the 1950s. Ontario Hydro paid the owner at the time, one payment of $154 for twenty two acres of right away, and installed three towers. Hydro One pays no annual fees for this right. Farmers provide the corridors, and all Hydro One customers pay to maintain the grid so high density users can have cheaper delivery charges.

  2. Leslie September 14, 2016 at 10:37 am #

    SINCE WE PAID FOR THE INSTALATION OF ALL THE TOWERS AND LINES ACROSS ONTARIO,
    WE SHOULD NOT HAVE TO PAY THESE SO-CALLED “DELIVERY ” CHARGES.

  3. Bert October 4, 2016 at 11:23 pm #

    Delivery charges? What about the wind projects in rural Ontario? We, the rural people, pay for the delivery (transport) of this wind electricity to cities.
    The ancient local electricity system in rural Ontario is paid for many times by now.

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