The Ontario government’s decision to freeze electricity rates during the COVID-19 pandemic will cost taxpayers around $175 million by the end of May, the Financial Accountability Office (FAO) said in a report released May 22.
In a relief measure early in the pandemic, the province lowered the cost of electricity for residential customers and some commercial clients, mostly small businesses and farms, by suspending time-of-use pricing.
Time-of-use (TOU) pricing is a system of variable electricity rates depending on the time of day. The price is lower at off-peak hours. The suspension of TOU pricing set costs at the lowest “off-peak” rate of 10.1 cents-per-kilowatt-hour (c/kWh).
The FAO found the suspension of TOU pricing will save a typical residential ratepayer $34 and a typical commercial ratepayer $98 from March 24 to May 31, at a cost to Ontario taxpayers of $175 million ($138 million for residential ratepayers and $37 million for commercial).
If the province decides to extend the price freeze to Aug. 31, the FAO estimates it would cost an additional $316 million for a total cost of $491 million. Extending it to Dec. 31 would cost a total of $849 million, while suspending to March 31, 2021 would cost a total of $1.1 billion.
To learn more, read the full report here.