Well, seems the inflation ghost is finally creeping into power pricing in Ontario. To little fanfare, the Ontario energy board announced a price increase for residential electricity rates in Ontario. On the ultra-low overnight rate (which I use), the peak rate went up a whopping 38% (from 28.4 to 39.1 c/kWh). Lets look at the news release and review.
In the wake of the COVID pandemic, inflation ticked up substantially in Canada and around the world (source). Notably absent were any substantial increases in electricity rates (source). For example, inflation hit 8% in the summer of 2022, that November electricity rates actually went down a little with time of use peak rates dipping 2 c/kWh. Further, electricity demand in Ontario continues to increase, while the provinces nuclear stations continue to see downtime during refurbishment (source).
On the face of it, a pricing increase seems a sensible response to this. And for the most part it is. Lets review the changes in the news release on the ultra-low overnight plan.
| Time window | Current headline price [c/kWh] | New headline price [c/kWh] (sell rate) | Relative increase | * New buy rate [c/kWh] |
| Overnight (11 pm – 7 am) | 2.8 | 3.9 | 39 % | 7.2 |
| Off-peak weekends (7 am to 11 pm) | 7.6 | 9.8 | 29 % | 13.9 |
| Mid-peak weekday (7 am to 4 pm), and (9 pm – 11 pm) | 12.2 | 15.7 | 28 % | 20.6 |
| Peak, weekday (4pm to 9 pm) | 28.4 | 39.1 | 37 % | 47 |
The sell rate corresponds to the expected credit on my bill.
Well well well, seems the business case for home energy storage has gotten a lot better. By “buying” at night, and discharging during the Peak, I now have a 40 c/kWh benefit compared to a 28c/kWh benefit before. Why now my $25k PW3 investment pays for itself in 25 years instead of 35 (assuming 250 weekdays in a year, and a 10 kWh capacity source).
Here at electric-car adventures, we have advocated for higher electricity prices as a simple policy tool to improve the solar economics (source). From that standpoint, this announcement is a win. In the fine-print though, there are some strange news. Namely the Ontario Electricity Rebate (OER) is increasing substantially from 13.1 % to 23.5 % (source). So far, as I tend to export more dollars than I import during the sunny months, I have not gotten any OER credit. I might get some of that as we head into the winter months, when the heat pump starts up while there is less solar, but we shall see.
We will have to see how these changes impact solar and battery financials, but for now, I am happy to see better economics for my home battery system, even though the solar OER muddies the solar waters.
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