| Jul 26, 2007


Feature Article - July 26, 2007

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Legalese - July 26, 2007

Purchasing Electricity

by William A. Florence, Barrister & Solicitor

Legalese is a column of general information and opinion on legal topics by the lawyers of Rural Legal Services, Box 359, Sharbot Lake, ON, K0H2P0, 613-279-3252, or 1-888-777-8916. This column is not intended to provide legal advice. You should contact a lawyer to determine your legal rights and obligations.

Ontarians have a choice of how we buy electricity. The delivery of electricity in Ontario, for the most part, is provided by Hydro One. We are charged for this delivery, and for other costs that arise out of the operation and maintenance of the hydro delivery system. However, the option we do have as consumers is the manner in which, and from whom, we purchase the amount of electricity that we use.

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One option is to purchase on the provincial regulated price plan. Hydro One will buy energy on the market, and charge the consumer what they pay for it. It does not make a profit on this purchase of electricity for the consumer. The price is determined by the Ontario Energy Board. The OEB is the independent regulator of Ontario’s energy services. The price may be changed every six months, and is based on a forecast model.

A second option is to buy your electricity through an electricity retailer other than Hydro One. The price is usually a guaranteed set rate, per kilowatt-hour of energy, which lasts for the duration of the contract. The contract could remain in effect for years. A kilowatt-hour of energy is equivalent to a 100-watt light bulb being on for ten hours.

A third option that only a limited number of consumers have access to, is spot market pricing. A special metre is used, and the electricity prices fluctuate every hour.

If a consumer decides to purchase electricity from an electricity retailer other than Hydro One, the difference in the monthly bill would relate to the cost of the electricity supplied, calculated by the rate agreed to in the contract. However, as Hydro One is responsible for the delivery of the electricity, the cost of delivering the electricity would remain the same. In addition, the regulatory administration costs, and the debt retirement charge, would remain the same.

One method that electricity retailers use to get new business is door-to-door sales. Agents who approach your home are required to show identification. If you are not clear about who they are, or who they work for, you should ask. You are not required to sign anything on the spot. You can ask to simply have materials left for you to review. You also do not need to show them a copy of your electricity bill for them to leave information for you. The agent only needs to see a copy of your electricity bill if you decide to sign a contract with the retailer.

It is important that you take the time to compare prices prior to signing a contract. While a fixed price protects a consumer from market increases in the price of electricity over the contract term, if the market price of electricity is lower than the retailer’s contract price, the consumer could end up paying more for electricity than they would if they stayed with Hydro One. It is also important that you read the contract before signing it, and that any questions you have are answered. A contract is a commitment, so it is important to know what you are committing to. Some key provisions in the contract will relate to the price the retailer is offering, exit conditions and options for renewal.

If you have signed a contract with an electricity retailer, you must be provided a copy of the contract within 40 days. After you receive your copy of the contract, you have 10 days to decide whether you want to cancel it. In most cases, after these 10 days are up, the electricity retailer will contact you, (normally by phone), and ask if you still want them to be your electricity retailer. If you say no at this point, then the contract ends. It is important to be aware of the time period you have to change your mind. The retailer is not required to affirm the contract if you contacted the retailer first, if you responded to direct mail solicitation, or if you completed a contract over the internet.

If you have any questions, concerns, or complaints about electricity retailers, a helpful resource is the Ontario Energy Board, who can be contacted at 1-877-632-2727. They can assist with interacting with the electricity retailer, and ensure that they follow all legal requirements that the OEB has the authority to enforce.

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