Higher Energy Costs Mean Low-Income Torontonians Will Feel the Chill

By Carolina Crewe – BASICS #17 (Jan/Feb 2010)

When the McGuinty government’s HST is applied to energy costs in the spring, Ontario energy bills will be off the charts.  An extra 8% charge on an electricity bill each month could mean the difference between a roof over a family and homelessness. Rates are extremely high and disproportionately applied to low-income building residents, as opposed to homeowners.  Homeowners have more flexibility to exchange old power-hungry fridges and stoves for newer energy efficient models while apartment complex residents don’t have this advantage.  The cost of electricity to run an older model appliance versus a newer model creates a $150-200 difference in energy costs per appliance per year.

All three of the major electricity distributors have used tools of “projected consumption” which really means estimating or guessing energy consumption for the coming month(s).  As one customer living in a west-end Toronto housing co-op explained, “We went away for six weeks and the only thing plugged in was the refrigerator. The bill was over $400. Toronto Hydro told me that they likely estimated the usage based on the previous year. So I told them there was no way I was paying that amount based on a guess.”

Most residents reported paying $150 per month in the winter and many resort to bundling up indoors. One resident admitted, “It’s freezing in my apartment and I can’t turn the heat on until December. I’m wearing layers of sweaters in there. It’s just too expensive; I can’t afford it. I pay $300 every two months in the winter time.”  

Those I’ve interviewed who have signed up for electricity services with the Direct or Universal energy retailers are paying slightly more at approximately $175 per month. Market reports reflect this experience. According to CBC Marketplace, electricity consumers who have signed contracts with these new retailers have always paid more. Not only are these contracts not saving consumers money, but they’re extremely difficult to get out of. The costs of termination range from $200-$500, on top of a recent energy bill. Numerous complaints have also been directed at these companies’ pushy and exploitative sales representatives, who have been accused of targeting areas of communities populated by low-income residents, seniors and newcomers to Ontario. As one resident experienced, “They told me that I didn’t have a choice. Everyone else would be switching to Direct Energy and that I would pay an extra 10 cents [per kilowatt hour] if I didn’t switch now.”

According to the Landlord and Tenant Board of Ontario, if your electricity costs are included in your rent, and you switch to a smart meter and start paying the cost of electricity, your landlord must reduce your rent. Also, if you are renting and choose not to switch, the landlord cannot cut off your electricity. However, for most of us, it’s too late. As the “smart meter” calculations come into effect this month for those with Toronto Hydro, it will place higher costs on families with children. The digital time of use service is supposed to place responsibility for hydro use directly on the individual bill payer. The rate is calculated at 47 cents at peak hours, to cook a family meal, and less than half as much during off-peak hours. Usage between 5 pm and 9 pm is considered “on-peak” which means that using a computer and printer for homework completion or work-at-home tasks will create a significant cost.

There is no mention on Toronto Hydro’s time-of-use guide that an extra 8% tax will be applied to the bill, regardless of usage level come June of 2010. McGuinty’s HST implementation will issue cheques of $1,000 for families earning under $160,000, and $300 for individuals earning less than $80,000. Families may want to use their $300 cheques to pay their way out of contracts with Direct and Universal energy companies, or save it to pay their next hydro bill.  Middle-income families earning under $80,000 per year will feel the brunt of the new HST on costs of gas, electricity, haircuts and Internet service, adding an estimated $2500 per year in tax costs.  A one-time $300 cash-out is not going to alleviate those costs, nor will it prevent more families from facing homelessness in Ontario in 2010.