By John Spears Wed Feb 23 2011
A victory for electricity ratepayers who objected to paying high interest rates on overdue bills will be a loss for those who pay on time.
The Ontario Energy Board has ruled that most of the province’s electric utilities — which under a Supreme court of Canada ruling, had to give away money collected on overdue accounts because the interest rates charged were too high — may get the money back from customers across the board.
As a result, typical residential electricity customers will pay an extra 20 to 30 cents a month on their bills, for a period of one to two years.
Further, the parties agreed that it would be impossible to find and reimburse customers who had paid the high interest rates over decades.
The case, which does not apply to Hydro One’s local customers, dates back to a decision over late penalty payments on natural gas bills. The Supreme Court ruled in 2004 that the late payment penalty charged by the utilities exceeded the 60 per cent limit allowed under Canadian law.
The gas companies, required to give away the excess they’d collectedpaid it into a fund administered by the United Way to help low income families pay winter heating bills.
But the energy board then ruled that the gas utilities could recover their lost revenue by levying a levy a charge on all their customers.
Attention then switched to hydro utilities, which charged similar late payment penalties and faced an action similar to the gas utility case.
They, too, agreed to pay the illegally collected money out into the winter warmth fund and then
They, too, sought to regain it from the rest of their customers.
And they, too, have been successful.
The steep penalty for late bill payments “was itself an action undertaken by the utilities to protect the interests of the large majority of ratepayers who pay their accounts on time,” the board wrote in a decision released Tuesday.
“Delinquent accounts are an important source of costs for utilities, and these costs can only be recovered from ratepayers.”
Since the utilities can’t target the late-payers with big penalties, they’ll have to get the money from all their customers.
The board also argues that the now-outlawed late penalties were used to lower over-all electricity rates.
“Because of the revenues generated by the (late payment penalties), electricity rates were lower than they otherwise would have been,” the board wrote.
Since those revenues are no longer available to reduce rates, the board ruled, utilities should be allowed to increase rates to offset the loss.
The parties agreed that the overpayment across the province came to $17 million; with interest and other items their total costs for the settlement came to $18.4 million.
Toronto Hydro’s share of the overpayment was $7.5 million. It will have a two-year period in which to pay out the money; other utilities across the province must make their payouts within a year.
While the decision makes sense to the energy board, it’s unlikely to satisfy angry ratepayers who protested to the board.
“The costs are solely the result of unethical (if not illegal) conduct by (the utilities’) management teams, and all such costs should be borne directly by the distributors out of their own profits,” wrote Jim Mallar.
“This application is an insult to consumers,” wrote Keith Moyer. “What the utility distributors are now saying is: ‘Sure, we were found guilty, but now we want our money back, including the cost of our high priced lawyers…’”
Jane Cooper wrote: “I vehemently protest any costs or damages…being recovered from ratepayers. This is NOT the ratepayers’ problem and we are already burdened with extreme high costs.”
Sally Wilkie also protested:“I am a ratepayer that pays my bill on time, every time, including the rate increases, HST, debt retirement charges, etc.Am I about to be penalized for the people who pay late and for the management that imposed late payment fees? I and other ratepayers and tax payers should not be held responsible. We plead innocent. DON'T FINE US.”