Understanding Electricity Pricing

When Ontario restructured the industry in May 2002 and began offering electricity as a commodity, businesses realized that by monitoring their electricity usage they could also control their electricity costs.

Understanding how the market works and what determines the price you pay for the electricity you use is essential in keeping your business efficient, competitive and most importantly, profitable.

Businesses in Brampton without an interval-meter, using more than 250,000 kilowatt-hours of electricity per year pay a wholesale price, called the Weighted Average Hourly Spot Price (WAHSP). This is based on consumption patterns within Hydro One Brampton's distribution area. If consumers in this distribution area use more electricity at times when prices are higher, this will result in a higher weighted average. Businesses with an interval meter pay the actual hourly price, called the Hourly Ontario Energy Price (HOEP). This is the market price as established by the Independent Electricity System Operator. Learn more about Interval Meters.

Many factors affect this price, offered on an hourly basis to consumers. These factors are based wholly on the laws of supply and demand. The time of day, the weather and the season in which electricity is consumed can affect the amount that is needed. Demand tends to be higher through the week, in late afternoon and early evening, and is generally greater in the winter and summer months, due to the need for additional heating and cooling.

In addition, some forms of electricity generation are more expensive than others, and generators, bidding to supply the market, are often chosen depending on their prices. When the demand for electricity is high, the Province is forced to buy electricity from generators demanding higher prices. These prices are then passed on to the consumer.

Click on the link Electricity Rebates for Ontario Businesses for information on the Provincial Benefit and the OPG Non-Prescribed Assets (ONPA).

The following chart provides information on the average wholesale price of electricity for each month in 2005.

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This document was last modified on 2006-03-21.