Why has the Provincial Benefit been a significant charge since the spring of 2009?
The Provincial Benefit can be a charge or a credit in any given month depending on the spot price of electricity. Since the spring of 2009 the spot market price has been unusually low resulting in a charge as high as 4.57 cents/kWh in April 2010. The average charge from April 2009 to December 2010 has been more than 3.1 cents per kilowatt hour.
Since the Provincial Benefit is the difference between the total payments made to contracted or regulated generators of electricity and conservation services and the offsetting revenues received through the sale of electricity to customers, the spot price of electricity is the major factor in determining the Provincial Benefit charge or credit each month.
It is interesting to note that the sum of the Provincial Benefit and the weighted average spot price for electricity each month tends to be fairly consistent.
I have heard that electricity rates are going to increase by 46% over the next 5 years. Should I lock in now to protect myself?
Many electricity retailers have used increases in electricity costs reported in the media to convince consumers of the need to secure their commodity rate through a fixed-price contract.
However, these increased charges will impact the Provincial Benefit as well as transmission and delivery costs, but not the commodity line of your electricity bill. Therefore, signing a fixed price contract does not protect you against these upcoming rate increases.
Copyright 2011 Strategic Energy Services Inc. All rights reserved