LAS Electricity Program Pricing Details for 2020

November 12, 2019

LAS recently completed a tendered purchase for the 2020 Electricity Program hedge that includes 134 enrolled municipalities.  As in previous years, the term of the purchase is from January 1 to December 31, 2020.

Effective January 1, 2020, the LAS program hedge cost will be an average of $24.40/MW (2.44 ¢/kWh), including fees. This year, LAS secured a hedge price that will vary monthly; this will result in a lower average rate. Also note that comparative Time of Use (TOU) rates have increased 55% as of November 1, 2019, while the LAS hedge price has increased 1.6%.

Spot market consumption
The spot market cost of electricity is dependent on the supply and demand of electricity on an hour-by-hour basis.  However, over the past 12 months the weighted average spot market price was 1.918 ¢/kWh.
 
Global Adjustment = The average Global Adjustment charge over the past 12 months was 6.948 ¢/kWh.  LAS has added 5% to this charge as a precaution for 2020 budgeting.
 
Ontario Electricity Rebate = Accounts participating in the LAS electricity program are removed from RPP and placed on hedge or spot billing, thereby qualifying for the Global Adjustment Modifier, or GA reduction.
 
As of November 1, 2019, the OER took effect, replacing the GA reduction. The Ontario Energy Rebate (OER) will replace the 8% rebate. Base invoices will see increased costs related to electricity consumption (including commodity, settlement and adjustments) within the billing period. These costs will be partially offset by the new Ontario Energy Rebate.

Time of Use Rates = Starting November 1, 2019, the Ontario Energy Board (OEB) will increase all Off/Mid/On-Peak periods and Tiered RPP rates approximately 55%.
 
The following chart illustrates the expected average total commodity cost in 2020. These are based on the LAS hedge price at 65%, and similar market pricing over the last 12 months.

Expected Commodity Costs @ 65% Hedged

Expected Commodity Costs @ 65% Hedged

Notes:

  • Average weighted HOEP price from October 2018 to September 2019. Past averages may not be indicative of future costs.
  • Average Global Adjustment charge from November 2018 to October 2019 (plus 5% for caution)
  • Based on November 2019 rates and assuming a usage pattern of 55% off-peak, 22.5% mid-peak, and 22.5% on-peak (representative of a typical municipal account) the TOU rate is 13.475 ¢/kWh.

There will be points during the term when the spot market cost is lower than the LAS hedge price.  However, there will also be points during the term where the opposite is true, where the spot market price is higher than the LAS Hedge price. The hedge portion is intended to safeguard against large swings in the spot market during peak heating and cooling seasons.
 
Streetlight Accounts:
All enrolled streetlight accounts will continue to bill at the prevailing spot market rates in 2020.
 
Electricity costs are typically lower for streetlight accounts because streetlights are primarily operated when demand for electricity is lowest (i.e. overnight – from dusk to dawn), and with lower demand comes lower spot market rates.  Over the most recent 12 months, the average streetlight commodity price was 1.474 ¢/kWh.

Expected Streetlight Costs

Expected Streetlight Costs

Notes:
Average spot market cost based on streetlight profile of an Ontario LDC - October 2018 to September 2019. Costs within different LDC service areas may vary slightly.
Average Global Adjustment charge from November 2018 to October 2019 (plus 5% for caution)
Rate is the higher of the two-tier RPP rates as many municipal streetlight accounts get charged the majority of usage at the upper tier.
 
Current Time-of-Use (TOU) and RPP Rates
Effective November 1, 2019, Time of Use (TOU) electricity rates have increased significantly, as follows:

  • On-Peak           20.8 ¢/kWh       (7-11am and 5-7pm M-F)
  • Mid-Peak          14.4 ¢/kWh       (11am-5pm M-F)
  • Off-Peak           10.1 ¢/kWh       (7pm-7am M-F, plus weekends and holidays)

The RPP rates for ‘eligible’ municipal accounts, effective November 1, 2019 are:

  • Up to 750 kWh – 11.9 ¢/kWh
  • All Additional Usage – 13.9 ¢/kWh

The RPP ended in 2009 for municipal accounts with annual consumption of >250,000kWh; accounts that exceed this threshold, and which are not enrolled with a retailer (such as LAS) are billed at the weighted average spot market rate.

 

Category
Commodity Program
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