LAS Electricity Program Pricing Details for 2021

November 18, 2020

LAS recently completed a tendered purchase for the 2021 Electricity Program hedge that includes 133 enrolled municipalities. As in previous years, the term of the purchase is from January 1 to December 31, 2021.

Effective January 1, 2021, the LAS program hedge cost will be an average of $24.64/MW (2.464 ¢/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 an average of 23% as of November 1, 2020, while the LAS hedge price has increased 1%. See the chart below for the expected total commodity calculation.

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 1.452 ¢/kWh. 

Global Adjustment = The average Global Adjustment (GA) charge over the past 12 months was 11.555 ¢/kWh.  LAS has added 5% to this charge as a precaution for 2021 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 Ontario Electricity Rebate (OER) took effect, replacing the GA reduction. The 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 Electricity Rebate with a 33.2% rebate from the province on the subtotal of their electricity bill. 

Time of Use Rates = Starting November 1, 2020, the Ontario Energy Board (OEB) has increased all Off/Mid/On-Peak periods and Tiered RPP rates.

The following chart illustrates the expected average total commodity cost in 2021. These are based on the LAS hedge price at 65%, and similar market pricing over the last 12 months.

Expected Commodity Costs @ 65% Hedged

Chart detailing commodity costs

Notes: 

  • Average weighted HOEP price from October 2019 to September 2020. Past averages may not be indicative of future costs.
  • Average Global Adjustment charge from November 2019 to October 2020 (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 14.036 ¢/kWh.
  • For 2021 the Global Adjustment modifier has been removed leading to the higher GA price versus the 2020 outlook. OER has replaced the GA modifier reduction + 8% Provincial Rebate

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 2021.

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 1.119 ¢/kWh.  

Expected Streetlight Costs

Expected Streetlight Costs

Notes:

  • Average spot market cost based on streetlight profile of an Ontario LDC - October 2019 to September 2020. Costs within different LDC service areas may vary slightly.
  • Average Global Adjustment charge from November 2019 to October 2020 (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, 2020, Time of Use (TOU) electricity rates have been set for as follows:

  • On-Peak      21.7 ¢/kWh     (7-11am and 5-7pm M-F)
  • Mid-Peak     15.0 ¢/kWh       (11am-5pm M-F)
  • Off-Peak      10.5 ¢/kWh       (7pm-7am M-F, plus weekends and holidays)

The RPP rates for ‘eligible’ municipal accounts, effective November 1, 2020 are: 

  • Up to 750 kWh – 12.6 ¢/kWh
  • All Additional Usage – 14.6 ¢/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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