By Catherine Allison
Even with power-hungry air conditioners turned off for the season, small business owners are sweating over hydro bills that spiked sharply during the first six months of the now- deregulated electricity market.
Some Centretown businesses are reporting hydro bill increases of 30 to 100 per cent over the same billing period one year ago.
John Coughlin, manager of the Clock Tower Brew Pub on Bank Street, says with deregulation, his hydro now costs $1,000 more each month. Added to last year’s increase in natural gas prices, Coughlin estimates it now costs an extra $25,000 per year to run the pub.
Coughlin says patrons expect air conditioning in the summer and comfort from the cold in the winter, even if costs are higher.
“It’s tough to pass that along to the customer,” he says, “especially when we’ve just come through the no-smoking bylaw.”
Peter Harris, executive director of the Preston Street Business Improvement Area, says consumers dealing with the shock of their home hydro bills may be in for another rude awakening when they go shopping.
“If the rates go up on a permanent basis, then the cost of goods go up on a permanent basis,” says Harris.
Merchants will have to take a good hard look at their bottom line, once the first annual hydro bill is tallied.
Mario Giannetti, owner of Preston Hardware, says his September hydro bill was $2,000 higher than in September 2001, an increase of 30 per cent.
“If we were to raise prices like that, we’d be out of business,” he says.
Giannetti says he signed up with one of the nine energy retailers that began selling electricity in May, independent of the distributor, Hydro Ottawa.
Hoa Vuong, manager of the Bank Street Golden Baguette bakery, says he turned down contract offers from energy retailers last year because he wanted to support Hydro Ottawa. That loyalty will change if he can find a lower rate, he says.
“Now, I have no choice because winter is coming and my store has electrical heating.”
Vuong says his hydro bills soared in the summer.
“I used to pay only $300 a month for hydro. In both July and August we paid almost $600.”
While the tiny bakery doesn’t use air conditioning, large electric fans draw the gas oven’s heat out of the store.
With winter approaching, Vuong says the big hydro bills are especially hard to face because fewer customers brave the cold temperatures to shop on Bank Street.
Hydro deregulation came into effect on May 1 to create a competitive electricity market. With deregulation, consumers now pay hydro rates that fluctuate with market demand. Demand is largely seasonal, peaking in summer and winter.
Fluctuating rates apply to only half of the total bill, which is the actual electricity.
The other half, a fixed rate, covers transmission and delivery costs and a charge to pay off the $30 billion debt from the former Ontario Hydro. Just before deregulation, this “fixed” rate nearly doubled.
Hydro cost 4.3 cents per kilowatt hour before deregulation. Jeremy Byatt, Hydro Ottawa’s vice-president of public affairs and marketing, says electricity rates rose to 6.8 cents per kilowatt hour during July and August, when air conditioners were working to capacity.
When the heat wave continued into September after schools re-opened, energy demand pushed the price to nearly nine cents per kilowatt-hour.
Although final figures are not yet available, Byatt estimates the rate dropped to 4.3 cents in October.
But Byatt warns that “the highest consumption days are those leading up to Christmas. So I think December and January are going to be quite expensive.”
He adds that more electricity suppliers are needed to help keep hydro rates low, particularly with the closing of generators at the Bruce and Pickering nuclear power stations.
A rebate from the main Ontario electricity generator, Ontario Power Generation, may offer some financial relief to hydro consumers, but likely won’t be paid out until May 2003.
The Conservative government promised the rebate to protect against wildly fluctuating electricity prices following deregulation.
In the meantime, small business owners, many still reeling from the summer’s soaring hydro costs, face another spike in rates when the Christmas bulbs light up.