The latest increase in your power bills is easy to explain. The power companies broke the law when they overcharged customers who paid late. Now you will pay for their mistake. The story behind that simple explanation is complex, but one has to conclude that, when it comes to power rates, no one is on the consumers' side.
An Ontario Energy Board ruling this week makes a mockery of a seeming victory for Ontario power consumers. It took two trips to the Supreme Court of Canada to make the point, but it was finally determined that Ontario power companies had overcharged people who paid their bills late. The law prevents interest rates in excess of 60 per cent, and the industry thought it had settled just on the legal side of usury with its five-per-centper-month late fee. The court ruled differently because the compounding of the interest takes it over the limit. Rates have now been reduced to 1.5 per cent a month on overdue balances.
In a settlement, the power companies agreed to pay a little more than $17 million in compensation. Keeping track of who had actually overpaid for the late fees would be an enormous undertaking, so the companies are allowed to make a donation to a charity that helps the poor pay power bills. In the case of Hydro Ottawa, the cheque will be just over $1 million. Rather than make up that money from efficiencies or reductions in profits, the energy board will allow the power companies to get it back from their customers. The only lucky ones are those served by the provincial power company Hydro One, which isn't involved in this decision because it didn't stick customers with the big penalties.
In summary, some customers paid exorbitant late fees, the power companies have to pay a penalty, charity gets the money and the current customers get the bill.
Could there be a more cockeyed chain of events?
What makes all of this worse is that the Ontario Energy Board is supposed to act in the interests of consumers. That's difficult to see here. The board's decision notes that consumers strongly opposed getting stuck with this bill, but the board chose to side with the power companies.
There is an element of ass-covering in the decision. It was the board that originally told the power companies to charge a five-per-cent-amonth late fee. Even if that had not been found to be usury, it was ridiculously high. Now the board is sitting in judgment on its own decision. What a surprise that it would conclude that no one was at fault and the customers should pay.
The board decision argues that the high latepayment fees kept down the number of delinquent accounts and generated revenue, thus lowering the cost of electricity for everyone. They did it all for us, you see, so logically we would be the ones who have to pay the price of their overenthusiastic actions on our part.
It's important to note that the energy board decision gives power companies the permission to raise rates to cover the cost of the settlement. It doesn't oblige them to do so. There is nothing to stop the people's power company here in Ottawa from sucking up the cost corporately. With annual revenues of more than $750 million at Hydro Ottawa, there has to be a little wiggle room.
Even if absorbing the cost ultimately meant a lower dividend paid to the city, it's still preferable. The effect of a lower dividend is that the city government has a little less money to spend.
Under the Jim Watson regime, taxes can't go up more than 2.5 per cent, so the city can't really pass the cost on to us.
Unfortunately, Hydro Ottawa would not agree to an interview on this subject, although a spokesperson did say the company intended to pass the cost on to customers. That was news to Hydro Ottawa board member Councillor Peter Hume, so one would infer that it was a management decision. The board needs to take responsibility and explain to the public what it will do, and why.
The charge to fix this problem is small, only about 20 cents a month for the average customer. The principle is much larger. Surely a publiclyowned company should treat the public fairly.
The hydro utilities have screwed some of their customers, so now they want to fix their problem by screwing all of their customers. It's difficult to give that one a positive spin.
Contact Randall Denley at rdenley@ottawacitizen. com or 613-596-3756.
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