Tag Archives: expenses

Will a Scorcher Summer Ruin Our Budget for Electricity Or Will It Just Be the Astronomical Rate Increases?

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We don’t have an energy efficient home. We have old windows and only one new door and you can feel the drafts around your ankles in the winter. We do keep an eye on our electricity usage, though. We have power bars on our TVs, microwave, stereo, computers, router and various other appliances. Still, when I got our June hydro bill I started to wonder what to expect if we have a record-breaking heat wave this summer especially if it arrives along with yet another huge increase in the rate per kWh.

Will Dropping the Number of kWh We Use Dramatically Drop Our Hydro Bill?

Maybe. Our bill is not just based on the amount of electricity we use. It also includes delivery charges, costs for the infrastructure, costs for regulatory charges, for who knows what, and debt retirement charges, which probably include the original debt on building the generating station at Niagara Falls. Some of these are based on the kWh used but I’m not sure that all of them are.

Why Is Our Ontario Hydro Bill So High for 2016?

The most obvious increase in price for our residential electricity costs in 2016 is a change in government sleight-of-hand. We’d been getting a 10% “discount” from a previous election promise. That’s over now, so we saw an immediate 10% increase in our bill.

The nasty part of the “discount” is while our electricity costs appeared to be temporarily reduced we still have to pay that amount either in increased taxes or in future electricity “debt retirement” charges—worse, we might even have to pay more as interest fees!

And let’s not forget we also pay HST. That was almost $30 on the most recent bill!

There have also been some painful rate increases as well. They’ve been much higher than the rate of inflation estimated by the federal government. I’m sure it hurts those on pensions such as CPP which are increased only at the artificially low cost of living increase calculated by the feds.

It hurts us even more as this is the third year with NO raise or cost of living raise at work. Yes, our take-home pay has been losing ground to inflation for three years now with no end in sight. That’s good training, of course, for retirement when only our CPP and OAS will be indexed. That’s also why I prefer some of our future retirement income to come from dividend-payers who increase their dividends to at least keep pace with inflation.

Should We Use Our Air Conditioner If We’re Already Spending Too Much for Electricity?

Every year I tell the kids that they should be grateful if we use the air conditioner at all. We didn’t have a/c when I was growing up and I can vividly remember sweltering. The best (or worst) benefit (or drawback) of air conditioning is that it drops the humidity significantly.

That can be a real blessing when the humidity is up near 100% and it’s also pushing 35-40 C.

How Do We Reduce Our Electricity Costs for Air Conditioning our House?

We usually only run our air conditioner from 7 p.m. till 7 a.m. We try to drop the temperature to somewhere in the low 70s between midnight and 5 a.m. The temperature then gradually climbs all day and it can get pretty hot by the early evening.

This compromise has helped keep the cost of the electricity to run the unit to something tolerable. It means the load is during the “off peak” hours which have the lowest rate at 0.087 $/kWh. That’s less than half of the prime time rate.

Air Conditioners also run best when their is a good differential between the temperature of the outside air and the temperature of the inside air. At night, in theory, it’s cooler outside, allowing the air conditioner to run more efficiently than at, say, high noon.

So for now, we’ll keep using the air conditioner. But I hope I don’t regret it when we get our next bill!

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Did you notice your electricity bill sky-rocketing recently? Will you cut back on air conditioning this summer? Please share your views with a comment.

What Inflation Rate Should I Use for the Cost of Electricity? How Much Does Electricity Go Up Each Year?

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Unfortunately you can’t just set a budget once and use it for years. The costs of budget items keep changing even if your usage stays the same. As we approach retirement, I keep trying to get a clearer picture of what our costs will be not just for year 1 but for 20-30 years, should we be so lucky. Recently, I decided to check into how much our cost for electricity has been going up each year above the so-called rate of inflation.

What Total Amount Do We Pay Per kWh for Electricity Including the Taxes, Surcharges and Other Costs?

In Ontario, we pay a high rate for home use of electricity. Partly that’s because we’re still paying off all sorts of costs related to setting up and maintaining our nuclear reactors, shutting down our coal-fired generating stations, and paying huge amounts per kWh to people who set up solar arrays.

I took a look at our annual total spending on electricity divided by our total annual usage to see what our historical annual charge per kWh has been.

Year    $/kW         % Change

2015    0.156         6
2014    0.147         7
2013    0.137         7
2012    0.129       24
2011    0.103        -3
2010    0.107      -10
2009    0.119         8
2008    0.111        -6
2007    0.118      -21
2006    0.149         8
2005    0.138         9
2004    0.127         7
2003    0.119      -13
2002    0.137       22
2001    0.112

What Percentage Did Our Electricity Costs Go Up Per Year for the Past 10 Years?

If you look at the chart above, you’ll see it jumps around a lot. That’s because some of the rates were before “time of use” billing. And some years we used less or more electricity depending on the weather. And various government incentives and penalties came on and off.

You can see it’s going to be very difficult to pick a number to use for our rate of inflation. Some years our hydro rate per kWh actually decreased substantially, even though our usage has been fairly constant. That’s because this rate includes all those “non-variable” costs like delivery charges and debt retirement fees.

For planning purposes, I’m going to use 7% for the annual rate of increase in hydro costs. It’s probably wrong but I have to use something!

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What do you use to estimate the increase in the cost of electricity per year in your budget? Have you ever had to cut from other budget categories because your hydro costs rose faster than you expected? Please share your experiences with a comment.