Waterloo North Hydro is seeking to raise its fee for delivering electricity by 18.5 per cent next May, which would add $69 a year to the average residential bill in Woolwich and Wellesley townships, bringing it to $1,345.
If the 1,100-page proposal is approved by the Ontario Energy Board (OEB), it would equal a five per cent increase over the entire bill. It is the first time since 2004 that any major changes have been made to the rates.
“We froze our rates for a while a few years back, now we’re trying to put in a rate increase to play catch-up,” said Mayor Bill Strauss, Woolwich’s representative on the utility’s board.
Officials at Waterloo North Hydro, which was a non-profit venture that delivered electricity at-cost prior to 2000, echoed the mayor’s comments. They say that the increase in rates would generate $5 million a year, which is necessary to maintain a reliable system of distributing electricity and promoting conservation, and to help pay for a new $26-million head office, slated to open in Dec. 2011 in Woolwich Township.
“[The money is going] back into the business; back in to replacing old assets such as poles, transformers, and lines,” says Albert Singh, vice-president of finance.
He stressed that only a small portion of the revenues would be used to pay for the new building, saying it will be amortized over a 50-year period.
The utility say that the OEB has regulations against making incremental increases in costs each year, which the hydro company would prefer rather than dumping such a large increase at one time on customers.
Under the proposed increase, a bill this time next year will be 12.2 per cent higher than a bill from 2004, which works out to less than a two per cent increase each year, says Rene Gatien, president and CEO of Waterloo North Hydro. But under current regulations, the OEB has determined that companies can only submit a new cost-of-service study every few years, and in 2011 it will be Waterloo North Hydro’s turn.
“We don’t like the process where we have to catch up all of a sudden, and we have said to our regulator that this isn’t a good way to treat the customer,” said Gatien.
“Folks can understand if we say to them ‘our rate increase is going to be two per cent this year and next year it’s 1.5 per cent.’ They can understand that. When you come along and say 18 per cent, to try and understand the mechanics of how we reached 18 per cent, they don’t care. ‘Why are you hitting me
with 18 per cent?’
“We are the size of Toronto Hydro in terms of the area we cover, and we’re replacing stuff that’s 50 years old. And that’s what we’ve got to continue to do. We’ve got to continue to raise the money and continue to ensure we have a good reliable system.”