Consumers would better appreciate the value of the electricity they use if they better understood, for example, how that electricity gets to them, according to Ontario Energy Board Chair and CEO Rosemarie Leclair.
Consumer literacy around energy, or the lack of it, is one of the most important issues facing the energy sector today, she said in her Dec. 7 speech before the Ottawa Chamber of Commerce/Ottawa Business Journal Breakfast Series.
Together, Ontario’s distributors and transmitters represent significant and growing capital investments, with total assets of more than $27bn in 2011, she added.
Last year, those utilities invested almost $3bn on expanding and modernizing the infrastructure that carries electricity to the end user.
The board has been working with government agencies, utilities and others to better coordinate the flow of information to and from the consumer. The board is also examining its notices of application, consumer outreach, website and various other points of contact with consumers, she added.
“The broader work we are doing to renew the way we regulate the sector will require utilities to consider the needs of consumers as they plan future investments,” she said.
The board is putting in place a new framework that will help utilities in better aligning their interests with those of their customers. The new framework, she added, is a performance-based approach to regulating electricity distributors.
“With our new approach, we are moving our focus from cost of the service to delivering value for money, not just for today or for what is around the immediate corner, but down the road as well,” she said.
The new performance-based approach sets in place targets and measures for utilities to reach. Leclair also said that enhanced reporting practices will showcase desired outcomes and successes in a scorecard approach. The scorecard will allow consumers, that is, businesses and residents, to gain a better sense of how their utility is performing.
“Enabling energy literacy is an ambitious undertaking, but it is one that we believe is essential to aligning public policy, utility and consumer interests and maintaining consumer confidence in Ontario’s energy system,” she added.
The board regulates the rates of 77 local electricity distribution companies, like Hydro Ottawa, and transmission companies, including Hydro One, that operate Ontario’s electricity delivery network.
There are more than 4.8 million households and businesses in Ontario consuming electricity and gas on a daily basis, but the average energy customer has “very little understanding and, as a result, very little interest in energy issues,” she added.
“They don’t care much about who does what, and how,” Leclair said. “But when the lights go out, or the furnace stops running, or the bottom line on their bill is higher than the previous one, now you have their attention and interest.”
Most consumers – residential, small business or commercial – care about two things, namely, supply reliability and price. However, she added that she ventures to say that most do not adequately appreciate the relationship between the two or have the same perspective on the importance of each.
“In Ontario, much of the discussion on electricity these days is around supply, or the commodity, and more specifically, the cost of that commodity,” Leclair said.
While the commodity on a typical residential bill, if there is such a thing, she said, represents a little more than half of the bill, it is only one component.
That commodity cannot be used unless it flows from where it is generated to where it is consumed, she said, adding that the cost of delivering that electricity to homes and businesses represents roughly one-third of the total electricity bill.
“And, it includes the investment needed to build, maintain, and modernize the grid – the lines, the transformers and other equipment owned and operated by utilities like Hydro Ottawa and Hydro One that carry electricity from the generators to you,” she said.
While energy consumers want reliable service at a fair rate, they “are becoming wiser,” learning more about greener supply and embracing conservation tools and programs, Leclair said.
“They are more enthusiastic about rethinking their habits and they are advocating for other players in the energy sector to rethink energy sourcing and transmission,” she said. “Like the telecommunications sector before us, customers are becoming important catalysts for innovation in the energy system.”