Considering an Electricity Contract?
Know the facts before signing a retail contract
We have been contacted by customers concerned about the increases they have experienced on their energy bills after signing contracts with retail electricity marketers. Many have been surprised to discover they have signed a legal agreement that they cannot cancel.
Remember, you are under no obligation to sign a contract. As a residential customer, there are two ways to buy electricity and the choice is yours: Regulated Price Plan or retail contract.
New Consumer Protection Rules for the New Year - 2011
Regulated Price Plan
Unless you choose otherwise, you are automatically part of the Regulated Price Plan (RPP). The prices are set by the Ontario Energy Board (OEB) every six months based on a forecast of the expected cost to supply electricity. The provincial government has committed to providing a stable, affordable supply of electricity to Ontario residents. RPP prices have been steadily declining since May 2006.
Instead of the Regulated Price Plan, you can choose to buy your electricity through an retail electricity marketer. Energy retailers obtain large blocks of electricity and resell it to consumers.
Retailers are currently offering fixed price agreements in the Peterborough area at about 9 to 10 cents per kWh. Most contracts are locked in for up to five years.
It is important to remember that the price you pay retailers is only for the commodity portion of your electricity bill – about 50% of the total cost. All of the other charges for delivery, regulatory charges and debt retirement are on top of the rate specified in your contract.
Interesting story from the Toronto Star regarding Gas and Electricity Retailer contracts that customers should know.
Toronto Star Article
Fixed price or variable rate?
Think of it like a mortgage on your home. Some customers choose to go with a six-month term (RPP pricing) knowing that the rate will fluctuate over time. Others prefer a five-year term, even at a higher price, comfortable knowing that the rate they pay is locked in (retailer contract). Which is the best choice? It’s up to you to decide what’s right for you.
Know the terms and conditions
Before you sign a contract, make sure that you ask the following questions:
- What is the price being offered?
- What is the term of the contract?
- Are different terms available?
- Does the price in the contract differ depending on the length of the contract?
- What other fees or charges would I be required to pay?
- Would I be transferring the OPG rebate to the retailer if I sign?
- Would I be required to pay any charges if I leave before the contract ends?
- When would the contract take effect?
If you decide to sign a contract, you have a cooling-off period. To cancel, you must notify the retailer, in writing, within 10 business days.
Understand your options
Signing with a retailer may be your best option but understand that, if you do sign a retail contract:
- You may be paying higher prices for electricity, at least in the short term.
- The sales agreement is a legally binding contract and may include penalties for cancellation.
- The equal billing option is no longer available and you must pay any balance owing at the time of transfer to a retailer.
- An RPP Settlement amount is billed to you as soon as your contract comes into effect.
Peterborough Distribution Inc. cannot interfere in disputes between customers and retail energy marketers. Should you have concerns or wish to lodge a complaint regarding the conduct of an energy retailer, please contact the Ontario Energy Board toll-free at 1-877-632-2727 or through the Consumer Online Enquiry and Complaint form.