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What is the Provincial Benefit?
The Provincial Benefit ensures reliability by providing adequate generating capacity for Ontario. It accounts for differences between the spot market price and the rates paid to regulated and contracted generators. As a result, its value may be positive or negative, depending on the fluctuation of prices in the spot market.
The rate is set to reflect the difference between the spot market price and:
- The regulated rate paid to Ontario Power Generation’s baseload generating stations;
- Payments made to suppliers that have been awarded contracts through the Ontario Power Authority. These include new gas-fired facilities, renewable facilities (like wind farms) and demand response programs; and
- Contracted rates paid to Non-Utility Generators.
Who is affected by the Provincial Benefit?
This adjustment applies to business customers who pay the spot market price and customers who have signed a contract with a licensed electricity retailer. It appears as a separate line on the bill. For customers who pay the Regulated Price Plan, it is factored into the rate set by the Ontario Energy Board, and does not appear as a separate line item.
Why does the Provincial Benefit vary from month to month?
The Provincial Benefit has increased and decreased in response to changes in the spot market prices. So far in 2009, the spot market price has been unusually low. This has been a result of low demand (due to the economy and the weather) and good availability of generation. The Provincial Benefit has been higher in order to cover the additional costs of the contracted and other regulated generation.
For more information on the Provincial Benefit / Global Adjustment, please contact the Ontario Energy Board.
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