Understanding your electricity bill 

Your electricity bill contains information that is important for your business.

It tells you how much electricity your business used during the billing period. It also tells you when your business used electricity. That’s really good to know. Because when your business shifts electricity to non-peak times – when electricity is cheaper – it can save you money to put back into your business to help it grow.

Here’s a brief guide that explains what the items on your electricity bill mean. 

The first thing to know is that businesses that use less than 50 kilowatts of electricity each month are billed differently than those that use more. 

If you use less than 50 kilowatts

There are three main charges on your electricity bill. 

• Electricity Charge: This charge covers the cost to generate electricity and is billed to you based on how much you used and when you used it. It’s broken down into three periods of time and also by season (summer and winter). Each period of time has its own rate. There is one rate for electricity used during off-peak periods, another for mid-peak periods, and another for on-peak periods. Your electricity use during each period is itemized on your bill. 
  
  
• Delivery Charges: Your local hydro company bills you for delivering electricity from generating stations to your business. This line includes:
  
  
  • A Service Charge for costs related to meter reading, billing customer service, and for general utility operations.
    
    
  • A Transmission Charge for operating and maintaining the transmission system that carries electricity from generators to your local hydro company.
    
    
  • A Distribution Charge that reflects the cost of delivering electricity from the transmission system to your business.
    
    
  • A Line Loss Charge that represents the small amount of electricity that is “lost” on the lines.
    
    
  • A Standard Supply Services Charge that covers a portion of the administration costs incurred by the utility. 
    
    
• Regulatory Charges: You are also billed regulatory charges for costs associated with maintaining the reliability of the grid, as well as various administrative costs. (For a list of these costs and up-to-date time-of-use rates, visit the Ontario Energy Board (OEB) website.)

If you use more than 50 kilowatts

If your small business requires more electricity than most – perhaps you use a lot of machinery or refrigeration – the way you are charged for electricity is the same as it is for larger businesses. You pay a combination of charges based on how much electricity is used over the month (consumption) and your peak electricity use in that month (demand). 

Consumption: There are two main commodity charges that cover the cost of producing electricity. The Hourly Ontario Energy Price, or wholesale price, changes on an hourly basis based on market conditions. You are billed the wholesale price for each kilowatt-hour you use. The Global Adjustment reflects the difference between the market price of electricity and contracted rates paid to electricity suppliers. The Global Adjustment is also charged based on consumption, but unlike the market price, is set each month. 

Demand: There are also charges related to how quickly your facility draws electricity from the grid at any one time. These charges generally cover the cost of delivering electricity to your business. Peaks can, however, be costly. If your demand is consistent, but suddenly spikes for a short period, you will be charged higher demand rates based on the peak, even if you don’t use much more electricity overall. 

For more information about electricity pricing for large businesses, see "Ask the Experts: Breaking down electricity bills."