Published in the Colborne Chronicle Feb14th 2001
While the Township council counts the money from the sale
of the former Village of Colborne's Public Utility, the villagers wait
for the other shoe to drop -- what will happen to the rates? That frequent
question can be answered a bit more clearly now and all indications point
to a drop in rates for residential customers and a lower cost of running
the municipality's street lights.
In an interview this week the President of the "Town of Cobourg Holdings", Mr. Bruce Craig, explained what is in store for the nearly 1000 hydro accounts in the village of Colborne. "Firstly we are in new era of delivery and when we restructured according to Provincial legislation hydro rates in both Cobourg and Colborne were 'blended', or averaged across the utility, Cobourg's rates went up 1% and Colborne's went down 8%. This was because Colborne was paying more before the blending than Cobourg for the same kilowatthour. What we have done is develop a base rate for the future, and that includes rate increases if necessary. Secondly the hydro bills had to be 'unbundled' to comply with the legislation." 'Unbundling' is the process of itemizing all customers and services into categories and classes. Formerly there were only two categories of customers: Residential and General Service. Now there will be three: Residential, Small Commercial and Large Commercial. But, these three categories are subdivided into classes according to the consumption of power, and all the classes will have a different price for what will be known as the 'default supply of energy' and future price increases will be based on it. A benefit of the unbundling to Colborne will be that the price of power for street lighting is expected to drop dramatically. "Colborne's few street lights when averaged into Cobourg's many lowered the operating rate for Colborne when the uniform rate was applied" said Mr. Craig.
In November 2000 Cobourg Council, the owner of the "Town of Cobourg Holdings" applied to the Ontario Energy Board for a 6% increase to be applied over a three year period, an answer is expected in July 2001. The rate increases, if approved, will take effect, in Cobourg and Colborne, as soon as the Electricity Market is open for business. The Electricity Market is expected to open in December 2001; it was supposed to be open in April 2000. But the provincial Government has deferred the opening to further study the effects of privatization and deregulation of the electricity market. This became necessary after the Provincial Government received concerns about the possibility of privatization failing, as some critics have charged has happened in California this year.
One aspect of the commercialization of utility companies, that took place due to legislation passed earlier last year, is the prediction that unusual rate increases should not happen as utilities are now being run like a business. That means that unusual, or unexpected, costs must be taken out of the dividends that will normally flow to the owners. "We are only allowed to pass on approved costs up to the maximum 2% per year, any other unapproved costs have to be absorbed by the business" Mr. Craig explained. The last increase for Colborne was in 1998 for the 1999 season was 2.5 averaged across all classes.
Mr. Craig also revealed to the Chronicle that Cobourg Holdings Inc. feels that the integration of the Colborne PUC into the larger unit has been a great success. "We have completed a seamless transition with little public inconvenience and no layoffs. The elimination of the Colborne administration facilities has led to lower overall costs and higher service level with the same personnel. We are still delivering all the services at the local level with local people. In contrast other communities who have sold their PUCs now find themselves dealing with large billing organisations at the end of a 1-800 number."