What if there is a rate increase by your electricity provider?
Did your electricity rates recently increase? Wondering what impact that will have on your costs for the year?
The simplest answer...your bills will increase subtly over time. Something like $5-$10 per month. Not really noticeable but they will add up to a significant amount before you know it. Eventually you will be paying $100’s more per year on your electric bill!
In our typical solar proposals we factor this in and assume an average 2.1% electricity rate increase per year.
Why do providers keep on increasing your rates?
Inflation
Generally speaking the rate of inflation on average in Canada hovers around 2% every year. Most recently in 2019 the inflation rate was 1.95% for Canada. This means electricity providers typically have to compensate for this increased cost.
Improve Services
The providers want to improve the services they offer you. To make the investments in new infrastructure and research new ways to improve the service that money needs to come from somewhere, ultimately it will be you. But as a trade-off you will likely get a more reliable service and be able to access a higher amount of electricity without overloading the system because we continue to demand more electricity each and every day.
What a rate increase means to you
Often the rate increases are quite small and don’t seem like much but they will add up over time.
In PEI (at the time of my writing this in Jan 2020) your first 2,000kWh is charged at 14.37cents/kWh. If you increased that by 3.8% your new cost would be 14.92cents/kWh. On a monthly basis that’s really not much and hardly noticeable except it can really add up.
Let’s take a real world example
This is the monthly usage and energy cost of a common PEI resident. They pay about $185/month in electricity usage cost (excluding the service charge).
With the rate increase of 3.8% that means they go from 14.37 cents/kWh to 14.92 cents/kWh and they now pay an extra $6.97 per month on average. That’s 2 coffees each month.
$6.79 - extra cost per month
$81.44 - extra cost per year
$1,628 - extra cost over 20 years
And that’s just this year’s increase!
Your electricity provider is likely going to do it again...and again...and again. And each time it will be a % based on the last hike. So instead of 3.8% on 14.37 cents/kWh it will be on 14.92 cents/kWh. Instead of $81 per year, it’s now an extra $86 per year...plus the already $81 it went up the last time.
What does an average 2.1% increase look like over 20 years?
In 2021 your paying an extra $7/month
By 2031 your paying an extra $52/month
By 2041 your paying an extra $106/month
In 2041 you will be paying an extra $1,277 per year compared to 2021!
Depending on your age today this could be hard to handle. Retiring in the next 20 years? Usually someone in retirement has a rather fixed income and increased costs each year isn’t something you want to have to deal with. I don’t know about you but I would rather spend my hard earned money enjoying a nice trip, or at the very least a few fancy dinners. And don’t forget, that $1,277 that you avoid paying is on top of the savings of your annual electric bill which in this case would be some offset of $2,229!
Here’s a chart that shows just how your monthly costs changes year after year
Maybe a rate increase doesn’t happen every year. PEI went 3 years without an increase! But my real point here is that each year you should probably expect to pay a little more than you did in the previous year for each kWh of energy.
GOOD NEWS - Electricity Rate Increases are AVOIDABLE
By installing solar panels on your property, either a roof or ground mount system, you can be sure you won’t be very impacted by electricity providers increasing rates.
The benefits
Protect yourself from the inevitable rate increases thus saving you even more money each year!
Our client in our example is now expected to save an additional $81 per year!
Save money at the beginning by producing your own electricity and only getting a small amount from your provider through net metering
With our 0% financing option available, paying for the system typically means using your monthly electricity savings to cover the payments and having the left over savings to enjoy!
Just think of all the houses you drive by now that heard about the new rate increase and just laughed. They are all sitting in their homes comfortable knowing rate increases are not something they have to worry about any longer!
Why not save money?
Protect yourself from rate increases