Frank Klees

Frankly Speaking

March 22, 2011

More Hydro Madness

Just when you thought it couldn't get any worse, hydro customers get another shock !

As if the rate increases, Debt Retirement Charges, Smart Meter fees and HST aren't enough, here's the latest stranger-than-fiction hydro story.

Have you heard the one about the villain who was convicted of charging his customers interest rates that were in excess of the amount allowed under the criminal code ? And when the court ordered him to pay a huge fine, he had the gall to ask the court for permission to recover the amount of the fine by billing the same customers that he overcharged in the first place ?

That could never happen in the real world, you say. But that's precisely what happened in the world of our hydro utilities. And one way or another, your electricity bill will be hit one more time with charges that have nothing to do with how much hydro you use.

Late Payment Penalty in Excess of 60% Interest Rate

Here's what happened: For years, municipally owned hydro-electric utilities and natural gas utilities have been charging a Late Payment Penalty to customers who missed the due date on their bills. Class action lawsuits were brought against the utilities claiming that these charges were so high that they actually violated the Criminal Code interest provision.

(In 1981, the Federal Parliament amended section 347 of the Criminal Code to make it a criminal offence to receive an interest payment at an effective rate of interest exceeding an annual amount of 60%). 

After extended court proceedings, the Supreme Court of Canada ruled that in some circumstances, the Late Payment Penalty as charged by the utilities resulted in an effective rate of interest in excess of 60% and thus contravened section 347 of the Criminal Code. 

$18 Million Plus Settlement

On April 21, 2010 the Ontario Superior Court of Justice approved a settlement with the utilities in the amount of $18,382,125. (This included $17 million in damages and balance for legal fees and taxes).

I won't go into the details here of how the rest of this story unfolded, but you can find a link to the Ontario Energy Board's Decision on my website, and see for yourself.

In short, having been found out, and directed to pay a fine of more than $18 million, the utilities asked the Ontario Energy Board to let them recover the damages from their customers. And guess what ?  The very quasi-judicial board that should be looking out for the interests of consumers, ruled in favour of the utilities and told them to go at us once again !

Starting in June, our local hydro companies can now begin charging us what they consider to be our portion of their fines.

Stop the Madness !

Even the Minister of Energy sees the gross unfairness of this decision and in a letter to all utilities asked them not to pass these costs on to their customers. I can report that Newmarket Hydro has decided to respect that request and advised the Ontario Energy Board that it will not be recovering these costs directly from its customers. In the end of course, the customer always pays.

No Decision Yet For Aurora Customers

According to a spokesperson for Powerstream, the utility that serves Aurora, no decision has yet been made as to whether Aurora customers will be billed for Powerstream share of these costs.

In a letter to Powerstream's President and Board of Directors, I asked that as a matter of fairness, any costs related to this court decision should not be billed to its customers.  I encourage you to register the same request by calling Powerstream at 1877 963 6900 or by emailing the President at brian.bentz@powerstream.ca.    

Hopefully common sense will prevail, and we will be spared yet one more reach into our pockets.

As always, I welcome your comments and advice on this and any other issue of concern to you. Please feel free to call me at 905 750 0019 or through my website at www.frank-klees.on.ca

Don't pass on lawsuit costs: Klees .... Article in the Era Banner March 22, 2011 By Sean Pearce click here

Klees asks Powersteam not to pass cost to users ...Article in The Auroran March 22, 2011 click here

Also Click Here for more Frankly Speaking articles on this subject