Utilities in Toronto

What Home Buyers should know about utilities in Toronto:

One of the keys to making a successful home purchase is knowing how much square footage you can afford. It’s not just about your mortgage. The size of your living space can impact your utility costs as well. While most buyers are aware of this fact, many don’t have a clear understanding of how an energy bill breaks down. Knowing the basics can help you accurately tally up your monthly expenses—and make a more informed purchase decision.

If you’re buying a home and want to take all your monthly expenses into account, here’s what you should know about utilities in Toronto

Time-of-use utility rates

The vast majority of Ontarians pay time-of-use pricing. This model is based on the cost of producing energy at different times of day. There are three different periods:

• On-peak (when demand is at its highest, and prices are too)

• Mid-peak (when there’s less need, and costs are slightly lower)

• Off-peak (when demand is at its lowest, and prices reflect that)

Rates for the different periods are reviewed and set by the Ontario Energy Board twice per year—on November 1st and May 1st. The hours change depending on which half of the year it is. Winter is considered to be November 1st to April 30th, while summer is May 1st to October 31st.

During the summer, on-peak hours are weekdays from 11 a.m. to 5 p.m., while 7 p.m. to 7 a.m. is the off-peak period. Weekends and holidays are also considered to be off-peak.

Pricing can also change due to events that have the potential to impact consumers’ finances. For example, at the time of writing, Ontarians are paying the low rate of 12.8 cents per kWh at all times. This is due to the COVID-19 pandemic.

Other pricing models

Instead of time-of-use, some Ontarians pay tiered pricing. With this model, there’s one fixed rate (tier 1) for your first 1000 kWhs during a 30-day period. Another slightly higher rate (tier 2) is charged for any amount over and above that. While these numbers are also reviewed twice per year, increases are currently on pause due to COVID-19. The rates are 11.9 cents for tier one and 13.9 for tier 2.

There are a few other, less common options. Some homeowners purchase their energy from a retailer, and adhere to the specific terms within the resulting contract. Others are either charged a price based on the current market rates weighted over the billing period (the WAHSP model) or the actual hourly market rate within their billing period (the HOEP model).

Additional charges

On top of the rates above, you’ll see a few other numbers on your bill. Delivery charges are the cost of getting energy from generating stations to Hydro Toronto to your home. Regulatory charges cover the administration of the wholesale electricity system and upkeep of the grid.

HST (a harmonized sales tax of 13 per cent) applies. You may also see a few miscellaneous charges related to adjustments based on past bills and other specific services when they apply.

As there are numerous items on an energy bill, breaking it down can be complicated. That said, a recent study shows that Torontonians wind up paying around $200 each month on average. You can find a further breakdown of all costs here.

Factoring utilities into your purchase

For most Ontarians, utilities account for about 10 per cent of monthly expenses. When you’re buying a home, that number is worth keeping in mind. The square footage of your living space will have an impact on your utility bills, something you’ll want to factor in during your search.

No matter the size of your home, you can keep your energy costs low by adopting some lifestyle changes. By taking steps like fixing your leaky faucets, unplugging your electronics when they’re not in use, and using natural light whenever possible, you can reduce the burden of a hefty utility bill.

While keeping your overall energy consumption down is ideal, time-of-use customers can also reduce their energy costs by timing their usage (although, for the time being, the rate is 12.8 cents across the board).

Buying a home is one of the most exciting steps you can take in life, but it should taken prudently to avoid future financial hardship. By factoring in all of your monthly expenses—including your utilities—you can help ensure a successful homeownership journey.

For over 36 years, our clients have trusted us to minimize risk, offer unbiased opinions, and ensure their best interests are served. Contact us today to talk about your needs, by emailing us at info@christensengroup.ca or calling us at 416-441-2888 ext. 772.

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