Ontario HydroÂ’s legacy of debt

Ontario Debt Retirement Charge adds about $6 to $8 monthly to household electricity bills, funding stranded debt from Ontario Hydro via per kilowatt-hour fees managed by OEFC, alongside Hydro One, OPG, and conservation levies.

The line shows up on every hydro bill in the province: Debt Retirement Charge.

It's an extra $6 to $8 a month on a typical household's bill, especially during record heat when usage spikes.

The charge results from the restructuring of the old Ontario Hydro, which was broken up in 1998 and turned into two main operating companies – Ontario Power Generation and Hydro One, though Hydro One delivery rates have since changed.

But Ontario Hydro had run up such a massive debt during its massive nuclear expansion in the 1980s that Hydro One and OPG couldn't absorb it all if they were to operate as commercially viable firms and undertake infrastructure projects like new power lines across the grid.

The province created the Ontario Electricity Financial Corp. to hold the debt that Hydro One and OPG couldn't absorb. It became known as "stranded debt."

To help pay off the stranded debt, a special charge was levied on every kilowatt of power.

The stranded debt amounted at the outset to $19.4 billion, and success in paying it down was limited. In fact, the stranded debt increased marginally through 2005.

Since then, it had trended downward, and is now declining at about $1 billion a year. If that keeps up, you'll only have to pay the debt service charge until 2026, even as TOU rates influence electricity prices.

Consumers also pay a fee to cover the costs of administering the electricity system, such as uniform transmission rates set by the OEB, including a special levy imposed this year to pay for conservation programs.

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