An overview of the industry

In recent years, the electricity industry in Ontario has changed dramatically and it continues to evolve. Foremost among the changes is that as of May 1, 2002 the Government of Ontario opened the electricity market to competition. In the past, Milton Hydro was a public sector entity and one of our primary responsibilities was to purchase electricity from the old Ontario Hydro and sell it to customers within our service area. In the current electricity market, we are a Local Distribution Company (LDC), registered as a for-profit business corporation under the Ontario Business Corporations Act. Our primary functions are to build, own and maintain the electricity distribution system within our service area and to deliver electricity.

Customers now have a choice. By doing nothing you can automatically stay with Milton Hydro as a Standard Service Supply customer. The electricity cost for Standard Service Supply is a pass-through rate that is the same as the price we pay for the electricity received from the Independent Electricity System Operator. An alternative choice is to purchase electricity (the commodity only – approximately 55% of your current bill) from an Ontario Energy Board licensed retailer at a fixed contracted rate.

While the electricity marketplace continues to change, Milton Hydro remains committed to delivering a safe and reliable supply of electricity to your home or business. In 1998, the Ontario government passed Bill 35, the Energy Competition Act, which established the framework for a competitive market by:

  • creating an independent, not-for-profit corporation called the Independent Electricity System Operator, which would also create the rules for the operation of the electricity market;
  • establishing that access to the province’s transmission grid must be non-discriminatory;
  • dividing Ontario Hydro into several successor corporations including one owning generation assets (now called Ontario Power Generation), and another owning the transmission system and distribution assets (now called Hydro One);
  • creating a financial corporation called the Ontario Electricity Financial Corporation to hold the debt of the old Ontario Hydro that cannot be serviced and retired by the successor companies;
  • requiring the two new Ontario Hydro businesses and all municipal electric utilities to make payments-in-lieu of taxes to the provincial government;
  • requiring all municipal electric utilities which transfer property (i.e., consolidate with one another) to pay a transfer tax equal to a portion of the fair market value of the property transferred; and
  • requiring all municipalities to transfer the assets of their electric utilities to for-profit corporations (i.e., incorporated under the Ontario Business Corporations Act), eligible to earn commercial rates of return on capital, and whose shares would initially be owned entirely by the municipal corporations themselves. The Ontario Energy Board Act gave the OEB the power to license and regulate all market participants, and set transmission and distribution rates.

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