Greater Sudbury Hydro to refund customers for 4 years of overbilling

Greater Sudbury Hydro will refund a total of $919,000 to its customers over four years of billing from 2017 through 2020 after discovering it had miscalculated fixed charges dating back as far as 2005.

The hydro distributor reported the billing error to the Ontario Energy Board on March 11, 2021, and put in measures to prevent more overcharges. Since then, it has been working with the Ontario Energy Board (OEB) on an "assurance of voluntary compliance," a document that outlines how the utility will fix the error and compensate its customers.

Hydro users will receive a one-time credit on their bill within the next 90 days, set at a flat amount depending on their rate class. For a home customer, the amount for the four-year correction will total $17.61, according to Greater Sudbury Hydro spokesperson Wendy Watson.

"It's the right thing to do. This was a billing error. There was nothing intentional about it; when we found it, we were horrified," Watson said.

OEB and Greater Sudbury Hydro accepted the agreement on March 11, 2022, a year after the local utility reported the issue. In addition to the refunds, Greater Sudbury Hydro will pay a $5,000 administrative penalty.

Watson said there is an interim fix in place to prevent further overcharging, and a permanent change to the calculations will follow.

Fixed rates the cause

Watson said the overbilling stems from errors in calculating all fixed costs, namely distribution rates after Ontario moved away from variable distribution rates. She said the utility calculated incorrectly when it broke down its fixed charges into a per-day figure.

Rather than calculating the daily equivalent charge for the 365 days in a year, the utility split the distribution charges across an average of 30 days per month, times 12 months. 

Essentially, the daily rate was calculated as though there were only 360 days per year, meaning a slightly higher daily amount.

"It was very difficult to detect. When we were doing some analysis, we went, 'Wait a second, there's a small discrepancy here,'" Watson said.

The oldest bill Greater Sudbury Hydro could find containing the error is from 2005. However, because the distribution charges were lower at that time, Watson said the OEB suggested a repayment period of 2017 through 2020 instead.

Miscalculation had 'very small' difference

Distribution charges make up 15 per cent of a customer's electricity bill, Watson said. The miscalculation totals 1.4 per cent of that distribution charge. That totalled $5.09 across 2020 for residential customers and $4.62 in 2019.

A note in the 2020 Greater Sudbury Hydro Scorecard said a typical home electricity customer using 750 kilowatt hours per month would have seen an overcharge of roughly 0.3 per cent, what it called an "immaterial" discrepancy.

A news release from the OEB said it was good that Greater Sudbury Hydro was forthcoming after it noticed the error.

"With the assurance from Greater Sudbury Hydro that it has measures in place to prevent further overcharging, customers will be billed accurately and better protected," said Brian Hewson, OEB's vice-president of consumer protection and industry performance.

Greater Sudbury Hydro distributes electricity to more than 47,400 customers within the City of Greater Sudbury and the municipality of West Nipissing.

The full text of the agreement is available on the OEB website.