By Chris Sepe, President, Broker of Record (Commercial Realtor) for Aztec Realty Inc. and President, Landlords Association of Durham (ON, Canada)
On 2019 11 06, I notified you that Ontario electricity prices had quietly risen 55% as of 2019 11 01. I’ve appended the email below in case you missed it.
The form to determine if your multi-residential rental property qualifies for the 31.7% rebate is different for every municipality. With Brantford, it appears that the rebate is autmatic for any multi-res. property that consumes less than 50 KwH per year but you should determine that for yourself.
With Oshawa Power (OPUC), the form is here:
If the link above doesn’t work then go to the home page of OPUC, click on FORMS at the far right of the top drop-down menus, then click on “Oshawa Power Ontario Electricity Rebate Eligibility Self-Declaration” and then save it.
For every other Ontario municipality, you have to contact your local power company (eg. Powerstream, etc.) and find out what their procedure is.
P.S. If you were planning to attend the next Landlording in Ontario course Jan. 18, 2020 the early bird discount ends Dec. 31/19 (see details further below)
P.P.S My new book, The Dark Side of Residential Landlording should be coming out some time in January 2020. I’ll let you know when it’s published.
55% Increase in Electricity Rates
On 2019 10 22, the Ontario Energy Board (OEB), in collusion with the provincial government, disguised a massive rate increase in electricity by announcing, “The total bill for a typical residential customer who uses 700 kWh per month will increase by about $1.99 or 1.8%, which is in line with the rate of inflation … With changes in legislation (emphasis added by me), prices on the Electricity line are increasing so that they once again closely reflect the forecast cost of supply.”
What the announcement deliberately avoided to mention was that, “Effective November 1, 2019, the Province of Ontario replaced the 8% Provincial Rebate with a new 31.8% Ontario Electricity Rebate” to replace the original 8% rebate.
In order to receive that new rebate, “… you will need to complete and send us this form no later than January 31, 2020.” (see: https://www.oeb.ca/sites/default/files/Template-OER-Eligibility-Form.pdf)
The ACTUAL increase is about 55%!
TOU price periods
|2019 05 01 TOU prices including old bill relief|
|2019 11 01 TOU prices excluding new bill relief|
|Off-Peak (Weekdays 7 p.m. – 7 a.m., all day weekends and holidays)||6.5||10.1||55.4%|
|Mid-Peak (Weekdays 11 a.m. – 5 p.m.)||9.4||14.4||53.2%|
|On-Peak (Weekdays 7 a.m. – 11 a.m. and 5 p.m. – 7 p.m.)||13.4||20.8||55.2%|
Where is the money coming from to underwrite this huge cost?
The current government is continuing the policy of the previous government to mask true costs by re-directing tax dollars from other desperately-needed services like affordable housing to artificially suppress electricity costs; much like rent control actually.
How long can the government sustain that immense financial burden, and what other services are being under-funded or disabled in the process?
No wonder the Landlord and Tenant Board (LTB) is a dysfunctional and abusive silhouette of immeasurably-delayed justice that is resorting to dirty tricks to manage its massive backlog of cases. I personally have one hearing that hasn’t received a hearing date after 1.25 years and a second that was heard in August 2019 but hasn’t received a rendered decision after 2.5 months, despite “standard orders” generally being rendered after 11 days.
Sooner or later, the government must reduce or remove the rebate program. If you include electricity in your rent, expect to see a huge impact on your net operating income (NOI) and a consequent significant decrease in your equity and therefore property value. For example, if your electricity bill is $500/month = $6,000/year. When the rebate disappears your electricty bill will be $9,000 or more. I have a saying. $1 or NOI is $20 of Joy or “Oi” if the NOI decreases (at a 5% cap rate). Therefore, the $3,000 electricity cost increase will reduce your equity by $60,000.
Thanks to Chris Seepe, Aztec Realty Inc. for this advisory. Chris is an expert in Landlord Tenancy and regularly conducts educational training. Chris can be reached at: Mobile: (416) 525-1558 Email: firstname.lastname@example.org
Steven Porter is a Licensed mortgage agent with Mortgage Architects, mortgage broker. For advice and service contact Steven Porter, Accredited Buyer Representative, Seniors Real Estate Specialist, Certified Luxury Home Mortgage Advisor and Certified Reverse Mortgage Specialist at 905-875-2582, steven@1800Mortgages.ca. www.1800Mortgages.ca