This charge relates to the energy you consume. This can either be provided by Welland Hydro-Electric System Corp. or an electricity retailer.

The total amount of electricity consumed is multiplied by an adjustment factor. When electricity is transmitted over power lines, a small amount of that electricity is lost naturally, as heat. (The transmission equipment, such as wires and transformers, consumes this power before it gets to your home or business.) Your local utility must purchase power to cover these losses. It collects the cost of this power from consumers through the adjustment factor and passes the amount directly to its suppliers.

This charge is made up of the following components, which are approved by the Ontario Energy Board (OEB) for each utility:

DISTRIBUTION COSTS: The costs Welland Hydro-Electric System Corp. incurs delivering electricity to your home or business. Distribution costs include:

• Customer Service Charge: Welland Hydro-Electric System Corp.'s administrative costs, such as meter reading, billing, customer service and maintenance of accounts. It is a fixed cost — it does not change with the amount of electricity used, that varies from utility to utility.
   
• Distribution Cost: The costs involved to deliver electricity from the local utility to your home or business.

TRANSMISSION COSTS: The costs to deliver electricity from generating stations to your utility along the high-voltage transmission system (also called the transmission grid) owned by Hydro One Networks Inc. Transmission costs vary with the amount of electricity used. Transmission costs include:

• Network Service Charge: The cost to deliver electricity from generating stations to your utility through Hydro One's transmission system.
• Line and Transformation Connection Service Charge: The costs your utility incurs to connect to Hydro One's transmission lines, as well as the cost to transform electricity from the high voltages used in the bulk transmission system to lower "distribution voltages" used by your local utility.

This charge is made up of the following components, which are approved by the Ontario Energy Board:

WHOLESALE MARKET SERVICE CHARGE: This charge of 0.62 cents per kWh covers the cost of services provided by the Independent Electricity System Operator (IESO). The IESO operates Ontario's competitive electricity market where electricity is bought and sold. This charge also includes a 0.1 cent per kWh charge for Rural and Remote Rate Protection, which all customers pay to offset the higher cost to distribute electricity to consumers in rural and remote areas of Ontario.

STANDARD SUPPLY SERVICE CHARGE: This charge of 25 cents per month covers administrative costs incurred by your utility to provide electricity to Standard Supply Service customers - consumers who purchase electrity from a utility instead of from a licensed electricity retailer. This is primarily consumers (e.g., residential) on the Regulated Price Plan.