Understanding Your Hydro Bill: A Guide for Going Solar

Why Your Hydro Bill Matters for Solar

If you are considering solar panels for your Ontario home, your hydro bill is the single most important document for understanding your potential savings. It tells you how much electricity you use, when you use it, what you pay per kilowatt-hour, and how your total cost breaks down between actual electricity and the fixed charges that solar cannot fully eliminate. Understanding each line item helps you set realistic expectations and size your system correctly.

This guide walks through every major component of an Ontario hydro bill, explains what each charge means, and shows exactly how solar panels affect each one.

Time-of-Use (TOU) Rates Explained

Most Ontario households are on time-of-use pricing, which charges different rates depending on when you use electricity. As of the latest OEB rate schedule, the three TOU tiers are 9.8 cents per kWh during off-peak hours, 15.7 cents per kWh during mid-peak hours, and 20.3 cents per kWh during on-peak hours.

In summer (May 1 to October 31), on-peak runs from 11 AM to 5 PM on weekdays, mid-peak covers 7 AM to 11 AM and 5 PM to 7 PM on weekdays, and off-peak includes all other hours including evenings, nights, weekends, and holidays. In winter (November 1 to April 30), the on-peak and mid-peak windows swap: on-peak is 7 AM to 11 AM and 5 PM to 7 PM, and mid-peak is 11 AM to 5 PM.

This matters for solar because your panels generate the most electricity during midday hours, which are on-peak in summer and mid-peak in winter. Under net metering, the kWh credits you earn during these higher-rate periods offset your consumption during lower-rate periods, giving you a favorable economic trade.

Tiered Pricing Alternative

Ontario homeowners can opt for tiered pricing instead of TOU. Under tiered rates, the first threshold of consumption each month (1,000 kWh in summer, 1,000 kWh in winter) is billed at 10.3 cents per kWh (Tier 1), and everything above that threshold costs 12.5 cents per kWh (Tier 2). There is no time component, so it does not matter when you use electricity.

Solar panels reduce your total consumption, pulling you out of the more expensive Tier 2 first. If you consistently exceed 1,000 kWh per month and have solar panels that bring you below that threshold, you save at the higher 12.5 cent rate on every kWh your panels offset above the threshold. For homes with high but steady consumption patterns, tiered pricing can sometimes be more advantageous than TOU when combined with solar. Your installer can help you determine which rate structure maximizes your savings.

Delivery Charges

Delivery charges cover the cost of transmitting electricity from generating stations to your home through transmission lines and local distribution infrastructure. These charges have two components: a fixed monthly charge (typically $25 to $40 depending on your LDC) and a volumetric rate based on your consumption (roughly 3 to 5 cents per kWh).

Solar panels reduce the volumetric portion of your delivery charges because you are consuming less electricity from the grid. However, the fixed monthly charge remains regardless of how much solar you generate. Net metering credits do not directly offset delivery charges, but by reducing your net grid consumption, you pay less in volumetric delivery fees. On a typical bill, delivery charges make up 25 to 35 percent of the total.

Regulatory Charges and Other Line Items

Your hydro bill includes several regulatory charges that cover the operational costs of Ontario's electricity system. The Transmission Network Charge and Transmission Connection Charge cover the cost of the high-voltage transmission grid. The Wholesale Market Service Rate covers the cost of operating Ontario's electricity market. These are all billed on a per-kWh basis and are reduced when solar lowers your net consumption.

The Ontario Electricity Rebate (OER) is a government-funded credit that reduces the pre-tax subtotal of your bill by 19.3 percent. This rebate applies to the total of your electricity, delivery, and regulatory charges. When solar reduces these underlying charges, the OER credit becomes smaller in dollar terms (since it is a percentage of a smaller base), but your net bill is still significantly lower.

The Debt Retirement Charge, which was once a separate line item covering legacy debt from Ontario Hydro, was eliminated for residential customers in 2016. If you still see references to it online, it no longer applies to residential bills.

How to Read Your kWh Usage

Your hydro bill shows your total consumption in kWh for the billing period, broken down by TOU period or tier. To evaluate your solar potential, you want to look at your annual total, not just a single month. Ontario homes typically consume 40 to 60 percent more electricity in winter than summer, so a summer bill alone will underestimate your system size needs.

The best approach is to gather 12 months of bills and add up total consumption. If you have access to your LDC's online portal (MyAccount for Hydro One, MyToronto Hydro for Toronto Hydro, or MyAlectra for Alectra), you can often download a full year of hourly or monthly consumption data. A typical Ontario home uses 9,000 to 12,000 kWh per year. Homes with electric heating, pools, hot tubs, or electric vehicles may use 15,000 to 25,000 kWh or more.

When you request a solar quote through SolarQuote, your installer will ask for your annual consumption data to properly size your system. Having 12 months of bills or your online consumption summary ready will speed up the quoting process significantly.

How Solar Offsets Each Bill Component

Here is a summary of how solar panels affect each part of your hydro bill. The electricity commodity charge (the largest portion, typically 45 to 55 percent of your pre-tax bill) is directly offset by net metering credits. If your system produces as much as you consume annually, this charge drops to near zero. Volumetric delivery charges (25 to 35 percent of the bill) are reduced proportionally to your reduced grid consumption. Regulatory charges (5 to 10 percent of the bill) are also reduced proportionally.

Fixed charges, including the monthly customer charge and fixed delivery charges, are not affected by solar and will continue to appear on your bill regardless of system size. These typically total $30 to $50 per month. The OER 19.3 percent rebate continues to apply to whatever charges remain. HST at 13 percent applies to the post-OER total.

For a typical Ontario home paying $200 per month on hydro, a well-sized solar system can reduce that bill to $40 to $60 per month (the fixed charges plus HST), saving $140 to $160 per month or $1,680 to $1,920 per year.

Take Control of Your Hydro Bill

Your hydro bill does not have to keep climbing year after year. Solar panels give you the ability to generate your own electricity, lock in your rate at zero for the power you produce, and protect yourself against future rate increases. The first step is understanding what you are currently paying and how much you can save.

SolarQuote makes this easy. Upload your hydro bill or share your annual consumption, and our vetted Ontario solar installers will provide a detailed savings analysis showing exactly how each line item on your bill will change after solar. Get your free quote today and start the journey toward lower, more predictable electricity costs.