How to Complete a Debt Retirement Charge Return

DRC Guide 106
Published: January 2010
Content last reviewed: October 2015

Filing frequency

DRC returns are mailed to distributors, retailers and self-generating users according to established filing frequencies. Filing frequencies are specified in the regulations and are based on the amount of Debt Retirement Charge (DRC) required to be remitted or paid for the calendar year. Persons registered under the Debt Retirement Charge Program are provided with details of their initial filing frequency in the confirmation letter sent to them after registration and will be notified of any subsequent changes.

Return details

Each DRC return is a two-part form. The top portion is pre-printed with the following information:

  • legal name of the company
  • trade name (if applicable)
  • contact person
  • mailing address
  • period covered by the return
  • identification number.

Remittance portion

The lower remittance portion is pre-printed with the following information:

  • legal name of the company
  • identification number
  • period covered by the return
  • due date for the return and payment
  • certification section.

Return envelope

The return package also includes an envelope pre-printed with the address of the Debt Retirement Charge Program. This envelope should be used to mail the return and payment to the Ministry of Finance. If you misplace the envelope, the return and payment should be sent to the Debt Retirement Charge Program at the address detailed on the DRC return.

Completing the return

Line 1 - Total kilowatt hours sold or supplied

Enter the total kilowatt hours (kWh) sold or supplied, whether or not DRC was charged or collected. Enter '0' if no kWh were sold or supplied.

Distributors

Distributors are to report the total kWh of electricity sold or supplied under:

  • standard supply service
  • distributor-consolidated billing, and
  • split billing.

Retailers

Retailers are to report the total kWh of electricity sold or supplied:

  • directly to a consumer, provided the electricity is not conveyed through the Independent Electricity System Operator (IESO) administered market, and
  • under retailer-consolidated billings.

Retailers are also required to include the kWh of electricity sold or supplied where the distributor charged and collected the DRC.

Line 2 - Total kWh purchased for own consumption

Enter the total kWh of electricity purchased for own consumption on which DRC was not paid.

Include the total kWh of electricity provided to another person at your expense.

Line 3 - Total kWh on self-generated consumption

Enter the total of all kWh self-generated and consumed by you or by another person at your expense. Record the total of all kWh of self-generated consumption even if you qualify for an annual exemption. For information on how to calculate your consumption of self-generated electricity see Guide 102 - Rights and Responsibilities of Self-Generating Users.

Line 4 - DRC billed

Enter the total amount of DRC collectable on the electricity sold or supplied during the period covered by the return, whether or not the customer has paid it in full. For information on DRC rates see Guide 101 - Debt Retirement Charge - General Information.

If you issue a refund to a customer or write-off a bad debt, you may deduct these amounts from line 4 (see the Refunds and Bad debts sections below).

Line 5 - DRC on own consumption

Enter the total amount of DRC payable on the kWh of electricity reported on line 2. DRC is to be applied at a rate of 0.7 cents per kWh of electricity consumed except in those areas which are entitled to a reduced rate. For a listing of reduced rate areas and the applicable rates see Guide 101 – Debt Retirement Charge - General Information.

Transmitters and distributors are not required to pay DRC on electricity lost or unaccounted for in the transmission or distribution of electricity.

Line 6 - DRC on self-generated consumption

Enter the total amount of DRC payable on the kWh of electricity reported on line 3. DRC is to be applied at a rate of 0.7 cents per kWh of electricity consumed except in those areas which are entitled to a reduced rate. For a listing of reduced rate areas and the applicable rates see Guide 101 – Debt Retirement Charge - General Information.

If you have an annual exemption, DRC is payable when your consumption of self-generated electricity in a calendar year exceeds your annual exemption.

If you are entitled to a station service exemption, subtract the kWh of electricity consumed in the period for station service before calculating DRC payable.

For more information see Guide 102 - Rights and Responsibilities of Self-Generating Users.

Line 7 - Total due

Add lines 4, 5 and 6 and record the total of these three lines on line 7.

Line 8 - Payment amount

Payments must be made by cheque, electronic funds transfer or money order, made payable to the Ontario Electricity Financial Corporation (OEFC), in Canadian funds drawn on a Canadian financial institution.

These payments cannot be made at financial institutions.

Certification

An officer of the corporation, or someone authorized to sign for the legal entity, should certify that the information on the return is true, accurate and complete. The person signing the return must also print his/her name and date the remittance portion.

Filing the return

Return due date

Distributors, retailers and self-generating users are required to file returns on or before the 18th day of the month following the end of a reporting period. The due date for each return is printed on the lower remittance portion of the return. The completed return must be received by the Debt Retirement Charge Program, with payment, on or before the due date.

Returns must be filed even where there is no activity or DRC to report. If you did not receive a return, you are still required to provide the return information to the Debt Retirement Charge Program, with payment, by the due date.

Failure to file returns with payment in full may result in the imposition of penalties or other legal sanctions (see section on Penalties below).

Filing returns with payments

Returns and payments may be made at any ServiceOntario Centre or Ministry of Finance Tax Office. The Tax Offices accept returns and payments in the drop boxes provided.

DRC payments may be made by cheque, money order or electronic funds transfer (contact the ministry to make arrangements), payable to the Ontario Electricity Financial Corporation (OEFC) in Canadian funds.

There is a $35 charge for a non-negotiable cheque.

General

Adjustments

If you need to make adjustments or changes to a previously filed return, contact the Debt Retirement Charge Program at the telephone number listed at the end of this guide.

Refunds

Collectors may refund DRC collected if:

The refund must be made within four years after the person paid it.

If you refund DRC, you may adjust your next DRC remittance or apply for a refund. Adjustments or application for refund must be made within four years from the date the DRC was refunded to the customer. Please see Application for Refund of the Debt Retirement Charge [PDF - 111 KB], or contact the Debt Retirement Charge Program at the telephone number listed at the end of this guide.

Bad debts

If you are unable to collect DRC from a customer and have to write-off the account receivable as a bad debt, you may make an adjustment to your DRC liability account and DRC return for any DRC included in the amount written-off. A collector is only entitled to make one adjustment during any 12-month period. Bad debts must be the result of persons dealing at arm's length. Amounts deducted will be verified when the books and records are audited.

Adjustments for bad debts must be made within four years from the date of write-off.

The amount of DRC that may be refunded to a collector under this section in respect of an unpaid amount shall be calculated using the formula:

A × B/C

in which,

A is the amount of the DRC remitted by the collector with respect to the electricity consumed by the user,

B is the amount by which the unpaid amount in respect of the electricity exceeds the sum of all interest, finance, carrying, collection or similar charges imposed by the collector with respect to the electricity consumed by the user and all amounts received by the collector on the realization of any security given to secure the unpaid amount, and

C is the total amount that was payable by the user in respect of the electricity, including the amount of the DRC, but excluding the amount of Goods and Services Tax imposed by the Government of Canada.

Penalties: unfiled or late-filed returns

The penalty for failing to file a return or filing a return late is 10 per cent of DRC collectable and not remitted (line 4 of the return), plus 5 per cent of DRC payable on own consumption (line 5 of the return), plus 5 per cent of DRC payable on self-generated consumption (line 6 of the return), with no maximum.

If the non-filing or late-filing of a DRC return is due to neglect, carelessness, wilful default or fraud, an additional penalty of 25 per cent of the unpaid amount (minimum $100) may be assessed.

In addition to any civil penalties, the fine for failing to file a return on or before the due date shown on the return is $100 or more for each day the return is late.

Penalties: non-remittance of DRC

The penalty for failing to remit the total DRC owing with a return is 10 per cent of DRC billed (line 4 of the return), plus 5 per cent of DRC payable on own consumption (line 5 of the return), plus 5 per cent of DRC payable on self-generated consumption (line 6 of the return), with no maximum.

If the underpayment of DRC is due to neglect, carelessness, wilful default or fraud, an additional penalty of 25 per cent of the unpaid amount (minimum $100) may be assessed.

In addition to any civil penalties, the fine for failing to remit any DRC collected is a minimum of $100 or 25 per cent of the amount not remitted, whichever is more, up to a maximum of double the amount not remitted, or imprisonment for up to two years, or both.

Interest

Interest is calculated from the date the liability is incurred to the date it is paid in full, and is compounded daily.

More information

Telephone

  • 1 866 ONT-TAXS (1 866 668-8297)
  • 1 800 263-7776 for teletypewriter (TTY)

Written interpretation

To obtain a written interpretation on a specific situation not addressed in this guide, please send your request in writing to:

Ministry of Finance
Advisory, Objections, Appeals and Services Branch
33 King Street West
Oshawa ON L1H 8H5

Disclaimer and references

The information provided in this guide is not intended to replace the legislation.

Legislative references

Electricity Act, 1998, Part V.1 (Debt Retirement Charge)

  • Ontario Regulation 493/01 (Debt Retirement Charge - Rates and Exemptions)
  • Ontario Regulation 494/01 (Debt Retirement Charge - Administration)
  • Ontario Regulation 160/99 (Definitions and Exemptions)
  • Ontario Regulation 89/12 (Residual Stranded Debt)

Ontario Energy Board Act, 1998

  • Ontario Regulation 541/05 (Net Metering)
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