Fraser Forum

Ontario government shifts today’s electricity bills (plus interest) onto future consumers

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Ontarians have seen their electricity bills skyrocket in recent years. From 2010 to 2016, the average monthly electricity bill for Toronto residents increased by more than 50 per cent, granting Torontonians the distinction of having some of the highest electricity bills in Canada.

And yet, instead of addressing the underlying policy failures contributing to the growth in prices, the Ontario government is creating a new “financing entity” overseen by Ontario Power Generation to part of today’s electricity bills. The kicker is that the province will then force future consumers to pay the debt back—plus interest.

Specifically, the government plans to take on more debt to reduce electricity bills for the next 10 years, before applying a new charge to future bills called the “Clean Energy Adjustment” in the mid-to-late 2020s. This new charge will pay back the estimated $28 billion (including interest) in debt.

This policy, among others, was proposed recently when Queens Park announced their Fair Hydro Act to “relieve the current burden on ratepayers.” However, rather than truly relieving burdens by reforming the policies that created the problem in the first place, the Ontario government is instead just kicking the can down the road while shifting some costs from one place to another.

For example, the so-called Fair Hydro Act will shift the costs of the Ontario Electricity Support Program (OESP) and Rural or Remote Rate Protection program (RRRP) “from ratepayers to provincial revenues.” The Act includes new and existing program spending, which will cost the provincial treasury $2.5 billion over the next three years. It’s a fair assumption that most “ratepayers” are also taxpayers, raising an obvious question—will this shift result in any real savings for Ontarians?

The main takeaway from the Fair Hydro Act is that someone always pays the bills, whether it be future ratepayers or taxpayers. There’s no such thing as free electricity. Ontario should stop implementing Band-Aid solutions and instead address the underlying policy failures—largely stemming from the Green Energy Act—that have produced some of the highest electricity prices in Canada.

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