Lib­eral plan to re­duce rates saves cus­tomers $24 bil­lion but will cost $45 bil­lion, bud­get watch­dog says

The Hamilton Spectator - - FRONT PAGE - AL­LI­SON JONES

TORONTO — The Ontario gov­ern­ment’s plan to lower hy­dro rates, which have roughly dou­bled over the last decade, is ex­pected to cost tax­pay­ers $21 bil­lion over the next 30 years, ac­cord­ing to the prov­ince’s bud­get watch­dog.

But that fig­ure as­sumes bal­anced pro­vin­cial bud­gets dur­ing that pe­riod and could bal­loon if the gov­ern­ment funds some of its cuts to elec­tric­ity bills through debt.

A re­port from the fi­nan­cial ac­count­abil­ity of­fi­cer re­leased Wed­nes­day found the gov­ern­ment will spend $45 bil­lion over the life of its hy­dro plan to save peo­ple $24 bil­lion on their bills.

The $45 bil­lion is mostly the cost of fund­ing an eight per cent re­bate that took ef­fect in Jan­uary and as­sumes bal­anced bud­gets. If the gov­ern­ment has to fund that re­bate through debt, the cost could soar up to $93 bil­lion, the re­port said.

Leg­is­la­tion to cut elec­tric­ity bills by 17 per cent on av­er­age — on top of the eight-per-cent re­bate — is cur­rently be­fore the House and has to pass in the re­main­ing four sit­ting days be­fore the sum­mer break if re­lief is to be de­liv­ered un­der the time­line the Lib­er­als promised.

The Lib­er­als have said af­ter the ini­tial cut to bills this year, rate in­creases will be held to in­fla­tion for the next four years. Af­ter that, the av­er­age bill will rise about 6.8 per cent a year un­til 2028.

At that point, ratepay­ers will have to start pay­ing back debt that will be ac­cu­mu­lated in or­der to fi­nance lower rates for the first decade. From then on, bills will be about four per cent higher than they would have been with­out the Lib­eral plan, Fi­nan­cial Ac­count­abil­ity Of­fi­cer Stephen LeClair said. The plan will lower time-ofuse rates by re­mov­ing from bills a por­tion of the global ad­just­ment. For the next 10 years, a new en­tity over­seen by Ontario Power Gen­er­a­tion will take on debt to pay that dif­fer­ence. Then, the cost of pay­ing back that debt with in­ter­est — which the gov­ern­ment has said will be up to $28 bil­lion — will go back onto ratepay­ers’ bills for 20 years as a “Clean En­ergy Ad­just­ment.”

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