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