This hydro bill relief will come as a shock
Welcome one and all to the Ontario government’s incredible, stupendous hydro-cuts emporium where you can buy cheaper electricity today — then pay bigtime for it later.
If this makes the Liberals’ misnamed Fair Hydro Plan sound like a slick scheme concocted to get them re-elected, that’s because to a large degree it is.
Yes, we know Ontarians were begging for relief from constantly soaring hydro bills. We also know many consumers are cheering Premier Kathleen Wynne’s plan to slash hydro rates by 25 per cent this year and then limit increases to the inflation rate for the next four years.
But as the province’s financial watchdog reported last week, the cost of insulating Ontarians from soaring energy bills will eventually shock them to the tips of their toes.
To be sure, the Liberal plan will save consumers $24 billion over the next four years. That’s a tidy sum and it’s no coincidence the savings are perfectly timed to inspire warm and fuzzy feelings for the Liberals before the June 2018 election.
But as the Financial Accountability Office just reported, it will cost the province a jaw-dropping $45 billion over the next 29 years to make those savings possible. In addition, if interest rates rise or the province starts running deficits again, the eventual cost of the plan could balloon to $93 billion. The inescapable reason for this daunting bill is that the province must borrow heavily to pay for the discounted hydro rates.
That money must be repaid. And in order to lower hydro bills in the short term, the government will need to increase them in subsequent years to cover the debt that finances the plan. It’s all a bit like using a carving knife to extract a splinter. The operation may succeed, but the bleeding will be considerable.
So, while you can, enjoy seeing average monthly hydro bills drop from $163 to $123 starting this summer. But brace yourself for hydro rates to increase by 6.8 per cent a year from 2021 to 2027. Be ready for the average monthly bill to rise to $213 by 2028.
And get set for average consumers to spend thousands of dollars in extra electricity costs between 2028 and 2045. All because of the Fair Hydro Plan.
To the extent that the public is getting the lower bills it asked for, people shouldn’t gripe too loudly. Voters have accepted this. But the bottom line of the Fair Hydro Plan is frightening.
It is a reminder, too, of how badly this government has mismanaged the electricity file — think of their subsidies for wind and solar energy we don’t need. Other governments of different political stripes have made a mess of it before.
But the Wynne government has nothing to be proud of in how they’ve handled Ontario’s electricity system.