Energy group calls for end to hydro subsidies

Association says nearly $6B going to customers who don’t need help

The association representing Ontario’s energy producers and distributors says the province should stop subsidizing the price of hydro and instead offer targeted help to customers who need it most.

The Ontario Energy Association makes the request of the Ontario government in a policy paper released Wednesday, saying most of the nearly $6 billion the province spends every year to cut electricity costs goes to customers who don’t need help paying their bills.

If the province continues with its current pace, it will spend $228 billion subsidizing hydro rates over the next 25 years, according to the association.

“Ontario is also now spending more on electricity subsidies than on its entire transportation system,” the report states.

The paper, which was developed in partnership with former federal spending watchdog Kevin Page, makes a series of recommendations, including phasing out subsidies to help improve price stability.

The hydro file has been a problem for successive governments, with former premier Kathleen Wynne’s Liberals introducing their Fair Hydro Plan in 2017 to address a public outcry over soaring hydro rates, particularly in rural areas.

The policy lowered time-ofuse rates by 25 per cent by removing from bills a portion of the global adjustment — a charge consumers paid for above-market rates to power producers. Over the next decade, a new entity overseen by Ontario Power Generation was to pay that difference and take on debt to do so.

The energy association says looking back now, the impact experienced by some customers “cascaded into a broader reaction by voters that was vastly disproportionate” to the actual impact.

The association’s report says that despite years of relatively high increases, residential rates in Ontario remain among the lowest in North America.

Vince Brescia, the association’s president, said the group decided to publish the paper now because it believes the anger that surrounded electricity costs in 2017 has dissipated.

But he acknowledged that removing subsidies, thereby increasing costs for some customers, will not be a popular message.

“It may fall on deaf ears. It’s not a message a lot of people want to hear,” he said in an interview. “But most of people aren’t aware that we’re borrowing money to subsidize electricity, and when they find out that we’re doing that they really don’t like it. They think it’s a bad idea.” The province will need the money it’s been spending on subsidies for other things coming out of the COVID-19 pandemic, Brescia added.

“We need them for other societal issues,” he said. “The point is, we don’t see them going to good use and we think somebody needs to say this.”