Hydro rate cut will be short-lived, leak reveals
Prices will jump again in five years, eclipsing a promised 25% reduction, documents show
The short-term gain of a 25-per-cent hydro rate cut this summer could lead to long-term pain as a leaked cabinet document forecasts prices jumping again in five years.
In the briefing materials first revealed by the Star and obtained by the Progressive Conservatives, rates will start rising 6.5 per cent a year in 2022 and top out at 10.5 per cent in 2028, when average monthly bills hit $215.
That would be up from $123 this year once the rate cut — the subject of longawaited legislation unveiled Thursday by Energy Minister Glenn Thibeault — takes full effect. There will be another 17-per-cent cut in addition to the 8 per cent taken off bills in January when the provincial portion of the HST was waived.
The leaked papers overshadowed Thibeault’s efforts to tout the price break, which will be followed with four years of hydro rate increases at 2 per cent, roughly the rate of inflation.
Thibeault charged that the Conservatives used an “outdated” document to distract from the fact that they are the only major party without a plan for dealing with skyrocketing hydro rates, with a year to go until next June’s provincial election.
“It’s not a coincidence,” he told reporters, denying any plans for an eventual 10.5-per-cent rate hike and promising the government’s new long-term energy plan, due in a few months, will have better numbers.
“We are working hard right now to continue to pull costs out of the system.”
Opposition parties said the Liberal plan doesn’t deal with the underlying problems that have made electricity expensive and simply borrows money to spread the costs over a longer period of time, with $25 billion in interest charges over 30 years.
“The price of electricity is going to skyrocket after the next election,” warned Conservative MPP Todd Smith.
“We’re going to take on a huge debt so Kathleen Wynne can look good on the hustings in the next few months.” PETER TABUNS TORONTODANFORTH MPP
“The government isn’t being honest with the people of Ontario when it comes to the price of electricity.” The documents show average monthly bills peaking at $231 in the year 2047, before falling back to $210 the following year once the 30 years of interest payments are over.
Conservative sources say they obtained the papers stamped “confidential cabinet document” from a whistleblower after Thibeault’s ratecut plan was presented to cabinet ministers in early March. There is no date on the document, which the energy minister alternately dismissed as “inaccurate” or possibly one of many that have been prepared with different options in mind.
“We’ve had hundreds of briefings with hundreds of documents . . . I can’t comment on one graph when we’ve been looking at hundreds of scenarios.” New Democrats, who have proposed a scheme to cut hydro rates by 17 to 30 per cent if elected, also called the plan an election ploy with Liberals lagging in the polls.
“We’re going to take on a huge debt so (Premier) Kathleen Wynne can look good on the hustings in the next few months, and for decades we’re going to pay for it,” said MPP Peter Tabuns (Toronto-Danforth).
Thibeault acknowledged the Liberal plan will start repaying borrowed money in the mid- or late 2020s and it will show up on hydro bills as the “Clean Energy Adjustment.”
He compared the borrowing plan, which spreads the costs of upgrading the electricity system by closing coalfired plants and using more clean sources of power over a longer period, with a homeowner extending a mortgage.
Aside from setting up an entity to do the borrowing, the legislation expands subsidies for remote rural residents and low-income families and shifts their costs to the tax base, instead of leaving them for ratepayers to cover, as is the case now.
Smith, his party’s energy critic, said the Clean Energy Adjustment is akin to the recently axed debt retirement charge from the old Ontario Hydro, but “on steroids” and in place until the year 2047, according to the leaked documents.
“The debt retirement charge was $4 or $5 on the average residential bill. This one is going to reach $21 by the year 2028 . . . that’s a huge hit,” he added.
“This is the Kathleen Wynne retirement charge that’s going to appear on bills for not just my generation but our kids’ generation.”
Thibeault insisted the government can continue to trim costs from the electricity system as it has for several years, during which the Samsung clean power agreement was renegotiated and some renewable projects were halted. In the 2010 long-term energy plan, for example, the average monthly bill was forecast to be $178 by now. That was lowered to $170 in the 2013 long-term energy plan. The average monthly bill is now $156.
He said a new system of “capacity auctions” in which generating companies will be asked to bid will save money over the traditional system in which the government mandated how much power would come from nuclear, hydroelectric, natural gas, wind and other renewable sources.
Opposition parties also accused the government of trying to force the legislation through with little scrutiny in the eight remaining days the legislature sits before rising for the summer recess on June 1.
“This is just jamming it through at the end of the session,” Tabuns said.