Give hydro subsidies only where needed
Reading a document released Tuesday by the Ontario Energy Association, you might think the body representing the province’s energy producers and distributors had left the office and forgot to pack its brain.
The OEA policy statement urges the province to end its practice of heavily subsidizing hydro rates, and replace it with a system of targeted breaks for those who need it most.
Great idea, eh? right in the middle of a global crisis that has shuttered companies, sent unemployment soaring, capsized the economy and turned forecasting the future into a giant game of blind man’s bluff, here comes OEA to propose millions of Ontarians get hit with higher power bills. Good timing folks.
But wait. These people haven’t lost control of their senses. recognizing that very little will happen in the foreseeable future that isn’t linked in some way to the COVID-19 pandemic, the OEA offers its proposal in wrappings of concern for the aftermath of the crisis and the challenges Ontario and other governments will face when the bills come due.
Once an emergency off-peak rate plan expires on May 8, it suggests, legislators should “turn their attention to phasing out all non-targeted electricity rate subsidies.” rather than revert to the previous mishmash of supports, subsidies and smokescreens put in place over two decades of fly-by-night political fiddling, it argues, “the focus should be placed on identifying and allocating scarce resources to those who have been most impacted by COVID-19.”
Clever. Very clever. Because, while no one really knows what the post- COVID world will look like, it will certainly feature governments at every level faced with mammoth bills run up in the desperate effort to contain the virus’s spread. Municipalities will look to provinces, which will look to Ottawa, which has been making it up as it goes along. One way or another, they’ll all need ways to shift resources to new priorities brought into focus by the pandemic.
The energy association taps into this uncertainty by pointing out just how ridiculously expensive Ontario’s rate subsidies have become. The temporary plan put in place by the Progressive Conservative government of Premier doug Ford will cost $ 162 million over the life of its 45- day period alone. And that is a mere dribble compared with the billions cascading over the waterfall of subsidization introduced by the previous Liberal governments of dalton Mcguinty and Kathleen Wynne. Both those premiers poured billions into ill- advised experiments in green energy, then panicked when consumers rebelled at the resulting power prices and sought to buy their way out with ruinously expensive subsidy plans.
The Ford government foolishly pledged to scupper the Liberal approach yet somehow cut costs by an additional 12 per cent. A year ago it introduced legislation that would kill the Liberal scheme and replace it with a Tory version that was quickly denounced as largely the same system, but with a new name. Even the New democrats, who rarely reject consumer handouts, charged that “it’s still subsidizing hydro bills in a way that people are not going to be able to afford in the long run.”
There is no question Ontario’s power grid has been turned into a political playpen over the years, forever putting off the real cost of electricity to some unspecified date down the road. Should it continue at its current pace, the OEA says, it will spend $ 228 billion over the next 25 years shielding Ontarians. That’s more than it spends on its entire transportation system, it notes. Since the subsidies aren’t targeted to those individuals or sectors that need the help, most of the $ 5.6 billion it spends every year goes to people who don’t need it. The bigger the house, the more power it consumes, which means people who can afford the biggest, splashiest houses — with indoor pools and mega- garages for the Porsches — get the most benefit. Ontario’s residential rates are among the lowest in the world; countries with low rates tend to have higher carbon emissions, it notes.
It’s not a bad argument. Association president Vince Brescia acknowledges it might not be popular, but suggests the money could be better spent elsewhere. “The point is, we don’t see ( the subsidies) going to good use and we think somebody needs to say this.” If it happens to rescue the industry from the subsidy quagmire, that would be nice, too.
It’s all but certain the coronavirus pandemic will force decisions on governments they will be loath to face. Politicians love to talk about “tough decisions” but avoid making them at all costs. Only when the public mood shifts to the point elected leaders feel they can risk necessary changes without paying a price in popularity does it become possible. We may be at that point now. Most Canadians will understand that governments can’t go on spending at their current levels, and that some painful options will have to be taken if we are to resuscitate the economy while ensuring the health system is better prepared in future, and ending our shameful treatment of the elderly in longterm care homes.
If that means many of us have to pay something closer to the actual price of the power we use, it’s not an outrage. There is an opportunity now to begin repairing some of the great damage done to the hydro system over the past 20-plus years. Ford has built a new well of credibility with his handling of the pandemic; he ought to devote some of it to finally putting the system back on a more reasonable path.
Footnote: No politics here: The Liberals called their subsidy legislation “The Fair Hydro Plan.” When they came to power the Tories countered with the “Fixing the Hydro Mess Act.” The OEA, which calls itself “the credible and trusted voice of the energy sector,” opted for the virtuous in entitling its report “Help Those Who Need Help.”