Per­ceived hy­dro cri­sis needs to be ad­dressed

Toronto Star - - CANADA - Martin Regg Cohn

Never mind elec­tric­ity price points. Pay heed to the talk­ing points.

On­tar­i­ans keep talk­ing up an ex­is­ten­tial elec­tric­ity cri­sis and it goes some­thing like this:

Heat or eat. We are be­ing hosed by hy­dro util­i­ties. It’s never been this bad be­fore. It’s worse than any­where else.

Wel­come to the mother of all memes.

Op­po­si­tion politi­cians keep ask­ing: Why we should pay more for power than any­one else in North Amer­ica?

Good ques­tion — or al­le­ga­tion — ex­cept that we don’t. Rates in key U.S. cities are nearly dou­ble what we pay here.

If you live in Toronto and won­der what the fuss is about, a more hon­est an­swer is that many — though not all — ru­ral On­tar­i­ans do, in fact, face rapidly ris­ing elec­tric­ity prices.

Higher ru­ral rates are ex­plained, un­sur­pris­ingly, by the ex­tra costs of far-flung trans­mis­sion lines in ar­eas of low pop­u­la­tion den­sity. That dis­par­ity is com­pounded by the un­avail­abil­ity of nat­u­ral gas in some ar­eas, forc­ing res­i­dents to use base­boards for more costly elec­tric heat.

That’s dif­fer­ent from grip­ing about the high cost of hy­dro in cities, given the costs of cable TV, In­ter­net ac­cess and mo­bile phones. Not to men­tion the cost of heat­ing a hot tub in the coun­try.

Yet com­plaints over hy­dro price hikes have gone vi­ral on Face­book and are spread­ing at warp speed across the prov­ince. Which is why Pre­mier Kath­leen Wynne keeps promis­ing a fix.

Wilt­ing un­der the po­lit­i­cal heat, will her Lib­er­als be tempted to ease the heat­ing bills of cot­tagers and ru­ral folk by stick­ing it to city folk who are sup­pos­edly sit­ting pretty? Should you brace your­self for the fall­out from fu­ture price shock if the gov­ern­ment tries to even things out? That would be a blun­der. Yes, hy­dro is cheaper here, but Toron­to­ni­ans are weighed down by mas­sive mort­gages and costly com­mutes. True, hy­dro can be ex­pen­sive else­where, but home own­er­ship costs are a frac­tion of what it costs in big cities.

We pay a price for liv­ing here. And they pay a price for liv­ing there.

Is it fair to off-load more of that cost onto oth­ers? Why should work­ing peo­ple in Toronto be forced to pay higher rates just so that af­flu­ent cot­tagers (their fel­low Toron­to­ni­ans) get a price break?

It’s a recipe for con­fu­sion, not to men­tion more un­fair­ness, be­cause it’s hard to cross-ref­er­ence high bills with low in­comes.

On­tario’s elec­tric­ity sys­tem has long been likened to a Ru­bik’s cube, but that is a gross over­sim­pli­fi­ca­tion: My 13-year-old learned long ago how to solve that puz­zle in about a minute (hint: there are YouTube videos telling all).

Elec­tric­ity is in­fin­itely more com­pli­cated, and there are no easy YouTube so­lu­tions. The only cer­tainty is that ev­ery ac­tion gen­er­ates a re­ac­tion, which is what got us where we are to­day.

The po­lit­i­cal pres­sure for Wynne to take de­ci­sive ac­tion with a big bang — big­ger than Band-Aids of the past — is grow­ing. Mind­ful of past mis­steps, how­ever, gov­ern­ment sources say they must avoid short­cuts that short-cir­cuit the sys­tem in fu­ture.

There is un­likely to be sig­nif­i­cant cross-sub­si­diza­tion be­tween city and coun­try folk. For one thing, the ur­ban-ru­ral divide is some­thing of an ur­ban myth — Toronto’s elec­tric­ity trans­mis­sion costs are higher than most other util­i­ties, due to daunt­ing in­fras­truc­ture chal­lenges, but high pop­u­la­tion den­sity cush­ions the blow.

Don’t ex­pect quick fixes for cot­tag- ers who com­plain about high de­liv­ery costs in the win­ter months when they shut off most ap­pli­ances. Util­i­ties need to re­coup their fixed costs some­how, just like phone com­pa­nies do with fixed con­tracts.

The gov­ern­ment has al­ready started re­bat­ing the 8-per-cent pro­vin­cial por­tion of the HST from hy­dro bills, and of­fered greater re­lief (20 per cent) for peo­ple in the most un­der­ser­viced and over­priced ar­eas. But the Lib­er­als are get­ting lit­tle credit for nib­bling at the edges, so there is a need to be bolder — by break­ing out of the meme.

Wynne has al­ready hinted that the prov­ince needs to re­bal­ance the bur­den be­tween ratepay­ers and tax­pay­ers, which sounds sus­pi­ciously like a shell game. There is good rea­son to be skep­ti­cal, but also prac­ti­cal. Any­one who looks at the “global ad­just­ment” in their monthly bill knows how ar­bi­trary the billing and cost-al­lo­ca­tion sys­tem has be­come over the years.

For ex­am­ple, monthly bills charge cus­tomers up­front for mas­sive in­fras­truc­ture in­vest­ments — $50 bil­lion — that ar­guably have a much longer use­ful life, and could be amor­tized fur­ther into the fu­ture. Also, ratepay­ers are bear­ing the full bur­den of re­new­able en­ergy, which has as much to do with in­dus­trial — and en­vi­ron­men­tal — pol­icy as elec­tric­ity pol­icy (in the U.S., much of that ex­tra cost is borne by the fed­eral gov­ern­ment through tax cred­its).

Where there is a po­lit­i­cal will to re­tain power, there is al­ways a way to tinker with the power sys­tem. That’s al­ways been the On­tario way, for bet­ter or for worse.

Ahead of the spring bud­get, and the 2018 elec­tion, we’ll see whether the Lib­er­als have opted for a quick po­lit­i­cal fix to deal with talk­ing points, or a more co­her­ent way of deal­ing with true price points. Martin Regg Cohn’s po­lit­i­cal col­umn ap­pears Tues­day, Thurs­day and Satur­day. [email protected]­, Twit­ter: @reg­gcohn

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