useless electricity cost concern

The Ontario Liberal party, led by Premier Wynne, has a petition offering people to courageously add their name to “Support Lower Hydro Bills.” The petition follows a promise to rebate 8% of electricity bills – equivalent to the the provincial portion of the Harmonized Sales Tax (HST). Given the history of the Liberal governments in Ontario, perhaps a more meaningful question is:

When was a Liberal government least authentic in displaying concern for consumer electricity costs?

surveymonkey2
CLICK TO ANSWER

 

The Peterson Era (1995-1990)

The 1980’s were a period of high interest rates and slow growth in electricity demand – slower than anticipate in Ontario Hydro’s expansion plans. Most notably, the Darlington nuclear power plant was delayed numerous times/year – but perhaps more meaningfully in the long run were the development of non-utility generator contracts (NUGs). Tom Adams had already called these contracts the era’s “most costly legacy” before Ontario courts recently penalized ratepayers $500 million due to legal jargon and weak public representation.

Regardless of what proved to be the long-term expense, the NUGs were a hard turn from public generation – at cost.

The 2011 Long Term Energy Plan (LTEP)

The 2011 LTEP is noteworthy for it’s inclusion of a 10% rebate known as the Ontario Clean Energy Benefit (OCEB). Here is how the rebate was justified:

After five years, Ontario will have largely completed the transition to a cleaner more reliable system due to the replacement of coal-fired generation and new renewable generation under the GEA. Once these investments have been made, price increases are expected to level off…

Providing the 10 per cent OCEB to Ontarians is a responsible way of helping Ontario families and businesses through the transition to a cleaner electricity system. The OCEB would help residential and small business consumers over the next five years as the grid is modernized…

The projection in 2011’s LTEP was a residential consumer of 800 kilowatt-hours (monthly) in 2016 would have a cost of $172.

The Ontario Energy Board’s cost calculator shows a current price of $170 for a Toronto Hydro customer with 800 kWh consumed with a typical usage pattern.

2013 Long Term Energy Plan

The 2013 LTEP claimed lots of savings from 2011’s plan; by 2016 the expected price for the average consumer of 800 kWh each month was to be $167.

Going by Toronto Hydro, the actual is closer to the figure from 2011, but all are similar.

Note both that the actual charges vary widely across the province (rural consumers are paying far more than this), and that the 2013 LTEP forecast included a debt retirement charge – which I’ve aruged was likely eliminated to keep soaring rates in the forecast range.

2016 rebate of Provincial portion of the the HST

Here is the claim from the government’s press release:

The government will introduce legislation that would rebate — directly on consumers’ residential electricity bills — an amount equal to the provincial portion of the Harmonized Sales Tax (HST), an eight per cent savings…

It is anticipated that this measure alone would result in savings of about $130 per year for the typical Ontario household. By providing direct, on-bill savings each month, Ontario families will have access to additional disposable income to save or spend…

Unless the ratepayer is also a taxpayer – as they, on average, will need to pay out whatever the ratepayer does not.

The accusations are quite entertaining on why the government introduced this rebate – particularly the one attributing the move to the loss of a Liberal stronghold in a recent by-election marking the change from high electricity costs moving from “not a problem” to “big problem”.

Unlike the previous rebate, the Liberal party has not explained what special circumstance they attach to the move, how long it will last, or whether there’s been a philosophical change from costs associated with electricity being paid for with revenues from the electricity sector.

The message is “we are the government and we are here to help.”

Of all the times that claim has been made regarding electricity costs in the province, I can’t think of an instance when it’s been less credible.

 

notes:

-feel free to share the survey link!

-found this report in the Star, on the OCEB introduced for 2011, the Premier McGuinty explained:

“We’ve asked a lot of Ontarians. We’ve asked them to invest in a long-term energy plan. We put it all out there. It’s thoughtful, it is responsible, it is honest . . . we’re renewing 80 per cent of our system over the next 20 years…

The challenge is it’s falling entirely to our generation to make a massive investment that’s going to serve our kids and our grandkids…it’s only fair in those circumstances” to give consumers a break.

“We’ve borrowed money to help reduce the payments during the first five years.”

There seems to be a certain type of person who feels it’s acceptable to run public debt today (which they probably own) to push of paying for today’s decisions tomorrow.

Unfortunately that type of person has enormous electoral appeal in Ontario’s urban centres.

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2 thoughts on “useless electricity cost concern

  1. I noticed while reading the climate change strategy that they said that they were going to use $1 billion to lower our electric bills through the cap and trade. While that $1 billion is in the form of a HST rebate but they are making it back with cap and trade revenues. Cap and trade is going to cost about $11-13 a month from gasoline and natural gas bills which is the exact same amount saved from this electric rebate. With one hand they take the other they give. Ronald Reagan could describe the electricity sector problem the best in Ontario “Government is not the solution to our problem, Government is the problem” – Ronald Reagan.

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