Hydro rate cut will cost Ontario up to $21B, watchdog warns

Marco Green
May 25, 2017

This results in a net cost to Ontarian hydro users of $21 billion.

The $45 billion includes the cost of funding the eight per cent rebate that started in January, but also assumes balanced budgets for the next three decades.

Under the FHP, average electricity bills are projected to decrease by 25% this year, followed by four years of growth at the rate of inflation. If the Province is required to fund the FHP through debt, then the cost to the Province could increase to between $69 billion and $93 billion. "After 2027, electricity bills are projected to increase by an average of 4% higher under the FHP than the status quo, even with the continuation of the HST rebate".

Premier Kathleen Wynne promised to cut hydro bills in the province after widespread anger over rising costs helped send her approval ratings to record lows.

Wynne's government announced the bold hydro plan after bills soared, leaving many ratepayers complaining that the cost was so high that it was getting hard to meet their other needs like food and housing.

That means there will be no impact on Ontario's net debt - now at about $312 billion - or annual surplus/deficit, said Auditor General Bonnie Lysyk.

The plan is now before committee at the Legislature.

"They'll be going up nearly 7% a year until about year 10, and then after that they'll be about 12% higher than they otherwise would have been", NDP Energy Critic Peter Tabuns said.

At that point, ratepayers will have to start paying back debt that will be accumulated in order to finance lower rates for the first decade.

Electricity bills in the province have roughly doubled in the last decade, due in part to green energy initiatives, and the government has said the goal of its hydro plan is to better spread out those costs.

Once the 25% break on bills is factored in, Ontarians will pay a total of at least $21 billion more than they would have without the hydro rate reduction.

However, a leaked cabinet document obtained by the Tories - and dismissed by the Liberals as an early draft of the plan - said rates would rise steeply, starting with 6.5 per cent in 2022 and topping out at 10.5 per cent in 2028, when average monthly bills should be $215.

Other reports by Click Lancashire

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