Hydro relief to save average Ontario household $130 in 2017
Rates will not be frozen, Premier Kathleen Wynne says. Move will cost Queen’s Park $1 billion a year. Relief should save rural customers $540 annually on average.

TheStar.com
Dec. 21, 2016
Robert Benzie

Relief is on the horizon for electricity ratepayers, but Premier Kathleen Wynne has no plans to impose a freeze on hydro prices.

Wynne will next month remove the 8 per cent provincial portion of the 13 per cent harmonized sales tax from electricity bills.

It’s a move that will cost Queen’s Park $1 billion a year and save the average household $130 in 2017.

As well, there is relief for rural customers that should save them on average $540 annually.

Wynne said her Liberal government will not reprise former Progressive Conservative premier Ernie Eves’ 2002 freezing of rates, which cost the treasury $550 million a year.

“We ended up paying for that,” she said in an interview with the Toronto Star earlier this week.

“When we came into office (in 2003), we had a system that was degrade, and the real price of electricity hadn’t been accounted for,” said Wynne.

“So that’s the kind of fix I don’t want to put in place. I want to figure out how to do something that doesn’t have to be undone by the next government, because it was a really bad policy.”

Fourteen years ago, Eves’ government froze hydro rates at 4.3 cents per kilowatt hour when the average price was actually 6.2 cents.

That subsidy was to offset the impact on consumers of the opening of the electricity market to competition earlier in 2002, which had led to soaring bills when prices jumped.

Rates skyrocketed 23 per cent between May and November that year, so Eves was forced to intervene with an election looming in 2003.

While his Liberal successor, Dalton McGuinty, lifted the freeze because it too expensive, he later bowed to political pressure and introduced a 10-per-cent rate rebate marketed as the “clean energy benefit.”

That controversial measure, which was blasted by conservationists because it effectively rewarded ratepayers for using more electricity, cost the treasury $1.1 billion a year before it was phased out.

Wynne, whose approval ratings have plunged this year, is now suffering the same political fallout over rising hydro costs as her two predecessors.

Wynne, who faces a challenging re-election campaign in June 2018, promised there would be other measures to make power more affordable for Ontarians in 2017.

“Now, we need to look for the other . . . systemic ideas. I’m going to be meeting with the leadership of all of the parts of the electricity system to say ‘Okay, folks, this is up to all of us to find a way to make this system work better for people and to take costs off their bills,’ ” the premier said.

“I mean we did it with the rural distribution charges. We looked across the system and said, ‘How can we re-distribute some of these costs so that people who are suffering the most get relief?’ ” she said.

“How do we figure out how to make this work better for the people who are having the most trouble?

“We’ve got to look at the whole system in order to find those answers.”