The politics of fixing - and keeping - power

Thestar.com
Feb. 11, 2017
By 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.

Read more: People who live in rural areas should turn up their heat at night: green builder

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 cottagers 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.