MPP Column – Cost of the government’s hydro proposal
Over the last few weeks two separate documents have been released which show the government’s hydro proposal will result in the people of Ontario paying higher hydro bills for many years.
First, there was a leaked Liberal cabinet document entitled “Global Adjustment Smoothing” which includes a chart showing that under the government’s proposal, hydro bills will be higher in five years than they were before the Fair Hydro Plan was put in place. It also shows that the increases will continue to be significant as the accumulated debt from the temporary hydro relief is repaid.
This document raised a lot of questions and concerns about the government’s hydro proposal. I have real concern about the impact on families who are already struggling to make ends meet and seniors on fixed incomes when the cost of the debt repayment is added onto the increased cost of hydro.
According to the leaked cabinet document not only are costs passed on to the next generation as the government originally stated, but current hydro users will start paying for these significant borrowing costs in four years.
Despite the fact that the government initially said that the leaked document was incorrect and then said was outdated, a report released by Ontario’s Financial Accountability Officer has now confirmed those estimates were accurate.
The Financial Accountability Officer is an independent officer of the Legislature. His job is to provide a non-partisan analysis of the financial impact of government programs and announcements.
On May 24th he released a report on the government’s hydro plan which found that the cost could increase to $93 billion and that electricity users will pay higher rates as a result.
In the release to accompany the report he said “After 10 years, ratepayers will be required to repay the deferred electricity costs plus approximately $21.0 billion in interest which will result in higher electricity bills than under the status quo.”
The Financial Accountability Officer estimates that Ontarians will be paying added costs on their hydro bill for at least 17 years to make up for the temporary four year reduction. He makes it clear that the reductions are not free money, but costs that hydro users will pay for – with interest. The repayment will include a new charge, similar to the Debt Retirement Charge, which will add approximately $22 to the average bill.
We understand the challenges that high hydro rates have caused for people in Ontario. Over and over we have raised examples of people who are choosing between hydro to heat their home and basic necessities such as food or medication.
However these documents show the government’s proposal will actually make the problem worse for these families. Instead of a short-term fix until after the election, the government needs to address the problems that are causing the cost of hydro to increase, such as the expensive green energy contracts the government continues to sign and multi-million dollar salaries. If we don’t address these costs and fix the system in the long-run we will all pay the price.