Weighing its election chances, the provincial government opted for the latter part of the “pay me now or pay me later” equation in an attempt to lower soaring electricity costs.
Residential customers will see a 17 per cent cut to their hydro bills starting in June, as Premier Kathleen Wynne opted to shift costs from consumers to the province’s growing debt. The cuts don’t apply to commercial or industrial users, and will be offset by higher taxes, including the much-criticized carbon tax.
The province will add more than a billion dollars a year to its debt, with Wynne arguing investments in today’s infrastructure will benefit future customers who’ll be paying to service the debt.
In making the announcement, Wynne acknowledged that today’s cuts will be reflected in future payments to satisfy electricity-supply contracts she has described as “too generous” in the first place. The 20- to 30-year contracts will take longer to fulfill and will cost taxpayers an estimated $1.4 billion more per year in interest payments over ten years.
Kitchener-Conestoga MPP Michael Harris says that while today’s customers will be parting with less of their money, they shouldn’t have been paying such huge increases in the first place. The original contracts handed out for the likes of wind and solar projects weren’t in the best interest of Ontarians.
“We’re in this mess primarily because of bad contracts the Liberals signed for green energy. We have guaranteed contracts that are paying a premium, unlike anywhere else in North America,” he said. “Hydro rates are the number-one thing that I hear about, especially in our rural communities because of the high delivery costs to consumers, but this is just kicking the can down the road,” he said of Wynne’s announcement. “They are not dealing with any of the structural issues that have led to high hydro rates other than extending the mortgage or adding more interest to the payment that we will eventually have to pay.”
Rather than sound policy, it’s a political move in the run-up to next year’s election, said Harris.
“She realized hydro was now going to bring her a lot of grief, and of course, next year, there is an election. This is all a mechanism to save Kathleen Wynne, frankly,” he said of the premier. “She even admitted it was her mistake. This is an opportunity where I will agree with the premier.”
Having rolled out the cuts, the province has yet to inform local utilities just what the changes mean, however.
“The same announcement the public has seen is the same amount of information that we have at this point in time,” said Waterloo North Hydro’s Jeff Quint, adding that it seemed like good news for its 47,000 residential customers. “I guess what I can say is that we are glad to see it, and we are very happy to support it. The energy cost is the biggest part of the bill and it is expensive. We understand that sometime in the summer, we are going to start applying it. How it is going to be applied, whether it is retroactive, how long it will be applied for are still unknowns for us.”