Rising energy costs are a foregone conclusion. We will be spending more to keep the lights on, to heat our homes and to keep our cars rolling along.
The provincial government expects electricity costs to rise 46 per cent over the next five years.
Sounds like a lot. And it is. Not unlike the steep hike in gasoline prices we’ve seen in that last few years. And, just like gas prices, we’re really ticked off by the increases, especially the application of the HST.
The backlash against the McGuinty government has been as quick as it was predictable. Some of it is deserved. Most of it is not.
As I’ve written about the rising cost of water, electricity is one of those things we take for granted.
We expect it to be there when we need it. We expect it to be cheap, flying under the radar of our monthly bills. That’s no longer the case. Having previously buried the costs in our general taxes, run up huge deficits and relied on aging infrastructure, we’re only now looking at settling the bill.
Understandably, we don’t like the looks of it.
What we used to pay for utilities didn’t cover the actual costs of providing those services, let alone begin to address a host of other costs such as the environmental impacts. Since we first began that way, a day of reckoning was coming. We simply have the misfortune of being the ones standing around when the music stopped and the piper wants paying.
Yes, the government has sped up some of the pain by paying exorbitant prices for electricity generated from renewable sources, part of its pledge to go green by phasing out coal-fired generating stations.
Those sources include the likes of the biogas facility proposed by Woolwich Bio-En Inc. For company president Chuck Martin, the reaction to higher rates to pay for cleaner energy reflects what happened in Europe, where such programs were rolled out much earlier.
“What we’re seeing here is kind of what happened in Europe – places like Germany and Denmark – where they went with alternatives. People don’t like higher prices. They’re [wary] of the costs of going green,” he says, noting those countries have adapted to the changes.
Here, people are theoretically in favour of greener technologies, but aren’t willing to pay much more to implement them.
“They’ll go green … all things being equal. Especially the price,” he laughs.
That’s where Dalton McGuinty is running into trouble: people talk a good game about the environment, but balk at the cost. That’s understandable, but one way or another we’re moving away from fossil fuels. That comes with a cost. For the government, that cost is political. And that’s why we saw last week’s announcement of the Ontario Clean Energy Benefit (OCEB), which provides a 10-per-cent discount on electricity rates for each of the next five years.
The rebates that will save the average household $153.40 annually will cost the province $1.1 billion each year. Essentially, we’re back to subsidizing electricity costs through general tax revenues, softening the blow to consumers.
In the short term, this is probably a good idea: sticker shock could hinder the orderly transition from fossil fuels to more sustainable alternatives. Some will argue higher prices would foster conservation, the most cost-effective way of “creating” more energy. That’s true, but we have to move slowly.
Contradictions are part and parcel of a political issue as big and as contentious as energy. Some people would prefer to continue burning cheap coal to keep rates lower. The nuclear lobby, which has the government’s ear, wants to see billions invested in that technology, while groups such as the Ontario Clean Air Alliance pan the nuclear option. Meanwhile, Wind Concerns Ontario and its supporters are calling for an end to wind turbines. When the province looked to back away from high prices associated with its microFIT program for renewable energy, it was forced to back down.
Contradictory positions abound.
Add in the cost of updating the transmission lines – aging and in need of repair like so many of our roads, bridges and water systems – and the financial demands become even more burdensome.
And the potato even hotter for McGuinty.
The OECB rebate is a political stopgap. Dropping the HST on utility bills would also be good politics. In the long run, however, as energy rates rise, consumers will either have to foot the bill directly or continue to pay part of the costs with their taxes. Either way, the province will have to cut spending in other areas to make up for the extra expenditure. It can’t raise taxes if the subsidies remain. If consumers pay the full freight, our taxes will have to be cut to cover the extra cash we’ll be paying for electricity. That’s the bottom line on the way to next October’s election.
