Following Premier Kathleen Wynne’s acknowledgement that high electricity prices were her “mistake,” an acknowledgement that saw her taking responsibility “for not paying close enough attention to some of the daily stresses in Ontarians’ lives,” some changes are about to be set in motion that should generate some relief for those struggling to pay their unaffordable hydro bills.
The Wynne government will cut hydro rates by one-quarter.
In addition to passing a regulation dictating that hydro cannot be shut off to individuals or families who fall behind on their payments during the winter months, Ontario’s Wynne government has also declared that it will cut hydro rates by 25 per cent.
How does the party plan to cover the costs? By “smoothing out” the costs of electricity generation contracts over longer periods—by the same basic principle you would use to refinance a mortgage. The result would mean paying lower rates over a longer period, but the impact on consumers who are currently struggling with unaffordable rates is significant.
The 25 per cent rate reduction will include the 8 per cent provincial sales tax rebate (a reduction that is already worth close to $130 a year for the average consumer) that came into effect on January 1, along with other “quick, tangible rebates.” Savings are expected to begin taking effect immediately.
That should come as a relief to Ontarians, many of whom have been struggling to accommodate soaring hydro rates.
One such ratepayer brought the issue more widely into focus with her tearful plea to Prime Minister Justin Trudeau earlier in January. It was a plea that grabbed the attention of a number of fellow Ontarians through news and social media outlets, but it’s a plea that also managed to spark a response among political leaders.
Of course, the fact that soaring hydro rates were losing the liberal party their popularity was another factor in the sudden decision, one that was compounded by the fact that opposing parties had begun proposing plans of their own to address the high rates.
Days before the Liberals announced their current plan, NDP leader Andrea Horwath announced that she could reduce rates by between 17 and 30 percent. Her solution included allowing ratepayers to opt out of time-of-use pricing, and it also involved capping profits for private power producers who supply energy to the grid. A plan to buy back the now-private Hydro One transmission utility was also proposed.
But why are Ontario’s hydro rates so high in the first place?
Ontario’s hydro rates are among the most expensive in the country because of the costs involved in building the current energy system. According to Wynne, the high costs are a result of the fact that “Ontario’s electricity system was a mess.” Since 2003, when the Liberal party took office, they have been investing in generation and transmission infrastructure in order to rebuild a system that was creating energy blackouts and smog days. Eliminating coal and rebuilding the grid cost the province billions, and it came down to ratepayers to carry that expense.
Photo courtesy of Alex Gulbord, licensed via CC BY-ND 2.0.
