The largest rate reduction in provincial history
With ratepayers complaining of skyrocketing electricity bills, the provincial government has developed a new strategy to make hydro more affordable.
Starting in summer 2017, Ontario’s Fair Hydro Plan claims to reduce ratepayer bills by an average of 25 per cent, according to a press release by the government of Ontario. This figure includes the eight per cent rebate that was implemented in January, which means ratepayers will see an average difference of 17 per cent.These reduced hydro rates will be held to the rate of inflation, observing no other increases for four years. Under normal circumstances, Ontario’s hydro rates are revisited bi-annually by the Ontario Energy Board (OEB).
A major public concern for the hydro cuts is the long-term implication for ratepayers, who will be receiving hydro bills long after the four-year proposal. According to the press release, this 25 per cent commitment will cost the province $2.5 billion over three years. The statement is unclear on how much of that will be covered by taxpayers.“Over time, it will cost a bit more. And it will take longer to pay off,” said Premier Kathleen Wynne in a statement. “But it is fairer—because it doesn’t ask this generation of hydro customers alone to pay the freight for everyone before and after.”
According to the press release, the original reasoning for inflated hydro bills was: “Decades of under-investment in the electricity system by governments of all stripes,” which thus demanded major investments in order to upgrade power generation, transmission, and distribution.
In order to finance those upgrades, the provincial government leaned heavily on ratepayers, who saw major increases in the “delivery” charge on their bills and in fees of various forms. The “delivery” charge generally accounts for all the infrastructure (and the maintenance of that infrastructure) that allows electricity to reach a given place.Therefore, dwellings even across the street from municipal boundaries will often observe much higher delivery charges than those billed to urban customers.
Aside from the “delivery” charge, ratepayers will see “regulatory” charges with little explanation.
However, price adjustments have had rural and residential customers finding it increasingly difficult to pay their bills each month.
The hydro changes come amidst reports, from both CBC and The Globe and Mail, of record low approval ratings for Premier Wynne and the Ontario provincial government.“Ratepayers across Ontario have been loud and clear—we need to do more to help reduce costs,” said minister of energy Glenn Thibeault in the press release.
Another stipulation in the Fair Hydro Plan says that the Ontario Electricity Support Program (OESP), which was previously funded by ratepayers, will now be funded by the government.
The Fair Hydro Plan announcement comes 14 months before the next provincial election and the government maintains that, despite these changes, it will achieve a balanced budget in the 2017 to 2018 fiscal year.
Photo by Mariah Bridgeman/The Ontarion.