MPP Column – Economic Update
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A few weeks ago the Ontario government released its fall economic update in which they announced a 10% rebate on hydro bills for all Ontarians.  They also revealed that over the next five years hydro bills will increase by 46%.  This is on top of a 75% increase in hydro rates and a 31% increase in hydro bills since the McGuinty government took office. 

I have spoken with many families and businesses who are concerned about their rising hydro bills, and while I support any measure that gives needed relief to them, this rebate is not going to offer effective financial assistance. Hydro rate increases in the coming years will more than eliminate the modest amount of money families will receive under this rebate program.  This move does not seem to be rooted in practical economic sense.

There are several reasons for the increase in hydro costs, including time of use pricing, green energy expenditures and infrastructure costs. Time of use pricing involves paying different rates for electricity based the time of day. These rates are measured using the much talked about “smart meters.” Currently, Ontarians are paying 9.9 ¢/kWh during the peak period from 5:00pm-9:00pm.  This is up from 4.3 ¢/kWh when the McGuinty government took office.

Ontario PC leader Tim Hudak committed that a PC government would give families the choice between flat rate and time-of-use pricing, and I support that position.  With energy prices as high as they are, it only seems fair to offer hardworking Ontarians the ability to choose which energy option works best for them.

Policy towards green energy has been a major reason for the increase in energy prices over the last few years. Under the Feed-in Tariff (FIT) program, which awards energy contracts to green providers, Ontario offers solar producers between 44.3¢/kWh and 80.2¢/kWh for their power.  These rates are far in excess of current electricity prices. In contrast, the average price paid to electricity generators in the province (such as Niagara Falls and Darlington nuclear) is 3.8¢/kWh for 2010.

While I fully support developing green, alternative energy in Ontario, this must be done in a sustainable way which keeps rate increases to a minimum. Ontario Power Authority FIT contracts, as well as deals with companies like Samsung for wind and solar will cost families significantly in the coming years.  Supporting and developing green energy does not have to mean paying excessive rates and awarding sole-sourced contracts.

Another reason for the increase in hydro bills has been the costs associated with updating aging infrastructure, including power lines and distribution systems.  While these investments are important, the costs associated have combined with time of use rates and green energy expenses to create high energy prices which Ontarians are increasingly unable to cope with.

The numbers here clearly don’t add up. Energy prices continue to rise at unacceptable levels, and the modest provisions offered in the fall economic update will not do enough to help families and businesses who are struggling.