Recommended: Do not defer the cost of the Fair Hydro Plan

June 1, 2017

Let’s not repeat more mistakes of the Past

June 1, 2017, Niagara-on-the-Lake – The Board of Niagara-on-the-Lake Hydro (NOTL Hydro) urges the Provincial Government not to defer the costs of the Ontario Fair Hydro Plan but to fund the additional rebate from Provincial revenues.

The Fair Hydro Plan includes an annual rebate of around $1.8 billion a year for ten years which residential and small business electricity consumers (but not all consumers – see our April 3, 2017 media release) will realize as a reduction in the Regulated Price Plan rates. This rebate will be funded through Ontario Power Generation creating a massive $26.2 billion debt that will have to be repaid in the future; deferring the cost for future ratepayers.  This rebate is in addition to the 8% reduction in electricity bills which commenced on January 1, 2017 and which is being funded by Provincial revenues.

The Government of Ontario has a history of deferring the costs of electricity price reductions.  The result is always that further action is required at the end of the deferral period.

  • In 1993 the Ontario Government froze the price of electricity.  The resulting losses in Ontario Hydro were a major part of the $19.4 billion in stranded debt that is only now finally being repaid from the Debt Retirement Charge.
  • In November 2002 the Ontario Government froze the price of electricity.  As a result, the stranded debt rose in 2003 and 2004; prolonging the required life of the Debt Retirement Charge.
  • In 2011 the Ontario Government introduced the 10% Ontario Clean Energy Benefit.  Its expiry in 2016 contributed to the increased political pressure that lead to the Ontario Fair Hydro Plan.
  • The Financial Accountability Office of Ontario has estimated that it will cost at least $21 billion in interest costs over the next 28 years to provide the $18.4 billion in Fair Hydro Plan rebates over the next ten years.

“Pushing the repayment of this rebate out 10 years is not responsible” said NOTL Board Chair Jim Ryan. “Let’s pay for it in a responsible manner now so that we can focus going forward on the underlying cost issues in this industry.”

The NOTL Hydro Board recognizes that there is an electricity cost issue for consumers that must be dealt with immediately and supports the goals of the Fair Hydro Plan. The NOTL Hydro Board has previously recommended that the Ontario Government write-off the excess cost of the wind and solar contracts all at once.  The write-off would likely be over $25 billion and would be a one-time charge on the Provincial Government books.  This would bring the cost of this generation down to a reasonable price and not be a burden for future electricity rate payers.

As the Fair Hydro Plan instead calls for an annual rebate, the NOTL Hydro Board recommends that this rebate be funded by Provincial revenues so will be either paid each year by tax revenues or recognized as a deficit on the books of the Provincial Government.

The Board of NOTL Hydro has previously urged the Minister and the Premier to take steps to reduce the high cost of electricity in Ontario and has provided concrete suggestions.

NOTL Hydro Board Critiques: