Liberals end debt retirement charge on hydro but bills still going up
Watch video above: The debt retirement charge is done but hydro bills are still going up. Alan Carter explains why.
TORONTO – Residential consumers will still see their hydro bills go up, even though the governing Liberals are planning to remove the controversial debt retirement charge from their monthly statements in 2016.
The Ontario Clean Energy Benefit, which takes 10 per cent off hydro bills, will also expire at the same time. The majority of ratepayers will also be expected to bankroll a proposed program that would offset energy costs for lower-income families.
According to the government, a typical family consuming about 800 kilowatt hours per month would save about $75.60 a year after taxes once the debt retirement charge is removed on Jan. 1, 2016.
But those savings would be cancelled out by the loss of an $180 annual rebate from the clean energy benefit, which was introduced in 2012.
However, the Liberals are promising a support program for famillies with an income of up to $40,000 that would provide about the same savings as the clean energy benefit after it expires.
An eligible family could save on average $250 a year when combined with the removal of the DRC, Energy Minister Bob Chiarelli said Wednesday.
“We fully understand the electricity price pressures facing families, and that’s why we’re taking these steps,” he said.
“This is real rate relief for those who need it most.”
The program will add about 90 cents on the average monthly bill of the rest of the ratepayers, Chiarelli said.
“We feel that this is a very modest tradeoff to be made in order to accommodate those who are in significant need,” he added.
By getting ratepayers to foot the bill, the Liberals can take all the credit for a program that won’t add to the already staggering provincial debt they’ve racked up, the Progressive Conservatives said.
“It’s increasing the hydro bills of the middle class to pay for low-income families,” said Tory finance critic Vic Fedeli.
“At the end of the day, most families in Ontario will end up with a higher hydro bill over it.”
Chiarelli said non-residential electricity users, including large industries, would still have to pay the debt retirement charge until 2018.
High energy costs are already chasing companies and jobs out of Ontario, Fedeli said.
The DRC, which is calculated based on consumption, was introduced in 1998 to help pay down the debt left over from Ontario Hydro, the former Crown corporation that was split into five companies.
Ontario Power Generation, Hydro One and municipal utilities were responsible for servicing and retiring part of the debt, while consumers were to pay off the residual stranded debt – amounting to $7.8 billion in 1999 – through the DRC.
The charge has been a headache for both consumers and the minority Liberals, who may be facing an election if they can’t pass their May 1 budget in the legislature.
The opposition parties have zeroed in on the rising cost of electricity, saying it will climb even higher because the Liberals cancelled two unpopular gas plants in Oakville and Mississauga – which could end up costing up to $1.1 billion – for political gain.
Removing the DRC will provide little relief, said NDP energy critic Peter Tabuns.
“I’m not sure it’s going to make a big difference to most families,” he said. “People do need cash, no argument, but frankly they’re going to be continuing upward pressures that are going to cost people a lot.”
The Tories say the DRC should have been eliminated years ago because far more than $7.8 billion has been collected.
But the Liberals say $3.9 billion of the residual stranded debt was still outstanding as of March 31 of last year.
“They count on it being confusing, so people just throw their arms up and say, ‘oh that’s just government,’ and walk away from it – it’s too confusing to get to the bottom of,” said Fedeli.