Ontario won’t be able to reduce soaring hydro costs anytime soon, say experts
Ontario Premier Kathleen Wynne concedes skyrocketing electricity rates are an “urgent issue” for the Liberals, but experts say there is little the government can do in the short term to fix the growing problem.
Wynne told reporters Wednesday the rising cost of hydro, which has doubled over the last decade, was one of the most consistent issues her party heard from homeowners and tenants across the province – even before the Liberals lost the Scarborough-Rouge River byelection.
WATCH: Premier Kathleen Wynne calls Ontario hydro rates an ‘urgent issue’ for her government
“One of the things that we heard most consistently was hydro rates. I heard about electricity rates in the north. It is not something that is isolated in one riding in Toronto. This is a concern across the province. I recognize that,” Wynne said.
“It’s an urgent issue for the minister of energy,” the premier said, adding that her government will look at “further mitigations” to offset the high cost of electricity in the province.
But exactly how Energy Minister Glenn Thibeault can provide relief for ratepayers is unclear.
What do the experts say?
Experts that spoke with Global News say there is no easy fix to the problem of soaring energy rates that have led to roughly 567,000 Ontarians owing more than $172.5 million in unpaid hydro bills.
Brady Yauch, an economist and executive director with the Consumer Policy Institute, said that in the short term there may be nothing the province can do to lower rates that have risen dramatically over the past decade.
“The reason [energy rates] are not going to come down on their own is that the province has signed really long contracts with a whole host of generators,” said Yauch.
He said the province also needs to address the imbalance between supply and demand. The Ontario government has been growing capacity while consumer have been cutting back.
The average household now consumes 25 per cent less than a decade ago and peak demand is 16 per cent lower than in 2006. Meanwhile, a 2015 report from Auditor General Bonnie Lysyk found Ontarians paid roughly $37-billion more than market price for electricity over an eight year period. Her report also found hydro customers will pay $9.2 billion more for wind and solar projects under the Liberal’s 20-year guaranteed-price program for renewable energy than they would have under the previous program.
“Over the long term, the province can stop giving new contracts. It can stop contracting for more capacity, it can be potentially more aggressive with some of the utilities through the OEB, or hopes the OEB is more aggressive with utilities,” he said. “But you can’t suddenly just erase 10 years of policy to suddenly lower rates.”
“Consumers are getting hit from every side. They are getting hit from the generation, the distribution side, the transmission side. There is no break coming.”
WATCH: Wynne says costly hydro rates are an ‘urgent issue’ for the minister of energy
Energy analyst Tom Adams agrees that the Liberals need to stop the procurement of new power generation.
“They have to cancel any contracts that they get out of without severe penalties like we saw in the gas plant scandal,” Adams said.
Jatin Nathwani, executive director of the Waterloo Institute for Sustainable Energy, said rising bills are the result of a decade of investments in Ontario electricity infrastructure and costs associated with shutting coal-fired power plants.
“Those decisions have been made, investments have been made, and they are now baked into the rate process and that’s what consumers are seeing,” said Nathwani.
Nathwani added that the move towards green energy contracts, like wind and solar, have contributed to increase in prices and there is little the government can do to back out of them.
What the government can do to lower energy rates
So, what can the government do to lessen the pain for ratepayers across province?
One option is increasing rebates for consumers that will come out of the provincial treasury.
Francesca Dobbyn, executive director of the United Way of Bruce County, told Global News she wants to see the provincial government engage with the charitable sector and ask what they and the community needs to resolve the issue across the province.
“They need to engage with those of us that are on the ground with these issues, rather than just making decisions and listening to the for-profit companies that have the ear of the politicians,” she said.
Dobbyn said that increasing the Ontario Energy Support Program up from $30 would go a long way in helping consumers.
The OESP provides monthly payments from $30 to $75 depending upon location and the number of people in the home. Families with household incomes of $52,000 or less after tax can apply for the program.
Another option is creating a taxpayer funded subsidy similar to the expired Ontario Clean Energy Benefit, instituted under former premier Dalton McGuinty, which provided a 10 per cent discount on hydro bills to compensate for the cost of wind and solar power subsidies.
However, Yauch called a taxpayer funded subsidy a “band-aid solution.”
“It doesn’t actually lower hydro rates, it just offsets the cost using other money,” said Yauch. “It’s just shifting around the buckets of money.”
Global News attempted to reach the Ministry of Energy for comment but did not receive a response.
*Jacques Bourbeau and Adam Miller contributed to this reportFollow @andyruzzell
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