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Electricity rates drop now, pay later

Ontario electricity bills are to drop 17 per cent on average starting this summer, under a new plan released Thursday morning by Premier Kathleen Wynne. With eight per cent reduction that kicked in Jan. 1 this year, the Liberals say the plan will cut 25 per cent off the average residential bill.

The plan helps customers this year, but stretches financing for past contracts into the future at an estimated cost of roughly 25 billion in interest over 30 years. It also shifts some $2.5 billion in electricity costs over three years to taxpayers from ratepayers.

Wynne agreed it will cost more but said the plan is more fair because it now spreads out the costs over 30 years instead of 20.

Electricity bills have approximately doubled for many in the last decade but rates are expected to stay at or below the rate of inflation – roughly two per cent – for the next four years but are not predicted for after that time.

Wynne said increasing costs were due to investments in the grid, nuclear refurbishments and getting rid of coal. She said the way the government financed several long-term contracts to private power producers was “too generous”.

“For too long, governments – my own included – have made mistakes in the way we’ve structured Ontario’s electricity system,” said Wynne, in a statement today. “That has resulted in rates that are unfairly high. It’s time to fix those mistakes… Everywhere I go I hear from people worried about the price they are asked to pay for hydro and the impact it has on their household budgets.”

She said the cut will go to all households that pay for electricity, “no asterisks, no loopholes and no exceptions.”

People with low incomes and those living in eligible rural communities are to receive more reductions. The Ontario Electricity Support Program for low-income ratepayers will be funded through government revenues instead of other taxpayers. Benefit for a single person earning less than $28,000 would save $45 a month instead of $30. On reserve First Nations customers will receive a 100 per cent credit of the delivery line.

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  1. Emily says:

    The Conservatives deregulated our publicly owned Ontario Hydro. What was their long term logic for such an extreme move and why do they now not have solutions only blaming the party in power?

  2. Gary Mooney says:

    Wynne’s plan doesn’t deal with the problems, only with how the problems are financed. Stretching out the period for amortization of capital investments from 20 to 30 years, and transferring some costs from electricity ratepayers to taxpayers. There are no savings in total, just reallocation of costs.

    Wind and solar together account for 25% to 30% of generation costs, but contribute only about 10% of the electricity. Not only is the government not cancelling any of these projects, they are accepting more solar under FIT 5.0 and allowing wind projects recently approved under LRP 1 to go ahead.

    Premier Wynne is just kicking the can down the road.

  3. Vic Alyea says:

    I agree Chris. Scrapping contracts for unbuilt wind and solar power one part of the larger plan that is needed to solve the problem. I have listened intently to all three parties regarding plans to deal with this problem. The NDP complain but seem to have a so-so plan formulated for implementation if elected. The Conservatives complain but have not articulated any kind of plan of action if elected that i know of. The Liberals are finally getting the message but have only begun to take action of any kind. At this point I have no party to vote for. I’m sure many others out there are in the same boat.

  4. Chris Keen says:

    If Wynne truly wants a place to start to begin fixing the “mistakes” in Ontario’s electricity system she could start by cancelling all un-built solar and wind projects today. They will produce power we don’t need that will be “sold” at a loss to the U.S. Simply reducing the price and making the next generation pay is fiscally irresponsible and nothing more than a cynical attempt to buy votes.

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