Ontario Energy Association asks government to end hydro subsidies, help Canadians instead

The association released a policy paper on Wednesday, making the request to the government of Ontario. The paper said that the province spends close to $6 billion on cutting electricity costs for customers who don't require assistance in paying their bills.

The association noted that in the next 25 years, Ontario is on pace to spend $228 billion on subsidizing hydro rates.

“Ontario is also now spending more on electricity subsidies than on its entire transportation system,” the report says.

The paper was made in partnership with Kevin Page who was previously a federal spending watchdog. It makes several recommendations, such as cutting back on subsidies to help price stability.

Governments like Kathleen Wynne’s Liberals had trouble with the hydro file and received public backlash over heightened hydro rates, especially in rural areas. In 2017, they introduced the Fair Hydro plan.

The plan removed part of the global adjustment from bills and reduced time-of-use rates 25 percent causing consumers to pay above-market rates to producers.

Ontario Power Generation oversaw an entity that paid the difference throughout the next decade.

The energy association believes that the experience felt by customers “cascaded into a broader reaction by voters that was vastly disproportionate” in comparison to the actual impact.

In the report it says that Ontario’s residential hydro rates are some of the lowest rates in North America, even with the large increases over previous years.

President of the association, Vince Brescia noted that the paper has now been published because people are not as angry about the 2017 electricity costs.

He also accepted that the act of removing subsidies would not be taken lightly as it will raise costs for certain customers.

“It may fall on deaf ears. It’s not a message a lot of people want to hear,” he said. “But most people aren’t aware that we’re borrowing money to subsidize electricity, and when they find out that we’re doing that they really don’t like it. They think it’s a bad idea.”

Bresca added that the subsidy money will be needed for coronavirus related issues in Ontario.

“We need them for other societal issues,” he said. “The point is, we don’t see them going to good use and we think somebody needs to say this.”

The report adds that low-income and rural residents should still receive some subsidies from the government.

Premier Doug Ford restated one of his 2018 election campaign promises to cut costs by 12 percent in March.

“We’re trying to hold the line,” he said.”We are going to keep our promise (and) reduce it by 12 per cent. It’s a very, very complicated, complicated issue.”

Brescia said Ford should think about reconsidering the promise.

“Who really cares about that commitment now… we’re in a post-pandemic world,” he said. “We need to really think about what our priorities are.”

Ford’s government has reduced hydro rates during the pandemic for small businesses, residential consumers and farms due to the increased amount of people working from home. The government spent $162 million subsidizing the 45-day move to off-peak rates

An announcement was made by Ontario’s finance minister in January, that $1.6 billion more than budgeted, would be spent by the province in 2019-2020 to “stabilize” customer rates.

Rod Phillips blamed the increase in hydro rates on the previous Fair Hydro Plan brought in by the Liberals along with green energy deals.

“There’s no question that $1.6 billion of additional spending is troubling,” he previously stated. “This is the legacy of a failed Liberal energy strategy that provided energy people didn’t need at prices they couldn’t afford.”