Energy prices heading up

TORONTO: Electricity consumers in Ontario were jolted with a shock in the fall economic update, learning rates will jump 46 per cent over five years, although they will get 10 per cent rebates on each hydro bill.

The government says the rate hikes are necessary to pay for badly needed upgrades to the system that previous governments failed to make, and to wean the province off of coal-fired generation.

The Liberals say the new rebates mean electricity bills will rise about 3.6 per cent a year, instead of 7.9 per cent.

The party also plans to make off-peak rates start two hours earlier —at 7 p.m. instead of 9 p.m.— next May, government sources told The Canadian Press on Sunday. The change is expected to be announced Tuesday.

“We’ve been saying from day one that the costs of power need to go up to pay for the critical investments we’re making,” said Energy Minister Brad Duguid.

“I think we’re the only party in the province that’s being honest about the fact that building a clean, reliable, modern energy system comes with a cost. There’s no way around it.”

There’s also no way around the huge amounts of money needed to modernize an electricity system in the 21st century. Since coming to office in 2003, the Liberal government’s spending has included:

• $10 billion to add about 8,000 megawatts of cleaner energy supplies to the mix.
• $7 billion to upgrade 5,000 kilometres of transmission and distribution lines.
• a $7-billion deal with Korean giant Samsung to build new manufacturing plants in Ontario for green energy materials.

The number of wind turbines in Ontario has grown from 10 in 2003 to more than 700 wind, and the Sarnia area is now home to the largest solar farm in Canada. The province hopes its Green Energy Act will create 50,000 new jobs.

Ontario also budgeted $26 billion to build two new nuclear reactors and refurbish about 10 older units.

However, that project has been in limbo since AECL submitted a proposal for just the two new reactors at an estimated $26 billion, which the province rejected as “exorbitant.”

The province is also upset the federal government decided to sell AECL in the middle of the procurement process.

Nuclear power is expensive, but will remain the “backbone” of Ontario’s supply mix, generating 50 per cent of our electricity, said Duguid.

The government admits its plans to develop more wind, solar and other renewable forms of energy are responsible for about 56 per cent of the expected increases in electricity rates.

The Progressive Conservatives said the price of electricity has gone up between 75 and 100 per cent since the Liberals took office in 2003, from 4.3 cents per kilowatt hour to 7.5 cents for fixed rates, and up to 9.9 in peak periods for people with smart meters.

Add in the Liberals’ green energy policies, and the HST on electricity prices, and people are afraid to open their hydro bills, said the Tories.

“When you buy energy at 80 cents a kilowatt hour and the real price is only four or five cents, we all pay for it and as a province we can’t afford that,” said Progressive Conservative critic Norm Miller.

“If you treat it as a social program the cost of energy becomes too expensive and businesses can’t afford to do business here and people can’t afford to live here.”

The New Democrats said the Liberal government has made some “wrong-headed” decisions in its efforts to go green, including spending $1 billion to install so-called smart meters in over four million homes and switching people to time of use pricing.

“We see a government that decided on sole-sourcing the Samsung deal for $7 billion at the same time not allowing our own generator of power, OPG, to participate in the green energy regime,” said NDP Leader Andrea Horwath.

The worst Liberal offence —in Horwath’s eyes— was slapping the HST on electricity bills last summer, immediately adding the eight per cent provincial portion of the tax to energy costs.

“It’s a problem for homeowners who will see the 46 per cent increase in their hydro bills, but also though the eight per cent tax on top of that,” she said.

The Liberals say phasing out Ontario’s coal-fired generating stations —the last are scheduled to be shut in 2014— not only means cleaner air, but will also saves lives and help keep health care costs down.

© The Canadian Press