Ontario NDP propose tearing up long-term power deals to slash hydro rates
As the high cost of electricity weighs on the ruling Liberals, the opposition is championing energy reform; the NDP plan also includes buying back Hydro One and ditching time-of-use pricing
TORONTO—Electricity bills in Ontario could be cut by ending mandatory time-of-use pricing, reducing the delivery charge for rural customers and renegotiating power contracts, the NDP proposed Feb. 27.
The party released its plan both for reducing hydro bills by up to 30 per cent and returning Hydro One to public ownership, ahead of an upcoming announcement from the Liberal government about how it will cut costs.
“I think it would be fantastic if the Liberals took this plan and implemented it,” said NDP Leader Andrea Horwath.
“Electricity isn’t a luxury. It shouldn’t be priced like one and people want something done about it.”
The government faces no bigger political issue at the moment than hydro bills, which have about doubled in the last decade, and Premier Kathleen Wynne has promised that further relief—on top of an eight-per-cent rebate that took effect Jan. 1—will be announced before the spring budget.
Wynne has already signalled that more savings will be coming for rural and northern ratepayers, who face significantly higher costs than urban customers, and Energy Minister Glenn Thibeault suggested that changes are on the way for time-of-use pricing.
“Time of use is something that actually saves our system money, so we can’t get rid of time of use altogether, but what we can do is ensure that people have a choice,” he said.
“Eliminating time of use would actually mean that our peak hours, our peak demand would actually increase and that means we would need to create more generation, possibly.”
The NDP plan would see customers either choose to stay on time-of-use billing or pay a fixed rate of 10.3 cents per kilowatt hour, higher than the current off-peak rate but lower than the current mid- and on-peak rates.
“The time-of-use plan was a failure,” said Horwath. “It didn’t provide the kind of conservation or the kind of reduction in use that the Liberals had hoped and it didn’t help people to keep their bills down.”
The Liberals responded considerably less favourably to the idea of not only stopping any further sale of Hydro One shares, but also buying back the 30 per cent already privatized.
“That is the one thing that would not take a penny off people’s electricity bills,” Wynne said in question period. In defending the partial privatization, the Liberals have often reminded that it’s the Ontario Energy Board that sets rates.
The NDP proposes buying those shares back at a cost of between $3.3 billion and $4.1 billion, financed through the province’s share of its profit from Hydro One within eight years—assuming 70 per cent of the approximately $700 million in revenue it has previously generated for the province.
As the utility is transitioned back to public ownership, the NDP said a $2.6-billion tax benefit given to Hydro One in the process of privatization could be used to subsidize a drop in bills of 3.2 per cent.
The NDP’s plan also includes capping profit margins for private power companies and establishing a panel to examine cancelling or renegotiating long-term power contracts at above-market rates.
The Progressive Conservatives have also called for such contracts to be renegotiated. The Liberals frequently note they saved $3.7 billion by renegotiating a green energy deal with Samsung, but Thibeault said doing so with every contract would take years.
“They can’t just be cancelled because it would cost us billions of dollars in terms of these cancelled contracts, which would then go back onto the ratepayer and we would be in court for every contract we would rip up,” he said.
The NDP also proposed making permanent the Liberal government’s eight-per-cent rebate on bills while also negotiating with Ottawa to remove the federal portion of HST from bills.
It wants to reduce the delivery charge for rural Hydro One customers so they pay the same fee as urban customers, funded through a water rental fee paid by Ontario Power Generation for water flowing through dams—between $330 million and $350 million per year.