Ontario hydro bills cut, but rates to soar over five years

TORONTO, Ont. – The McGuinty government admitted Thursday hydro rates in Ontario will soar by 46 per cent over the next five years, which will erase the 10 per cent rebate on electricity bills the government promised.

The 10 per cent Clean Energy Benefit will be applied after all other items on the electricity bills, including taxes, and will kick in starting Jan. 1, 2011.

The rebates may not show up on utility bills until next May, but they will be retroactive until the start of the year.

Finance Minister Dwight Duncan said there are two reasons why hydro rates will continue to rise in the coming years: the shift to cleaner but more expensive solar and wind generation, and upgrades to the existing hydro plants.

Also, those rate hikes will whittle down the 10 per cent break on hydro bills to only about 3.6 per cent.

In his economic statement at Queen’s Park, Duncan said people in Ontario are now finally paying the true cost of electricity.

“Residential and business consumers around the world are feeling the impact of electricity prices, and if people tell you they can deliver clean, reliable electricity at a lower price, don’t believe them,” he said.

Duncan also said the McGuinty government is trying to strike a balance.

“People want cleaner air and they want reliable electricity, and they are also looking for help paying some of the additional cost until prices stabilize,” he explained.

Conservative and Opposition Leader Tim Hudak called the rebate a blatant attempt for the Liberal government to buy votes in next fall’s provincial election.

It will cost the government $1.1 billion a year to pay for the rebates, which are scheduled to last five years, until the debt retirement charge from the old Ontario Hydro is finally removed from bills.

On the positive side of this economic statement, the Finance Minister said Ontario is slowly emerging from the global recession.

“There are clear signs that the Ontario economy is recovering,” Duncan said in his speech to the legislature.

Revenues were up 0.67 per cent while expenses decreased by 0.2 per cent after the province paid $246 million less in interest than was forecast in the budget last March.

Real GDP is expected to average 3.2 per cent for 2010 and fall to 2.2 per cent next year, while unemployment is expected to average 8.8 per cent from nine per cent in 2009.

Duncan also announced a 50-year extension of a contract with Teranet, the company that operates the province’s electronic land registry. The $1 billion from that deal will be applied to the province’s $220-billion debt, and will also lower interest costs by $50-million a year.

The Teranet contract has built-in consumer protections, freezing its fees for five years and limiting increases after that to one-half of the inflation rate. It also includes new royalties for the province of about $50 million a year, starting in 2017.

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