Ontario Premier Kathleen Wynne says residential hydro customers will see their bills drop by 17 per cent on average this year, thanks to a new plan she unveiled this morning during a joint news conference with Energy Minister Glenn Thibeault.
Ontario's Fair Hydro Plan, as the Liberals are calling it, means a 25-per-cent cut to residential charges, including the eight-per-cent bill reduction that kicked in Jan. 1 when the province exempted residential customers from the province's portion of the HST.
It's being reported that the plan was approved by the premier's cabinet yesterday, prior to today's announcement.
In a speech to the Economic Club of Canada on Feb. 24, Thibeault said Ontario's Green Energy Act is partially to blame for the high cost of power. The plan was designed to spur investment in renewable energy sources, and push energy production away from coal.
A noble goal, Thibeault said, but a poorly executed program that gives long-term energy contracts to private producers of renewable energy (wind, hydro and solar) at rates as high was 40 times fair market value.
It made sense at the time, the Sudbury MPP said, but in hindsight it drove up costs for consumers. Combine this with how Ontario opted to finance its $50-billion plan to build new power plants and fix up old ones, and the government made a mistake, Wynne said today.
Cutting rates today, though, is a matter of changing how Ontario is going to finance those $50-billion worth of upgrades.
Under Ontario's Fair Hydro Plan, the province will refinance about $28 billion of that $50 billion. So, for the next four years, hydro rates will hover around or under the inflation rate. The interest on the refinancing will run to $1.4 billion a year.
Of course, what this means is those interest costs will be paid by hydro customers at some point in the future (and after the next election).
CBC has reported that officials aren't sure how much power rates will jump after the four years of the plan are up.