Canadian Press
CJAD 800 am
February 23, 2005

Toronto: Residential electricity users in Ontario can expect rebates of $50 to $100 a household this spring, Energy Minister Dwight Duncan announced Wednesday as he hiked the cost of hydro for large, industrial customers.

"Small consumers, farms, small businesses can expect, as of today, approximately a $300-million rebate," he said.

Duncan said the province "had some good luck" with the weather in the past year, which allowed electricity prices to fall 19 per cent below what the government predicted they would be when it set a new price plan last April.

He said Ontario’s large industrial users will pay more for electricity starting April 1 under a new scheme that regulates rates for most of the power used by the large industries that until now had been relying mainly on the unregulated spot market.

Industries will pay 12 per cent more than they did last year when weather was moderate, but just 1.5 per cent more than they did in 2002-2003, the first year the province’s electricity market was thrown open to competition.

Duncan said the new pricing system is intended to more accurately reflect the cost of producing electricity.

It will be used by the Ontario Energy Board to calculate new electricity rates for the province’s four million homeowners, also effective April 1.

"My estimation is that it will be well below five per cent," Duncan predicted about the size of the residential rate hike.

"For too long, taxpayers subsidies have kept electricity prices unsustainably low."

"It’s a step in the right direction," said Jack Gibbons of the Clean Air Alliance. "It’s not right to use taxpayers’ dollars to subsidize electricity consumption."

The business community agreed hydro consumers should pay the true cost of generating electricity, but the Ontario Chamber of Commerce said the government isn’t doing enough on its hydro file to keep businesses competitive.

"Business leaders in Ontario are worried that the government appears to be floundering on the energy file," said Len Crispino, the chamber’s president and CEO.

The Association of Major Power Consumers in Ontario said it supported the changes Duncan introduced, but warned a lot needs to be done to restore investor confidence in the province.

"It will be difficult for many companies to absorb a sudden cost increase that extends well into the double digits," said AMPCO chair Mike Kuriychuk.

"Serious attention to mitigation will be necessary to avoid adverse impacts on investment and employment."

The price hike for Ontario’s 55,000 large industrial and commercial electricity customers was smaller than expected.

New Democrat Leader Howard Hampton said that pushing the cost of electricity any higher would have crippled some Ontario companies and put them out of business.

"It would potentially mean the loss of tens of thousands of good paying jobs in Ontario," he said.

The average price of electricity will be 4.5 cents per kilowatt-hour for power generated by nuclear plants and large river dams owned by the government’s Ontario Power Generation, which generate 40 per cent of the province’s electricity.

Duncan also set a new price limit of 4.7 cents per kilowatt-hour on most of the output from OPG’s so-called unregulated assets, smaller dams, coal and gas-fired plants, accounting for another 33 per cent of the province’s generating capacity.

"What this is, is a gigantic bailout for OPG," said Tom Adams of the environment group Energy Probe. "This is a way of patching up OPG and allowing OPG to grow again."

However, the price for electricity from OPG’s unregulated assets is only for one year while the province replaces the previous government’s Market Power Mitigation Agreement.

That agreement, which gave rebates to large power users, cost Ontario taxpayers $100 million a month, or $3.3 billion dollars since it was implemented.

"We have stemmed what can only be called a hemorrhage of $100 million a month that was designed to force a government to sell the very assets that we don’t think we should sell," said Duncan.

"This sort of one-year, make-it-up on the back of an envelope, is not an answer for industry, business or the Ontario economy," charged Hampton.

"I think the Power Mitigation Agreement was working and they should have left it in place," countered acting Opposition leader Bob Runciman.

He said industry and large businesses can’t absorb huge jumps in hydro bills. "The real concern here is with the big users and the job creators in the Ontario economy," he said.