Gary Rinne
Thunder Bay’s Source
November 26, 2003

As a colleague in the newsroom points out, the optics for Dalton McGuinty are not good.

During the election campaign, the Liberals promised to keep the price cap in place until 2006. The Liberal party had also voted in favour of the rate cap when it was introduced by the Eves government. Now, Ontario’s new Premier has approved a rate increase which will impose varying degrees of hardship on consumers, institutions, business and farmers.

Opposition critics are calling McGuinty a liar. The accusation would have more substance if it could be proven that the Premier knew before the election the size of the province’s deficit – nearly six billion dollars – would force him to backtrack. It is difficult to imagine that he didn’t at least feel queazy about making the commitment to maintaining the freeze for three more years. Whether it was outright deception, a terrible miscalculation or something in between, we may never know.

But aside from the issue of the Premier’s credibility (already strained by other decisions that were not part of the Liberals’ election platform) a spokesperson for Energy Probe has the correct perspective on this when he says charging a more realistic price for power is ‘better than hiding under the blanket.’

That is exactly what Ontario has been doing ever since Eves capped electricity rates at 4.3 cents per kilowatt hour a year ago in the midst of a revolt by consumers as rates shot skyward following the decision to open the market to competition. He may have placated voters in the short term but he did the province’s taxpayers no favour by keeping rates artificially low. Because the average wholesale price of power has been running at 5.8 cents/kw-h since then, $800,000,000 has been sucked out of the province’s treasury to make up the difference. This ill-conceived, politically-motivated strategy is not sustainable.

It has also done little to encourage energy conservation. With rates kept below the real cost of power, there was less incentive for Ontarians to take the need for conservation seriously. McGuinty’s plan encourages the wiser use of electricity by establishing a structure that rewards conservation.

The average Ontario home currently uses 860 kw-h a month. Homeowners who can cut their consumption to 750 kw-h will see the increase in the charge for power held at about 9%. That sounds like an awful lot but the actual out-of-pocket cost at that level is only $5.00 a month. For consumption over 750 kh-h, the rate will go up by 28%. Few of us can argue that we can’t find ways to cut electricity useage. If all Ontario households took this on as a challenge, it would make a real difference.

How school boards, hospitals, other institutions and businesses are going to deal with the additional cost is worrisome. The NDP, taking a stance that makes it a bedfellow of the Canadian Federation of Independent Business, is arguing the end result will be the loss of tens of thousands of jobs, however the New Democrats never seem to have a problem with governments running a deficit.

Hiding under the blanket may provide temporary shelter from the cold hard facts, but should the whole house collapse under a load of debt, who would be blaming whom?