Richard Brennan
Toronto Star
November 12, 2002

Ontario Hydro consumers will get about $700 million in rebates from the provincial government to offset electricity costs that soared over the summer.

Premier Ernie Eves yesterday announced a nine-point plan that calls for rebates for consumers of $75 before the end of the year and more as a credit on their hydro bills next year, and a rate freeze that will last until 2006.

A protester dubbed "Hydrozilla" parades outside a Mississauga residence where Premier Ernie Eves announced yesterday rates will be capped and rebates will be issued. Credit: Frank Gunn, Toronto Star

"There are a lot of things you can do without," Eves said, "but electricity isn’t one of them."

Eves said "it is unacceptable that families are being hit with hydro bills they can’t afford, and businesses are facing cost increases significantly larger than they can handle. The problem requires immediate action and we are taking it. From now on, the only time your electricity bill will go up is when you use more power."

Eves said the money will come from a Consumer Price Protection Fund, money set aside by the government-owned Ontario Power Generation (OPG) and Hydro One for rebate purposes.

"At the end of this month that fund will be well in excess of $700 million," the Premier said.

Critics say the real cost will be billions of dollars.

And Arthur Dickinson, president of the Association of Major Power Consumers in Ontario, said the rate freeze means the future supply of electricity in Ontario is now in jeopardy.

Dickinson warned the price cap will deter new suppliers from setting up shop and could lead to power shortages given the ongoing delays in restarting nuclear reactors in Pickering and Kincardine.

Under the plan, which must be approved by the Legislature, the rate will be fixed at 4.3 cents a kilowatt hour effective Dec. 1 – about half what it was in September – and consumers would be repaid "every penny" of the difference retroactive to May 1 when the market was opened up to competition.

The government’s plan also calls for an investigation into delays in getting the four nuclear reactors at the Pickering A generating station back on line and changes of the board of directors at OPG, the government-owned producer that still controls 70 per cent of the electricity produced in the province.

Tom Adams, of Energy Probe, an industry watchdog, said the government’s meddling in the market will drive away potential investors.

"Ontario electricity supply is in a lot of danger . . . the likelihood of blackouts this winter went way up.

"Ontario does not have enough power supply," Adams told reporters.

Eves picked a sprawling neighourhood in west Mississauga to make his announcement, where owners with pools and air conditioning saw sharp increases.

Eves actually looked at a hydro bill for Mississauga couple Keshab Hardatt and his wife Meena whose home he used for his press conference, and with a pen explained that they would see a retroactive rebate of about $150.

Premier Ernie Eves visits the home of Meena Hardatt and her husband Keshab in Mississauga yesterday afternoon to announce that Ontario’s hydroelectricity rates will be capped and rebates paid. Eves calculates how much the Hardatts will save on their bill. Opposition critics say he’s refusing to admit privatizing hydro won’t work. Credit: Tony Bock, Toronto Star

Today Energy Minister John Baird is to make an announcement today about the issue of the supply of energy. Tomorrow Baird and MPP Steve Gilchrist will launch initiatives to encourage conservation, clean electricity and alternative energy.

Liberal Leader Dalton McGuinty said the true cost of the rebates could be much higher than Eves suggested.

"My real concern is how much is it going to cost all of us over the long term.

"We are talking about billions and billions of dollars that are either going to be added to the hydro debt or to the provincial debt," McGuinty said.

NDP leader Howard Hampton said "to engage in this kind of cover-up we estimate will cost a half a billion dollars a year, which means the government will be using tax dollars to hide the cost of privatized, deregulated electricity from consumers."

Under the plan, consumers will pay a fixed rate of 4.3 cents a kilowatt hour but producers will still charge the fluctuating market rate, leaving the province to make up the difference.

"The market will continue to operate in terms of those who generate power . . . the difference is the consumer won’t see that fluctuation," Eves said.

Customers of Toronto Hydro, who have been paying 4.3 cents, won’t be faced with additional costs they had expected to pay.

People who signed contracts with electricity retailers will also pay 4.3 cents with the province subsidizing these companies for the difference.

Eves said consumers will be reimbursed even if they signed contracts that say the retailer gets any rebate.

The combination of a hot summer and insufficient power produced in Ontario forced the province to import expensive electricity to meet the growing need, which sent rates soaring.

Other highlights of the plan include:

• The charge for delivering the power to people’s homes and business would be capped at current levels;

• An independent review of how other charges on electricity bills are calculated to ensure they are reasonable, including the fixed monthly charge and create standard province-wide electricity bills that are easier to understand;

• Demand Ottawa stop charging the GST on electricity bills;

• A plan to ensure a long-term electricity supply at reasonable costs;

• Incentives for conservation, clean energy and alternative fuels, including tax incentives and tax holidays.