September 28, 2010
Electricity in Hamilton and St. Catharines is about to get more expensive.
Horizon Utilities, which distributes power in the two cities, is asking the provincial regulator to increase the distribution charge for power by almost 12 per cent effective January. And the utility says there will need to more increases in the future.
At the same time, provincial NDP leader Andrea Horwath has started a campaign to cut bills by getting the provincial government to remove its portion of the new Harmonized Sales Tax.
Tony Iavarone, Horizon’s director of corporate communication, said the rate increase is needed so the company can start the expensive process of training new apprentices and replacing aging poles and wires.
“We thought it would be better to initiate this work now and have incremental increases than to wait and really have to hit our customers,” he said. “We have aging infrastructure and an aging population in our trades, and it takes four years to train up a new apprentice.
“A lot of this infrastructure was put in during the 1950s and 1960s,” he added. “We want to do the work faster so we don’t have it dying on us.”
The rate hike Horizon is seeking would add about $3.77 to the monthly bill of the average homeowner and about $10.47 to the bill of a larger user such as The Spectator.
Iavarone noted the Horizon hike is really only 3.5 per cent of a total hydro bill because Horizon’s fees and charges only account for about 22 per cent of the bill. The rest consists of charges imposed by Ontario Power Generation and other agencies.
This isn’t the first rate increase hydro users have faced this year. In May the Ontario Energy Board slapped average users with an increase of $5.78 to raise money for renewable generation projects and conservation programs, and to meet increased costs for existing generation. That was in addition to new time of use charges. In July, Ontario’s new Harmonized Sales Tax was added. Ontario Power Generation, the agency that actually produces electricity, has also applied for an increase of $2.75 per customer to take effect in January.
The OEB previously rejected an application by Horizon to increase the rates of average customers by 32 cents a month to make up $2.8 million in revenue it didn’t earn from U.S. Steel when the company shut down its Hamilton plants in 2009. Instead, that lost income will be build into rate increases Horizon intends to seek next year.
The Ontario NDP has said the HST adds about $11.25 a month to the average bill.
In total, the increases add up to more than $23.55 a month.
For NDP leader Andrea Horwath, that’s a cruel burden to lay on people already struggling because of fixed incomes or other problems. She has launched a campaign to push the Ontario government into taking its portion of the HST off hydro bills.
“This government has been putting more and more expenses on people who are already near the breaking point,” Horwath said in an interview. “This is going to drive people to the absolute brink of distress.”
Horwath said her own latest hydro bill was over $400. She can afford it, but many can’t.
“People are having to make a choice between buying groceries and paying these bills because they don’t have a choice about using hydro,” she said. “This is a chance for the government to do something positive.
In the Legislature, Premier Dalton McGuinty said his party is working to help people manage electricity costs, but wouldn’t promise to provide an HST exemption.
Lawrence Solomon, executive director of Energy Probe, added in an interview these hikes are only the first of many to come if the government doesn’t drop its plan to close down coal-fired generating stations in favour of expensive wind and solar projects.
“This is just the beginning,” he said. “If we stay on our present course we could see a doubling or tripling of rates.”
Solomon rejects the idea of pouring subsidies into wind and solar projects. Instead, he’d like to see the cost of hydro controlled by allowing real market competition – something the Harris Conservative government considered but never fully carried out.
“The NDP is aiming at the wrong problem,” he said. “All their plan will do is move the cost to another sector. They should be criticizing the general policy, not just the HST part of it.”