September 23, 2010
The Ontario Energy Board thinks you’re not paying enough for hydro so it’s yanking another $60 out of your wallet.
Ontario hydro ratepayers — already hammered by the HST, time-of-use pricing and rate hikes — will pay an added $240 million a year, the Ontario NDP says.
Officials at the provincial crown agency — whose salaries are paid for through hydro bills — decided earlier this year that utilities should be able to boost their rate of return to 9.85% from 8.39%.
The OEB says that the increase shouldn’t be more than $1 per month for most residential customers, tucked into the delivery charge on the bill.
NDP Leader Andrea Horwath called Premier Dalton McGuinty on the carpet in the legislature Thursday, demanding to know why ratepayers should have to cough up even more of their stretched dollars to boost profits for the utilities.
“Ontario families are scrambling to deal with sky-high hydro rates. Does the premier think it’s fair to actually ask consumers to pay even more just to ensure healthy profits for hydro utilities?” she said.
Because utilities are a monopoly, the OEB determines how much profit is required to attract investors, appease shareholders and permit investment in infrastructure and then balances that against the interests of the ratepayers who pick up the tab.
Prof Gordon Roberts, of the York University Schulich School of Business, who made a submission to the OEB on behalf of Pollution Probe, recommended a lower rate.
“It’s generous,” Roberts said. “Clearly, if the answer comes out on the generous side (for utilities), it’s less fair for the ratepayers.”
Energy Minister Brad Duguid said the rate of return allows these companies to reinvest, ensuring the province can keep the lights on.
“Local distribution companies are private companies — they have shareholders,” Duguid said. “The Ontario Energy Board determines what the appropriate rate of return is for them. That’s always the way it’s been and that’s the way it is now. We don’t influence that.”
Lawrence Solomon, executive director of Energy Probe, agrees that the OEB has an obligation to ensure utilities have enough funds to invest.
“I think the NDP is pointing their guns at the wrong target … not blame the regulator that’s really doing its best to adjudicate really an impossible situation,” Solomon said.
He expects the Dalton McGuinty government to do everything in its power to depress rate increases at least until the next election.
But Ontario’s already higher hydro bills will double or triple within the next couple of years unless the McGuinty government stops overpaying for wind and solar and rethinks its pledge to abandon cheap, efficient coal plants, he said.
“In the U.K there’s a term that’s become a household term — it’s called fuel poverty,” Solomon said. “They now need subsidies to make their energy payments and we are headed in the same direction.”