Wynne to make announcement on Ontario hydro bills on Thursday

Ontario electricity ratepayers will learn Thursday how the Liberal government plans to reduce their bills.

Premier Kathleen Wynne is set to make the announcement in the morning, a day after the Toronto Star reported the plan is to cut consumer costs by another 17 per cent largely by financing the costs of electricity generation contracts over longer periods.

Opposition and energy critics say the move, akin to renegotiating a mortgage, is a “shell game” that will lead to more costs down the road.

The Liberal government faces no bigger political issue at the moment than hydro bills, which have about doubled in the last decade.

The Star reported the benefit from the plan would be more than $1.5 billion a year, reflected in decreased global adjustment costs.

The global adjustment, which accounts for up to 70 per cent of electricity rates, is the charge consumers pay for above-market rates paid to power providers in 20-year contracts meant to ensure a steady supply.

Auditor general Bonnie Lysyk has estimated the global adjustment cost $50 billion between 2006 and 2015 and increased by 1,200 per cent between 2006 and 2013 – meanwhile, the average electricity market price dropped by 46 per cent.

The government will also shift the Ontario Electricity Support Program for low-income customers to the tax base, rather than being funded by other ratepayers, the Star reported.

Wynne has previously signalled that more savings will be coming for rural and northern ratepayers, who face significantly higher costs than urban customers, and the energy minister has suggested that changes are on the way for time-of-use pricing.

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Progressive Conservative Leader Patrick Brown said the reported plan would just shift costs from people’s hydro bills to tax bills.

“The money needs to come from somewhere,” he said. “Will this government come clean and acknowledge that in their leaked plan, taxes are going to go up? They’re simply playing a shell game.”

In response, Finance Minister Charles Sousa said the government would be balancing its upcoming budget.

Energy Minister Glenn Thibeault played equally coy after question period, refusing to confirm or deny the Star’s report. But he did note that Ontario Power Generation did something similar to reduce nuclear refurbishment cost increases.

“It’s something that OPG has recognized that works, but for us in terms of our smoothing – or our rate mitigation plans, we’re not putting anything out there right now,” Thibeault said before heading into a cabinet meeting.

Energy consultant Tom Adams said in a blog post that the plan would create a “big new electricity debt” in order to make rates “appear” to decrease.

“In a nutshell, Wynne’s plan is to stretch out the recovery of current electricity generation costs over a longer time period than currently is the case,” he wrote.

It’s not clear whether the underlying contracts would be extended or if the Ontario Electricity Financial Corporation, which manages the debt of the former Ontario Hydro, would fund the difference, Adams wrote.

NDP deputy leader Jagmeet Singh said the reported plan wouldn’t address the root causes of problems within the electricity system, such as the high-paying, long-term contracts.

“When they talk about smoothing out payments … that means extending a bad contract and by extending it the interest payments are going to put more money in the hands of bankers,” he said.

The NDP on Monday presented its plan to lower hydro bills, and it included renegotiating power contracts they say have led to high costs and an oversupply of energy.

The government will also shift the Ontario Electricity Support Program for low-income customers to the tax base, rather than being funded by other ratepayers, the Star reported.

Wynne has previously signalled that more savings will be coming for rural and northern ratepayers, who face significantly higher costs than urban customers, and Thibeault has suggested that changes are on the way for time-of-use pricing.