When Hydro Rates Come Down, What Is Going Up?

Growing evidence seems to suggest there is no hydro rate crisis. That was evident in the year end interview CTV reporter Paul Bliss had with Ontario’s premier, Kathleen Wynne. He asked her point blank if she actually sees her hydro bill.

She does and says the bill is stable, based on making her home energy efficient. Others in the province aren’t so lucky. To them there is a crisis.

Bliss had his interview just before MPPs left for their Christmas break. They are now back at Queen’s Park. If there was a hydro crisis, Wynne would surely have cancelled the break and toured the province talking to energy users in the fashion of political leaders touring natural disaster zones.

By not doing such a tour, she is signaling there is no crisis.

As far back as July 14 last year, Ontario’s energy minister Glen Thibeault told Global News he was not using crisis to describe the situation. But he did acknowledge for, “… one family if it’s a hundred bucks out of their own pocket that’s a crisis for them and I get that.”

Although still not calling it a crisis, the Toronto Star reported February 24 about Thibeault admitting, “Ontario screwed up by paying too much for renewable energy.”

The Star also reported the government may try to shift, “… other charges on bills, such as the global adjustment … from hydro ratepayers to all taxpayers.” The paper did not say how many taxpayers are also hydro ratepayers.

This is simply sleight-of-hand.

Moving hydro bill items to other bills will let the province bury hydro costs elsewhere.

Wynne, is adroitly adept at giving with one hand and taking with the other. She removed the 8% provincial sales tax from hydro bills. It cost her nothing because she immediately tacked on approximately 8% to gasoline and natural gas prices with her new cap and trade tax regime.

A considerable amount was transferred.

On January 8, writing on his blog, retired banker and now energy watcher Parker Gallant said Hydro One’s gross revenue for the year, including delivery costs, was $17.5 billion. Based on this, the rebate, as Wynne called it, “… would represent approximately $1.4 billion.”

Now, there are hints Wynne is considering removing 25% in costs from hydro bills.

Although her January rebate removed the provincial sales tax, it left the 5% GST. Federal tax revenues remained about the same. However, if she lowers hydro costs by 25%, the federal government could lose billions in lost GST revenue.

To retaliate, it could go as far as reducing transfer payments to Ontario.

But Wynne might simply do another sleight-of-hand tax shifting so as not to reduce GST revenue.

Watch for her to announce some interesting taxation manoeuvers. At the same time watch how, as the money moves around, nothing changes.

Taxpayers will pay a little less here and a little more over there. As their hydro bill goes down, they will pay the difference elsewhere.

So, really, no change except Wynne can brag she did something. She probably hopes voters won’t figure it out before next year’s election.

About the Author

Robert Tuomi
After initially succeeding as a broadcast journalist and achieving senior level assignments, Robert branched out into marketing communications. As a senior executive, primarily in the high-tech industry, Robert created award-winning and comprehensive, multi-faceted initiatives to enhance sales and expand market awareness for some of the largest companies in their fields. Email Robert Tuomi