Liberals raise hydro rates despite vow

London Free Press - November 26, 2003
by Jonathan Sher

Ontario's Liberal government will raise a price cap on electricity in April, breaking an election vow and shifting the tab from taxpayers to consumers at a cost of several dollars a month for a typical London household. Electricity will cost 4.7 cents a kilowatt-hour for the first 750 kilowatt-hours in a month and 5.5 cents for additional hours -- the latter rate 28 per cent more than the cap of 4.3 cents put in place by former Tory premier Ernie Eves.

The new caps will leave many Londoners near the line between the lower and higher rates since typical city households use 750 kilowatt-hours a month, London Hydro spokesperson Nancy Hutton said.

"Whenever there's different rates, that encourages conservation," she said. The incentive to conserve will be highest in summer, when the need is greatest. "It's a good move," Hutton said.

Eves imposed the freeze after bills soared when the former government threw open to competition Ontario's long-protected power market.

While rates were frozen for about half the energy market -- households, small businesses and farmers -- wholesale prices fluctuated with taxpayers picking up the difference.

The freeze has cost the government more than $800 million.

The freeze obscured the cost of power and discouraged conservation, Energy Minister Dwight Duncan said.

But even modest increases may make bills unaffordable for low-income residents who overwhelmed London's THAW program with requests for help with utility bills even with the lower rate, said Helen Connell, executive director of the United Way of London and Middlesex, which oversees the program.

"This will add to the pressures (next winter). It's an issue. We're going to be looking to the city, London Hydro and Union Gas for assistance," Connell said.

Across Ontario, energy-intensive households could see their bills rise $50 or more a month, while a small grocery store, for example, could pay $250 more.

The higher rates will take effect April 1 to allow consumers time to get used to the idea of paying more or find ways to use less power, Duncan told the legislature.

The new price caps will stay in effect until May 1, 2005, at the latest, by which time a new permanent pricing system will be put in place.

Starting in March, utilities can also recover money lost under a freeze imposed on distribution rates, but would have to collect the funds from consumers over four years.

The changes were applauded by the Ontario Chamber of Commerce, which represents more than 56,000 businesses in the province.

But Premier Dalton McGuinty drew political heat for scrapping a cap he had promised to maintain until 2006, citing a hidden deficit left by the Tories now projected at $5.6 billion.

"This was deceptive and this was wilful on your part," Tory MPP Cam Jackson said.

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