Ontario’s Liberal government is promising to eliminate the provincial portion of the harmonized sales tax (HST) on hydro bills, a move that is welcome news for ratepayers but does little to tackle the root cause of high electricity prices say experts.
The eight per cent rebate on electricity bills, equivalent to the provincial portion of the 13 per cent HST, will go into effect Jan. 1, 2017, resulting in an estimated saving of $130 a year for the average household.
However, the rebate will come at a cost to taxpayers; roughly $1 billion a year to subsidize electricity ratepayers.
The Liberals also pledged to deliver rebates of about 20 per cent on hydro bills for eligible rural residents, savings estimated at $540 a year, and additional help for businesses to shift their electricity use to off-peak times to save money.
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Francesca Dobbyn, executive director of the United Way of Bruce County, said she was pleased the Liberal government recognized the plight of rural residents when it came to hydro bills.
“We’ll take eight per cent, we’ll take whatever we can,” Dobbyn told Global News. “The victory here is in recognizing that rural [Ontario] has been significantly challenged. And they have started working on that right away with looking at maintaining the rates as they are.”
The province also offers other programs to help rural residents including the Ontario Energy Support Program, which provides monthly payments from $30 to $75 depending on location and the number of people in the home.
However, the increased savings for rural residents will be subsidized by other hydro ratepayers, meaning the eight per cent reduction could be less than that.
Brady Yauch, an economist and executive director with the Consumer Policy Institute, said the rebates will only offset the costs to consumers and doesn’t deal with the problem of high hydro bills.
“It’s not actually reducing the cost of hydro, you’re just shifting some money around,” Yauch said. “You’re using taxpayer money to lower hydro bills … It’s a temporary rebate that could be taken away at anytime.”
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He added that Ontario’s cap-and-trade proposal to reduce greenhouse gas emissions could effectively erase the savings of removing the HST.
The Liberals estimate their climate-change plan will add $5 a month to home heating bills and about four cents a litre to the price of gasoline, with the average energy costs to households rising about $13 per month in 2017.
“The cap-and-trade costs are coming in and those costs might offset any reduction you get on your hydro bill,” said Yauch. “So I’m not sure households are going to be any better off.”
The Canadian Taxpayers Federation said Premier Kathleen Wynne was basically trying to bribe Ontarians with their own money and called it a “cynical” move.
“Our electricity bills grow at an average of eight per cent a year, so if we have a reduction of eight per cent in 2017, what’s going to happen in the next year when they don’t have an HST to cut,” asked CTF Ontario spokeswoman Christine Van Geyn.
WATCH: Ontario’s Wynne makes moves to ease high hydro costs. Eric Sorensen reports.
The Liberals have said hydro rates increased as the province shut down its coal-burning power plants and invested heavily in infrastructure to make the electricity system more reliable than it was a decade ago.
“Over the last 10 years we’ve done great things with our electricity system. We’ve made it safe, we’ve made it reliable, and we’ve made it clean, and I think right now we need to take it to the next level and make it as affordable as can be for as many Ontarians as we can,” Energy Minister Glenn Thibeault told reporters.
Progressive Conservative Leader Patrick Brown slammed the announcement as a “band-aid” solution.
“Let’s be clear hydro rates are not going down,” Brown told reporters. “Today’s speech from the throne does nothing to change the fact that by the government’s own numbers between 2013 and 2018, hydro rates will go up by 42 per cent.”
Ontario NDP Leader Andrea Horwath called on the Wynne government to remove the HST altogether.