It took days of repeated questioning, but the provincial Liberals have revealed the longevity of their newly promised 8 per cent tax rebate on hydro bills.
Acknowledging it’s only a partial solution, Premier Kathleen Wynne vowed on Wednesday the rebate on the provincial portion of the 13 per cent harmonized sales tax on monthly hydro bills will be permanent.
NDP Leader Andrea Horwath is skeptical the rebate will last long term since the province didn’t negioate with the federal government to have hydro bills exempt from the HST.
The rebate was a quicker solution for the Liberals, who were desperate to address mounting concerns about hydro rates after the Progressive Conservatives shocking victory in the Scarborough-Rouge River byelection.
The rebate will cost the provincial treasury $1 billion a year, with the Liberals claiming the money will come from increased tax revenues from the growing economy.
Wynne admitted that it fails to solve the entire problem, but the government felt they had to do something.
The rebate goes into effect on Jan. 1, 2017 and will result in an estimated savings of $130 a year for the average household.
The Liberals also pledged 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.
However, some of Ontario’s most hard-hit ratepayers will see new increases on their bills, despite the rebate.
Figures obtained this week by Global News show some Ontarians living in the lowest density areas out in the country are about to see a huge hit with a change in the way distribution is billed.
By the end of next year Hydro One’s urban customers who use the most power will see distribution rates go down as much as 19 per cent, making their bills up to 4 per cent lower. Hydro One is Ontario’s largest energy utility.
But customers living in the lowest density rural areas, who use the least amount of power, will be hit hardest, with distribution soaring by as much as 25 per cent. The increase will mean total hydro bills will be up to 11.5 per cent higher by 2017.
WATCH: Global News has uncovered documents that show consumers in rural Ontario, who already pay the most for hydro, are about to get with even higher bills. Shirlee Engel investigates.
“There’s a major equity and policy implication that we think needs a political response as well as a regulatory response,” said Theresa McClenaghan of the Low-Income Energy Network. “We have to pay attention when we have inequitable impacts of policy decisions happening.”
Part the increase is due to a decision by the Ontario Energy Board. The energy regulator is moving from a variable distribution rate to a fixed rate and is phasing out a usage rate. The impact of the new policy depends on how much energy residents use and where they live. It does not include any electricity rate increases between now and then, which are announced in November and May of each year.
The Ontario Energy Board told Global News close to 60 per cent of customers will not see a significant change as a result of the move to fixed rates.
“Residential customers who use a lot of electricity, or those who use very little, will see the most change,” said Karen Evans of the Ontario Energy Board. “For example, customers who have cost-intensive electric heat, many of whom are low-income, will benefit from these changes as anyone who uses more electricity than the average will actually see their delivery charge decrease.”
Evans added the change is meant to help ensure fair billing for consumers.
WATCH: Wynne says she understands hydro pain
Independent energy analyst Tom Adams said this transfer of costs between types of residences is just the latest blow for rural customers who continue to be hit hard by Ontario’s energy policies.
“What’s gone on here is purely a kind of electoral, political consideration,” he said. “The Liberals were elected by urban voters and rural voters and rural concerns just don’t seem to appear on the radar.”
The provincial government has so far made no mention of the changes.
Adams said the rebate won’t translate into a reduction in costs for consumers given the rate changes, ongoing increases in commodity costs as well as the upcoming implementation of the province’s cap and trade system.
“The bottom line is rates are going up,” he said.
Wynne said Tuesday the changes were in the making for months.
“It’s also about the distribution rates for rural and remote communities where you know some of these costs are the highest on their bill,” Wynne said. “So we’ve been working to put that package together because we knew that there were different needs in different part of the province.”
But the measures were a slap in the face to rural consumer Gerry Kautz, who lives on the outskirts of Ottawa. His hydro bill has doubled in recent years.
“[It’s] about a hundred per cent increase and they give us eight per cent back?,” Kautz said. “Come on now, do they think we are stupid?”
It’s a sentiment that resonates with the local city counsellor, George Darouze, who says taxpayers will foot the bill one way or another.
“Every time I open [a bill], I scream,” he said. “I think this is a political decision. We’re going to pay for it next year or the year after or my kids are going to pay for it.”
With files from Shirlee Engel and Rebecca Lindell, Global News