By: Cheaper utility bills | posted in News & Stories |
Date: September 26th, 2010
The Ontario NDP released a report Thursday, September 23, 2010, from the Ontario Energy Board showing that Ontario taxpayers will be charged an additional $60 on their hydro bills each year, total of $240 million dollars per year simply to boost the profits of the province’s electricity distributors.
An email dated on February 24, 2010; outline the Ontario Energy Board decision to allow utility to boost their guarantee profit margin by 1.5 points to 9.85% guarantee profit increase. But information about the change was not widely reported until the New Democratic Party raised it in the legislature on Thursday, September 23, 2010.
Ontario NDP Leader Andrea Horwath challenged Premier Dalton McGuinty in the Provincial Legislature to answer why Ontarians are shelling out $240 million annually to add to the Energy Board’s utility profits.
“Why should families, struggling with their bills, fork over an extra $60 a year just to fatten the profits of already-profitable utilities?” NDP leader Andrea Horwath asked Premier Dalton McGuinty in the legislature. “We just think that’s wrong.”
The NDP’s figures triggered an intense debate during question period Thursday in the legislature, with Premier Dalton McGuinty ducking all questions about increasing profits for local utilities but agreeing electricity bills will continue to increase to pay for modernizing the system.
Industry critics say the regulator at Ontario Energy Board has abandoned more than 100 years of tradition, in which an electricity utility borrowed money to build an asset and then recovered its costs from consumers once the new power was delivered to their homes.
Hydro rates are skyrocketing in Ontario as a result of new energy initiatives that pay green power producers an exponentially higher amount than market prices.
The average hydro bill rose eight per cent in May, then by another eight per cent when the HST kicked in on July 1. One consultancy predicts bills will rise by another 40 per cent over the next five years, as the cost of subsidies to green power projects is passed on to consumers.
However, Energy Minister Brad Duguid said there is little he can do to influence the provincial regulator, which allowed the higher profits beginning May 1.
Despite posting a $29.4-million profit in 2009, Hydro Ottawa applied for a 1.1-per-cent rate increase that will go into effect Jan. 1. The local electricity distributor said it needed to raise rates to improve infrastructure and expand its workforce.
Profits at Hydro Ottawa have been robust over the past five years, ranging from $22.6 million in 2005 to $50 million in 2008 (when it sold Telecom Ottawa).
Gordon Roberts, a professor at the Schulich School of Business at York University, who made a submission to the OEB on behalf of Pollution Probe, recommended a lower rate. “It’s generous,” Roberts said. “Clearly, if the answer comes out on the generous side (for utilities), it’s less fair for the ratepayers.”
“Right across the board in Dalton McGuinty’s hydro bureaucracy, people are getting fat and rich while seniors and families are stuck with the bills,” PC Leader Tim Hudak said.
The board’s ruling says that Ontario Power Generation, Hydro One, Toronto Hydro and other utilities can bill consumers upfront to help recover their construction costs.
“The board will allow utilities to apply to include up to 100 per cent of prudently incurred [construction] costs in rate base,” the ruling says.
McGuinty responded by saying that these costs are associated with the legislature’s investments into new power generators and transmissions.
Ontario Energy Board response to the electricity distributors guarantee profits
The Ontario Energy Board issued a statement saying the 9.85 per cent rate of return it gave to electricity utilities earlier this year would work out to no more than $1.27 more on a monthly bill, and could even lead to slight decreases on some bills.
“When the board set the policy, the impact was estimated to be no more than a dollar a month for the majority of residential customers,” said the OEB statement.
NDP energy critic Peter Tabuns said it was no surprise the OEB was disputing the NDP’s numbers.
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