New assistance program creates more energy poverty in Ontario

Peasantry

Peasants in the Middle Ages: we’re getting there

On March 26, 2015, one day before release of the “Sunshine List”, Ontario’s Minister of Energy Bob Chiarelli announced the province has “low-income” electricity consumers who struggle to pay their electricity bills—and he intended to do something about it.

What a surprise: there is no denying the Liberal government forced more households into “energy poverty.” But Chiarelli’s press release and his diatribe at the press conference didn’t use that term; he blamed the need to close “dirty coal plants”* for rising costs. He wasn’t specific on how many “low-income” households there were or how many would benefit in his announcement, which was a followup to his letter of April 23, 2014 to the Ontario Energy Board (OEB), asking for recommendations to “protect low-income residential customers”.

The OEB submitted a 45-page report, and recommended “a maximum credit of $50 per month or $600 annually, with an average credit of $27.” to provide relief. The cost estimate by OEB to provide this assistance was “between $175 and $225 million” including “administrative costs of approximately $20 million” or (10 per cent of total program cost). The report suggested 500,000 households or about 11% of the 4.5 million hooked up to the grid would be in the “low-income” group. The report (dated December 31, 2014) was released to the public by the OEB the same day Chiarelli made his announcement. The media had no time to review it and question the Minister.

The prior (and retained) support program, LEAP (Low-income Energy Assistance Program), in 2013 had a total cost to ratepayers of $3.7 million which is/was a cost to ratepayers of less than $1 per year.

One would expect social support programs to fall under the Ministry of Community and Social Services, but with that cupboard empty and Premier Wynne and Finance Minister Sousa promising to balance the budget by 2017/18, a “revenue tool” had to be found somewhere. Wynne and Sousa presumably saw Hydro One (which just received a sizeable rate increase from the OEB) and its billing debacle as a looming “energy poverty” problem, more to do with high electricity prices. So Minister Chiarelli, who uses Tim Horton’s coffee as his reference currency, was the “go to” person. The plan concocted was, let’s ding the ratepayers! The OEB ran the numbers and told him the cost could be a “monthly fixed charge for a residential customer” of $2.55.   One large “Timmies” a month or $31 a year! The balance of the costs suggested were to come from a volumetric (per/kWh) charge on other users.

Chiarelli in his press release highlighted removal of the “debt retirement charge” and inferred that his cost of “less than a dollar a month” or $12 a year, support of low-come users would not impact ratepayers. The release said “Removing the Debt Retirement Charge will save the typical residential electricity ratepayer $5.60 per month” (or $67 a year). The press release failed to mention the “Ontario Clean Energy Benefit” (OCEB) will be removed at the same time, increasing the typical residential electricity ratepayer’s bill by $170 a year. Quick math indicates 4 million ratepayers would pay an extra $115 annually ($170 + $12 = $182 – $67 = $115) with the balance presumably paid by commercial consumers. So, the promise of no impact wasn’t true!

Minister Chiarelli opted for the OEB to implement “a fully volumetric charge applied at an equal rate to all rate classesvia his letter of February 17, 2015 to the OEB. The letter was brought to my attention by Bruce Sharp who also ran the numbers on the cost to ratepayers. Chiarelli’s choice was to increase the per kilowatt (kWh) charge to all ratepayers so that one large “Timmies” per month became $130 per annum, pushing up the average bill on January 1, 2016 by $300! That will put the all-in rate to an average Toronto Hydro customer at 25 cents per kWh. In 2003 the all-in charge to that ratepayer was 8.8 cents a kWh—an increase of 184%!

Why didn’t Minister Chiarelli insist the “$175 and $225 million” cost of this program come out of the OCEB? The OCEB costs taxpayers $1.1 billion annually, but this money appears earmarked for a revenue grab by Finance Minister, Sousa, presumably to impress rating agencies and reduce the deficit, leaving ratepayers to pick up its cost. This will push more ratepayers into energy poverty by using Ontario’s “middle class” households to pay for something the Liberal government created.

Simply put, this government’s attempt to balance their budget on the backs of ratepayers is a tax grab labelled the “Ontario Electricity Support Program” (OESP). Reducing taxpayer spending by $1.1 billion by eliminating the OCEB, grabbing a further $175 to $225 million after-tax dollars (with $20 million for another bureaucracy) to fund the OESP, and $200 million more in HST from ratepayers is a Wynne “revenue tool” and a $1.5 billion tax grab!

When will this government understand that ratepayers are also taxpayers?

© Parker Gallant

March 28, 2015

*Editor’s note: Using expensive wind and solar power

Comments

Sommer
Reply

“When will this government understand that ratepayers are also taxpayers?”

Once the ratepayers/taxpayers realize what’s happening and start howling en masse, this government might ‘get it’.

I hope this great analysis gets widely circulated.

Wind Concerns Ontario
Reply

Trying that; we are paying to have it “boosted” on Facebook. if you want to help, please see our DONATE button at the right

Pissed
Reply

What’s the point!! by time they get this credit hydro will have gone up another 45% according to the Lieberals. Try running a business and pay electrical on top of a house.
Getting ready to move out of this province. There is no money to be made here the Lib’s take it all. Also why should I pay for all others when I cannot keep my head above water. Every time I raise my prices I get hit with another charge. Tell the Liberals that when I close up shop they can add 3 more employees that are going to be out of work.

Stupid, Stupid voters in this province, but mostly GTA and Ottawa. BTW it going to get a lot worse as they try and pay down this dept, but they won’t. They will lose the next election and make the con’s look like the bad guys when they make the much needed cuts and then in the following election the airheads and PS Unions will put the Lib’s back in power to do it all over again.

This Province is screwed!!!!!!!!!!!!!!!!!!!!!

James Snow
Reply

25 cents per kWh / 8.8 cents per kWh = 284%. Shouldn’t it be 284% instead of 184%

Parker Gallant
Reply

James, I said the “increase” of 16.2 cents was 184%. You are right to suggest that it is 284% more than it was though.

James Snow
Reply

From the article
>The press release failed to mention the “Ontario Clean Energy Benefit” (OCEB) will be removed at the same time

From the linked press release: “The implementation of the Ontario Electricity Support Program would follow the conclusion of the Ontario Clean Energy Benefit on December 31, 2015. The Ontario Clean Energy Benefit started in 2011 for a five-year term and provides approximately $1 billion in relief to eligible consumers annually.”

Were changes made to the press release?

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