New assistance program creates more energy poverty in Ontario
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 classes” via 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