Ontario consumers to face higher electricity bills from profit-boosting

KAREN HOWLETT
TORONTO— Globe and Mail Update
Published Thursday, Sep. 23, 2010 1:42PM EDT

Electricity consumers facing rapidly rising bills in Ontario have another reason to complain after revelations on Thursday that power generators and distributors were given the go-ahead to boost their profits.

The province’s energy regulator has ruled that Ontario Power Generation, as well as all licensed electricity distributors and transmitters, are allowed to earn returns on equity of 9.85 per cent for this year, up from 8.4 per cent in 2009.

The higher rate will go straight to the bottom line for these companies and add another $240-million a year to consumers’ electricity bills, said New Democrat Leader Andrea Horwath.

The new returns on equity took effect May 1 and were quietly approved last February by the Ontario Energy Board. The Energy Board’s ruling came to light on Thursday when Ms. Horwath raised it during Question Period.

“Ontario families are scrambling to deal with sky-high hydro bills,” she said. “Does the Premier think it’s fair to actually ask consumers to pay even more just to ensure healthy profits for hydro utilities?”

Energy Minister Brad Duguid, who is already under fire over rising electricity rates, insisted that the higher returns apply only to private utilities in the province and not to Crown-owned Ontario Power Generation and Hydro One. He said he has no control over how much profit private utilities earn.

”These local distribution companies are private companies,” Mr. Duguid told reporters on Thursday. “Their returns are set by the OEB. The government doesn’t have input into that.”

However, the Energy Board’s letter is addressed to Ontario Power Generation and “all licensed electricity distributors and transmitters” as well as gas distributors. A spokesman for the Energy Board confirmed that the new rate does indeed apply to every electricity entity, including OPG and Hydro One.

Mr. Duguid told reporters that hydro rates are climbing because the province is making investments to modernize the system and replace pollution-spewing coal plants with cleaner sources of electricity.

However, Ms. Horwath said the higher returns approved by the Energy Board have nothing to do with making investments and will go straight to their bottom lines.

“Why should families, struggling with their bills, fork over an extra $60 a year just to fatten the profits of already-profitable utilities?,” she said.

The government’s electricity policies dominated Question Period.

“Right across the board in Dalton McGuinty’s hydro bureaucracy, people are getting fat and rich ...while seniors and families are getting whacked every time they open their hydro bills,” Progressive Conservative Leader Tim Hudak told reporters.

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