Dalton McGuinty’s hydro rate cut will cost Ontario taxpayers $6.4 billion over the next five years.
And hydro ratepayers will see their bills jump about 3.6% annually over the same period.
Finance Minister Dwight Duncan released the bad news in the government’s fall fiscal outlook Thursday.
The rate hike suggests an average household could pay an additional $50 in the first year alone with the bill going up every year.
“Any politician who suggests, implies or tries to tell people that the price of electricity is going to go down over the next five years is simply not telling the truth,” Duncan said. “Every kilowatt of new electricity is more expensive than the last.”
The government will bring in the Ontario Clean Energy Benefit on Jan. 1, giving a 10% break to households, small businesses and farmers but that will be more than offset by an expected 46% increase in the cost of hydro over the next five years.
All homeowners, including those who purchased energy price plans, are eligible for an average saving of about $150 a year from the benefit.
Businesses that use 250,000 kWh a year or less will see a reduction of $1,716 a year, and farms would save about $2,052 a year, the government estimates.
The savings should appear on hydro bills no later than May, and will be retroactive to the start of the year.
The government does not expect to be back in the black until 2017-18, meaning the OCEB will be paid for with borrowed money.
More than half the rising cost of electricity is due to new “clean green” energy such as wind, solar and water.
“Is it worth $3 billion a year in health costs to keep coal fired generating going?” Duncan said, when questioned about the expense.
Duncan’s economic statement revealed the Ontario deficit this year will be $18.7 billion but that is lower than projected in the spring budget.
Personal income taxes were down an astonishing $1.13 billion over what had been expected.
Countering that drop were rises in other tax revenues — the health premium ($151 million), tobacco ($166 million), corporations ($696 million), sales ($326 million) and education property ($382 million).
The government also fast-forwarded a contract with Teranet — responsible for the province’s electronic land registry — to bring in an additional $1 billion in revenue.
The government says it has recovered 75% of the jobs it had lost by May 2009, or over 180,000 positions.
The government credited a stronger-than-expected economy for the boost in HST revenues of $326 million.
Progressive Conservative Leader Tim Hudak said the McGuinty government has brought in the largest tax hikes and deficits in the province’s history.
Hudak called the government’s attempt to freeze the salaries of employees in the broader public sector a failure.
And after bringing in the harmonized sales tax and letting hydro rates increase 75% since coming into office, McGuinty’s OCEB doesn’t add up to big savings for Ontarians, he said.
“Just a year out from an election campaign, he decides to give a mere fraction of it back,” Hudak said.
NDP Leader Andrea Horwath, who led her party’s campaign to remove the HST permanently from the hydro bills, said she remembers when the McGuinty Liberals promised pre-election in 2003 to freeze hydro rates for five years.
“What happened to that?” she said.
Horwath said the hydro benefit is not a serious attempt to help families with their budgets, but rather a political move to smooth things over with the voters until the next election in 2011.
Premier Dalton McGuinty said in the Legislature that Ontarians will view this break as “good news” in economically challenging times.
Ontarians will also understand that the economic difficulties began outside the province with a world-wide recession, and that his government’s stimulus spending has built bridges and roads, schools, court houses and hospitals across the province while creating 300,000 jobs.
RW, the "Ontario Clean Energy Benefit" should be aply named "Ontario Clean Energy BRIBE".