The Ford government thought it useful to drag former Ontario premier Kathleen Wynne over the coals one more time this week, so we would all be reminded of what an awful mess she made with her policy of borrowing money to artificially reduce our power bills.
The strategy might have made sense, if the new government had any intention of putting an end to borrowing to pay our utility bills, but it doesn’t. Instead, the Ford team will double down with yet more reductions to the bills.
To recap, Wynne reduced bills by 25 per cent when she belatedly realized they had gotten really, really high. Instead of reducing the cost of power by running the system more effectively, she created a new entity to borrow money to make up for the shortfall between the cost and what Ontarians pay. By the planned end of this scheme in 2027, it would have cost power users $21 billion in interest. Then, bills were to start climbing steadily to pay back the cost of our holiday from reality.
It’s probably the single worst piece of public policy produced during the 15-year Ontario Liberal regime, as the PCs love to remind us. Keeping the focus on the power bill fiasco raises the inevitable question: What are the PCs going to do to fix it?
I asked finance minister Vic Fedeli that question at a Postmedia editorial board this week, and he said winding down the Wynne program is “virtually impossible without a sudden shock to families.”
In fact, the PCs are going to cut power bills an additional 12 per cent. That will be accomplished by shifting some costs from ratepayers to taxpayers and using the Hydro One dividend to help reduce what’s owed for power.
Ontario Finance Minister Vic Fedeli speaks in Toronto, Wednesday September 26, 2018.
Superficially, Fedeli’s changes make sense. There is no reason why power users should pay for social programs or energy conservation. For that matter, why is the government even touting energy conservation? What’s the point in conserving green electrical power when we are awash in supply? Power we don’t use isn’t “conserved,” it’s sold off to American customers at a fraction of its real cost.
Unfortunately, the financial part of Fedeli’s plan is a shell game. While it does remove cost from the electrical bill, it only transfers it to the tax side, where the money will be borrowed until that happy day when the deficit is eliminated. Ontarians aren’t any farther ahead.
The Ford government is at least putting an end to the separate entity the Liberals created to hold the power-borrowing debt. That will save rate payers between $2 billion and $4 billion “over time,” Fedeli says, because the government can borrow money less expensively.
This doesn’t attack the fundamental problem, though. Ontarians will still be borrowing to pay for power. That can’t possibly make sense, especially when most of the people getting the rate cut can certainly afford to pay their own power bills. At least the Liberals thought the borrowing plan …read more