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Reposted from Wind Concerns Ontario

Ontario ratepayers on the hook for Ontario deficit

Ontario on the brink of the financial abyss--with electricity ratepayers on the hook for millions
Ontario on the brink of the financial abyss–with electricity ratepayers on the hook for millions [Photo: the whirlpool in Niagara Gorge]

“Building Ontario Up”…to a huge disappointment

A letter directed to Energy Minister Bob Chiarelli, dated April 1, 2015, suggesting how he might stop the climb in electricity prices remains unanswered.

The budget preview posted on the WCO site April 19, 2015, however, has been verified.  The Ontario Budget, “Building Ontario Up,” released by Finance Minister Sousa April 23, 2015 has lots of bad news for Ontario ratepayers.

Prior to the release of the budget, Sousa released a 191-page report: “Ontario’s Long-Term Report on the Economy,” which got no media attention.  The report speaks to the wonders of how the current government plans for Ontario’s future will look, but with a caveat:  “It is beyond the scope of projections of this nature to quantify the risks of global political disruptions, extreme weather due to climate change, major health emergencies such as pandemics, disruptive technologies or an increase in international conflicts. Any of these factors, in addition to other unforeseen risks, could significantly impact the long-term outlook for the Ontario economy.”

With respect to electricity, it had this to say: “This will mean pursuing lower-cost options to meet energy needs when and where they are needed and other initiatives to reduce the cost increases in electricity now and in the future. Compared to the previous plan, the 2013 LTEP is expected to reduce projected cost increases by a cumulative $16 billion in the near term (2013–17), and $70 billion by 2030.”

The take-away from the lack of a response from Energy Minister, Bob Chiarelli is that the Liberal agenda, as it relates to the electricity sector, is written in stone and ratepayers are now regarded as a “revenue tool.”  Ratepayers are needed to pay for the agenda, to help balance the budget, and eliminate the deficit, despite the dishonest comment in the preceding quote.

The budget confirmed most of the preview forecast and included areas that extracts after-tax ratepayer dollars, despite the rhetoric in the “Long-Term Report on the Economy.” Non-budget Items, Reduced Spending and Increased Revenue from Ratepayers are three categories reviewed as follows.

►Non-budget Items affecting ratepayers

The budget claims the province is making “investments” falsely by extracting monies from ratepayers as the following quote about the “Northern Industrial Electricity Rate Program” (NIER) notes: “the government is committing to ongoing support for northern industrial facilities beyond March 2016, with continued investment of up to $120 million annually.”

The $120 million referenced will be paid by ratepayers, not taxpayers. It’s just one example.  The rest include: the newly announced Ontario Electricity Support Program (OESP) for “low-income” households of $225 million (see below under “Reduced Spending”); the Class A to Class B shift for industrial consumers with peak demand of 3 Megawatts costing an estimated $200 million; the recently approved rate increase by the Ontario Energy Board for the OPG which increased electricity costs $600 million; and the anticipated increases in delivery charges for LDC (local distribution companies) of $600 million.  Collectively the foregoing represent over $1.7 billion. This additional cost to ratepayers attracts the Ontario Portion of the HST (see below under “Increased Revenue”).

Reduced Spending

The Ontario Clean Energy Benefit will officially end December 31, 2015 meaning the forecast in the budget reduces this cost by $220 million; it will be followed in the next budget by a further reduction of $900 million.  This reduced spending will than be paid fully by ratepayers and include the HST, raising costs another $145 million putting $90 million into Ontario’s sales tax revenue slot. The budget also shows a cut of $243 million in “Social Service” spending reflecting the advent of the OESP.  Total reduced spending next year will be $450 million and in two years, will be reduced by $1.4 billion!

Increased Revenue from ratepayers

The budget anticipates increased Payments in Lieu of Taxes (PIL) of $315 million. That means the province is anticipating huge profits being generated by LDC that will be directly taken from ratepayers’ pockets.   In addition, the province’s portion of “sales tax” (forecast to increase $1.2 billion) on HST revenues will produce another $160 million for the 2015/16 year and in excess of $230 million in 2016/17.  Increased Revenue will be $550 million.

Eliminating the double counting on LDC revenue (PIL of $315 versus forecast “Non-budget Item” of $600 million) and “Social Service” spending ($243 million) will saddle ratepayers with costs in excess of $2.1 billion for budget year 2015/16 and $3.1 billion the following year—that’s without including the costs of the additional industrial wind and solar generation now in the contracting process!

In short

The ratepayers in Ontario should be grateful the reduction in those “projected cost increases by a cumulative $16 billion in the near term (2013–17), and $70 billion by 2030” have been tackled by our incumbent government, or the excesses we have seen, past, present and future from the proliferation of industrial wind turbines and solar panels, would have driven all industry from Ontario and have us freezing in the dark and unable to buy groceries.

As it is, the budget claims:  “Ontario remains the leading destination in North America for FDI” (Foreign Direct Investment). That particular claim fails to mention that as much as $25 billion of the “FDI” came from foreign companies rushing to Ontario to sign those lucrative ratepayer-backed wind and solar contracts, guaranteeing them 20 years of subsidies!

The current Liberal government has brought Ontario to the brink of the whirlpool. Unless they change their push for more wind and solar generation “Athens-on-the-lake” (a.k.a. Queen’s Park) and  Ontario will be sucked into the abyss.

©Parker Gallant

April 25, 2015

The views expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy

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