Ontario's Liberal government, in power for the past fourteen years, is quite staggeringly incompetent on all fronts. A couple of examples will suffice here. "Reforms" to the bargaining process for teachers' unions were introduced before the last election, purely to ensure labour peace during the campaign. Since then, scarcely a month has gone by without one group of teachers or another working to rule, on strike or threatening job action, because the reforms were so ill considered. Or consider the Province's doctors who, after working without a contract for many months, turned down a proposed new agreement with the Ministry of Health and are now contemplating a partial withdrawal of services that could well put patients' lives at risk.
These failures are bad enough, but nothing riles up Ontarians more than the soaring cost of electricity -- or "hydro", as it's still commonly known, even though most of it is now generated by nuclear or gas-fired plants or renewables. Truth to tell, the Liberals' Tory predecessors deserve part of the blame here, but most of it justly falls on current Premier Kathleen Wynne and her erstwhile boss, former Premier Dalton McGuinty.
McGuinty it was who pushed through a rapid decommissioning of Ontario's coal-fired generation capacity, mainly to burnish his green credentials. To keep the lights on, the Province then offered wildly generous contracts for the development of renewables, plus of course the gas-fired backups needed for when the wind don't blow and the sun don't shine. Oh, and McGuinty, with Wynne at his side, tried to win a couple of key seats in the last-but-one Provincial election by cancelling a couple of unpopular gas generating plants, at a cost to taxpayers of $ 1 billion or more. (Sadly, it worked).
Ontario now regularly finds itself with so much power that it is forced to sell the surplus to neighbouring jurisdictions, mainly in the United States, at a loss. And Ontario residents and businesses confront soaring monthly bills loaded with bizarre "global adjustment charges" and "delivery charges" to pay for all this folly.
Facing an election in 2018, Premier Wynne is trying to defuse the voters' anger by cutting power prices. At the start of the year, the Province removed its own portion of the harmonized (i.e. Federal/Provincial) sales tax from electricity bills, which amounted to an 8 percent cut. And today she has announced further steps that will supposedly reduce bills by a further 17 percent, for a 25 percent reduction in total.
Sounds good, but it's actually just a shell game. Part of the reduction will be achieved by shifting a program that helps lower income power users into general spending, so taxpayers will simply be paying out the money in a different way at a different time of the year, the hope presumably being that they won't notice. The biggest part of the reduction, however, comes by spreading out the cost of all the good and bad things that have been done over the past decade over a much longer period.
Cancelling the contracts was never an option, of course, so this is the only available course. Now, there's arguably a case for matching the term of financing more closely to the expected life of the assets. However, there should be no mistaking the fact that the cost of reducing power bills now will be higher bills much further out into the future, because of the added years of borrowing that will now have to be paid for. Again, Ms Wynne and her colleagues must be hoping that the taxpayers and voters won't notice.
Will it work? The opposition parties will be quick to point out the flaws in the scheme. And maybe Ms Wynne has acted too soon: people may be grateful for the rate relief when it shows up on their bills come the summer, but will they still feel that way when polling day rolls around in the spring of 2018? I'd bet against it, especially as experience suggests that the Liberals will pull of at least one more monster screw-up between now and then.
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