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Behind those rising hydro rates

The Toronto Star
December 12, 2012

Ontario Auditor General Jim McCarter told us last week that electricity rates have been rising without sufficient oversight. Warning that they will rise still higher, he blamed the McGuinty government and noted that government legislation and directives have overridden powers assigned to the Ontario Energy Board (OEB).

Electricity consumers have been paying a fixed debt retirement charge (DRC) on hydro bills since 1999. The finance minister is required to determine from time to time the residual stranded debt and make that determination public.

The auditor points out that the residual stranded debt originally was $7.8 billon and that, over a period of 10 years, $8 billion was collected. However, no public report has been made and the DRC is still being collected.

The [other] area of the auditor’s report was on the role of the OEB and the decline of its authority to control electricity rates. The auditor notes that in recent years the rates for unregulated sources of power have been higher than regulated sources, and that they account for about 65 per cent of the price paid by the average consumer, meaning that only $35 of every $100 paid for electricity can be regulated. The unregulated sources are primarily supplies under power contracts signed by the OPA under government direction.

The OEB says the public expects the board to regulate the industry. This, however, is a misconception because the government has taken away its authority to regulate.

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