Ont. Liberals under fire over rising electricity bills
The Canadian Press
Published Friday, January 28, 2011 6:52PM EST
TORONTO - The governing Liberals were once more in the hot seat Friday over why home electricity bills are climbing amid claims that the province is subsidizing power to consumers across its borders.
Premier Dalton McGuinty was forced to defend the government's energy policies again after the NDP said the province paid more than $2.1 million in subsidies just a few days ago to utilities in neighbouring provinces and U.S states.
It's also paying some of them to take its surplus power. Ontario reportedly gave $1.5 million to Quebec and the U.S. to rid itself of power it didn't need on Jan. 1 -- a day of unseasonably warm weather.
What's important to remember is that Ontario still makes a profit from selling power to its neighbours, even if it sometimes has to pay them to take it, McGuinty said.
"I know there's been some fun and some excitement associated with the stories that have been in the media lately, but I think it's really important to tell the full story," he said after delivering a speech to a Windsor business crowd.
No one has brought up the fact that Ontario was paid over $1 million to take Michigan's electricity last year, McGuinty added.
"These things happen from time to time, they've been happening for quite a while," he said.
"What you want to do, of course, is try to manage a system as best as you can so that there's as little extra electricity as possible."
But the NDP point out that while Ontario families are being financially drained by rising electricity bills, the Liberals are subsidizing consumers outside the province.
NDP critic Peter Tabuns urged McGuinty to close a loophole in the province's electricity export rules that he says has forced Ontario to subsidize neighbouring hydro users to the tune of $1 billion over five years.
"We live in a province were people are pressed hard in daily life, and he thinks we can subsidize exports to the tune of $200 million a year?" Tabuns said from Toronto.
"It seems he's learned nothing from what people have been saying in Ontario."
The loophole is the so-called global adjustment on electricity bills, which the government prefers to call the provincial benefit.
It's the difference between what the province pays for power on long-term energy contracts and the market price of electricity, and is now between three to four cents per kilowatt hour.
The global adjustment isn't charged on exported power, so traders in North American energy markets are buying Ontario power for much less than Ontario ratepayers, and selling it to Quebec or the U.S. for much higher rates.
The government says charging the global adjustment for exports would reduce the province's ability to export electricity.
NDP researchers say that on Jan. 24 -- one of the coldest days in years where energy was in high demand -- Ontario users paid roughly $28 more per megawatt hour than foreign buyers.
They said they collected the information from the website of the Independent Electricity System Operator, the agency charged with overseeing Ontario's power grid.
McGuinty wouldn't say if he'd make any changes to the global adjustment and instead reiterated his point that Ontario is a net exporter of electricity.
"I can say that we came out ahead by $240 million," he said.
"This is when you have a relationship and an integrated grid with other partners. This is how the system works."
The power grid always has to be in balance -- too much electricity would overpower the grid.
Nuclear power provides about half of the province's electricity, but it's too difficult and costly to turn off when power isn't needed.
The wind turbines could be turned off and on much more easily, but the province is required to buy all of the power the wind farms produce, even when it isn't needed.
Government officials note that before the Liberals took office in 2003, Ontario received about $300 million for electricity exports and paid close to $700 million for imports.
Last year, the province was paid $1.7 million to take excess power from Michigan and New York, they said.
The debate over rising electricity bills has quickly emerged as a major political battleground in the lead-up to the Oct. 6 election.
The Opposition Conservatives have largely blamed the increases on the lucrative contracts the government signed for wind-generated power.