A New plan to cut hydro costs was released by Premier Kathleen Wynne on March 2, 2017. The plan to cut hydro costs is introduced to help decrease electricity bill amounts for Ontario residents. Even though this seems like great news, how much does the plan actually benefit us?
The original goal is to cut hydro costs by 25% for residential and small business owners. Out of the 25% originally promised, an 8% cut was already applied on January 1, 2017. The 8% cut is a result of the government taking away HST charges from residential electricity costs.
Low Income Households Vs. Hydro Costs
Currently, low-income households can apply for the Ontario Electricity Support Program (OESP). This is a rebate program to help cut hydro costs for low-income households. The table below shows the levels of eligibility for the program based on the amount of income and number of people living per household.
Part of the plan to cut hydro costs is to increase the rebates for this program by approximately 50%. As a result, the rebates offered can save low-income households around $35 to $60 a month.
Another change to help cut hydro costs is the revaluation of the budget for building and refurbishing power plants. Over the next decade, an approximate $28 billion has been planned to be put towards building and refurbishing power plants. That 28 $billion will now be refinanced to be paid over a longer period. This move is expected to help keep hydro rates at or below the rate of inflation for the next four years.
The main idea is to cut hydro costs now and stretch the amount owed over a longer period. The plan will save Ontario residents billions of dollars by spreading what is owed now to future hydro bills and taxpayers.
The Contrast to Cutting Hydro Costs
This sounds like a great idea, but all this does is pass our debt along to those in the future. Taxes must be increased elsewhere with no HST being paid on our hydro bills. The low-income support program requires the help of $2.5 billion in taxes over the next three years. The $28 billion for building and refurbishing power plants will have a maximum of $1.4 billion in interest per year. Just because we have been offered this bit of relief now does not mean we can forget about our personal debt.
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