Increasing utility utilities rates make Doug Ford's promise to cut 12 Ontario hydro prices

Several local utilities in Ontario on January 1 raised electricity prices, creating a new challenge for Ford's already intimidating promise to cut prices by 12 percent.

With the approval of the provincial regulator, Toronto Hydro raised its prices by 5.4 percent, mainly to cover the $ 2 billion capital program to restore the aging infrastructure. Several other local distribution companies, mostly owned by the municipality, increased their rates by less than 2% to cover higher distribution costs and a small increase in transmission fees from Hydro One.

However, even a slight rise in prices contradicts the commitment of Prime Minister Doug Ford – in the election campaign that took place last spring's campaign and repeatedly when he took office – to cut electricity bills by 12 percent. Such a price cut would be in addition to the short-term savings generated by the former liberal government in 2017, when it cut rates by an average of 25 percent, expanding payments for new production and transmission assets. This step was widely criticized for financing current rate cuts with future interest costs.

Ford made Ontario's high electricity costs one of its key topics in its campaign, removing some of the liberal renewable energy contracts and addressing the $ 6 million compensation package to Hydro One's CEO who resigned after the election and was still replaced. However, neither the abolition of renewable energy contracts nor the resignation of Hydro One has created a burden on hydroelectric costs.

The energy minister, Greg Rickford, said the government was working to reduce the promised rates, although it did not meet the deadline of January 1, 2019, which Ford promised during the campaign.

"The government is still committed to cleaning up the water supply from the previous government and reducing its electricity bills by 12 percent," said Rickford's press spokesman, Sydney Stonier. Currently, Ontario will hold an increase in the inflation rate by redirecting old asset debt payments to government books, as recommended by the Auditor General.

Last week, the Premier Office announced that he would appoint Ford's chief secretary, Jenni Birni, to fill a vacant position in the Ontario Energy Council, which regulates the setting of rates in the province and will be the main agency used to exert pressure on reducing their costs and saving consumers. The Board monitors all bids, but the government can also issue directives to the regulator that affect its rulings.

Appointment urged Bank Nova Scotia analysts Robert Hope to lower his hopes for Hydro One shares, saying that there would be political pressure to cut the company's regulatory rate to 8 percent from 9 percent.

The government has announced that it expects all regulated companies whose costs are passed on to consumers in order to facilitate the rate reduction. These include power generators; Hydro One, which owns large transmission cables; and local utilities, also known as local distribution companies (LDCs), which distribute energy to customers. In the autumn of last year, the regulator froze a portion of this rate generation, but some LDCs have confirmed cost increases, while others have asked for a raise with the board.

Hydro One, which serves customers in some provincial areas, has demanded a retroactive increase of 1.8 percent in 2018 and 1.8 percent in 2019 for combined transmission and distribution costs. This request has not yet been made by the Energy Council. However, the cost of distributing it to rural and suburban customers was limited by the former liberal government and would therefore only affect a small part of the customers.

Toronto Hydro, serving 770,000 customers in the city, was the biggest hike, but the agent said that customers in May would receive a rate cut as part of the government's commitment to maintaining overall inflation. Toronto Hydro is a $ 2 billion US $ 2 billion capital program for the past five years and expects a similar investment program to be launched over the next five years, spokesman Tori Gass said on Monday.

NAP Energy Critic Peter Tabun said the government seemed to have no strategy to achieve the promised rate cuts beyond the cost to taxpayers, putting additional pressure on the provincial ballooning deficit. Meanwhile, all efforts to reduce local utilities revenues will worsen their ability to maintain the system and rob municipal owners with much needed revenues, he said.