With word last week the new Liberal government will get rid of the artificially-low hydro rate cap of 4.3 cents a kilowatt-hour, implemented by former premier Ernie Eves last November, local residents will see a change in their power bills down the road.
But exactly how drastic the difference will be remains to be seen, said Mark McCaig, CEO of the Fort Frances Power Corp.
“What they’re going to do is move towards a new fixed price—one that better reflects the true cost of electricity,” McCaig remarked. “They want it to be something stable and predictable so consumers can manage their energy costs.”
McCaig said the open electricity market fluctuates constantly and it would impossible to accurately say how much the new capped rate might be, especially when one factors in heating and air-conditioning costs in the winter and summer, and the differences between southern and Northern Ontario.
But he did say the real cost of electricity use has been closer to six cents a kilowatt-hour while under the Eves government’s 4.3 cent cap—and that could be a baseline amount for the new fixed price.
McCaig concluded this inevitably will mean at least slightly higher hydro bills for everyone, but stressed that FFPC customers can count themselves lucky as they’ll continue to benefit from the 1.23 cent/kWh rebate they get thanks to the long-standing agreement with the local paper mill.
This rebate, which the FFPC board of directors diligently lobbied to maintain this past spring, will remain regardless of any new government-mandated fixed rate.
But as far as the new, higher fixed rate goes, McCaig couldn’t say much.
“We were aware of this. It is going to happen,” he noted. “The 4.3 cents a kilowatt-hour was a temporary stop-gap measure to reduce the effects of the spot market.
“But all it really did was increase the province’s debt.”
Premier Dalton McGuinty said last week that Energy minister Dwight Duncan will present a plan to cabinet within 30 days to change the price structure so that what consumers pay more closely reflects the cost of electricity.
But as to when this will kick in, it remains to be seen. “We will keep our customers aware of any developments,” said McCaig.
The new Liberal government made the announcement last week when it was determined the artificially-low hydro rate cap of 4.3 cents a kilowatt-hour had cost the Ontario treasury $700 million so far.
“It’s one thing to take this sort of approach when the province is in surplus and it’s quite another when we find ourselves bleeding red ink,” McGuinty said of the electricity cap during a speech to the Economic Club of Toronto.
“This may not be popular, it may not be in our immediate self-serving political interest, but we firmly believe it’s in the public interest,” McGuinty said.
“We firmly believe it’s the right thing to do so we’re going to do it.”
During the election campaign, McGuinty promised to keep the electricity cap in place until 2006, saying ratepayers shouldn’t have to pay for the mistakes of any government.
Tory-imposed balanced budget legislation allows the Liberals to run a deficit this year, but they are forbidden from doing so next year.
—With files from The Canadian Press
Fort Frances Times
Local News from Across the Rainy River District
