As reported yesterday, Ontario’s auditor general, Bonnie Lysyk released a report yesterday on the Liberal government’s 25 per cent cuts to hydro bills and as expected the findings were NOT good.
Lysyk investigated the financing of what the Ontario Liberals call the “Fair Hydro Plan.” The plan has reduced the average household electricity bill in the province by 25 per cent from the peak in the summer of 2016 which sounds great…until you dig deeper.
The findings indicated that improper accounting practises aimed to cover up what was really going on with the “savings” for Ontarians that are in essence short term savings with long term implications. It goes on to say that the Wynne government created a “needlessly complex” scheme to pay for its hydro rate cuts without showing the costs on its own bottom line. (Lysk pictured below)
This complexity includes the government “improperly” accounting for the $26 billion in debt the province is taking on to cut hydro bills in the short term. The $26 billion is actually being borrowed through Ontario Power Generation, so will not appear on the province’s books. Electricity customers will pay off that debt through rate increases spread out over the next 30 years. ..and that will cost big time.
How much will it cost? Well, the auditor says the plan could also result in Ontarians paying “up to $4 billion more than necessary” in interest. That’s because OPG will be required to pay higher interest rates than the province would if the government took on the debt directly.
On top of this, the rate cut we currently have won’t last says Lysyk. “From 2028 on, ratepayers will be charged more than the actual cost of the electricity being produced in order to pay back the borrowings,” she said in the report.
“The improper accounting also inappropriately transfers long-term accountability for significantly higher electricity bills to future governments,” writes Lysyk. “Future governments will have to explain to ratepayers why electricity rates charged in 2028 and beyond exceed the actual cost of electricity.”
The Wynne government is already trying to dismiss all of the auditor’s findings.
As for Ontario’s financial accountability officer, they have already described the scheme as a “complicated accounting structure” that will increase gross debt by approximately $26 billion by 2027-28
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