Tuesday, March 21, 2023
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Ontario electricity subsidies fail to reduce root-cause of high prices, AG says

Taxpayer subsidies of electricity rates in Ontario have masked the true cost of power in the province without working to lower it, Ontario’s auditor general suggests.

In her annual report, Bonnie Lysyk found that various tax-based subsidy programs to lower electricity bills in Ontario have proved effective at dropping the prices Ontarians pay without addressing the root cause of the issue.

“These programs do not actually reduce the true cost of electricity, however; they simply shift a portion of the costs from ratepayers to taxpayers,” the auditor general wrote in her annual report.

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The monthly estimated cost of the subsidy per household is high.

Lysyk found that an average residential monthly electricity bill as of March 31, 2022, was estimated to be $121 for around 700 kilowatt hours. Without taxpayer subsidies, that bill would skyrocket almost 40 per cent to $166 per month.

A report by the C.D. Howe Institute in 2021 said subsidies in Ontario had “risen to staggering levels.”

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The findings were released by Ontario’s auditor general as the province stares down an energy supply — and potential price — crisis.

A report released in October found Ontario would need to expand its natural gas capacity to generate electricity to avoid an energy shortfall in the 2020s. That report came after the province announced it would expand Pickering nuclear power plant beyond its planned closure to stave-off blackouts.

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The auditor general also found the province’s low-income and emergency subsidy programs for electricity may not be working effectively.

She noted that performance targets were not set up to establish if the system was “successfully assisting those who need the assistance most.”

Although she found some positives, Lysyk concluded that the Ontario Energy Board’s powers were “constrained in some areas.”

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