Ontario’s Fair Hydro plan could end up costing an extra $4 billion over the next 30 years, because of the way the government is borrowing money to give rate payers a break on hydro costs. Auditor General Bonnie Lysyk says the province is hiding the true impact of the Fair Hydro plan, even though the Premier acknowledged a cost when she announced a 25% reduction to rate payers back in March.
“It will take longer to pay and it will cost more, but it is fairer because it doesn’t ask this generation alone to pay for everyone before and after.”
The problem, according to Lysyk, is that Ontario Power Generation will incur the debt, not the province and as an agency of the government it pays a slightly higher interest rate.
“The government is wasting $4 billion on an enron style accounting scheme whose sole purpose is to hide those truths from the public.” Peter Tabuns, NDP Energy Critic.
But Marvin Ryder from DeGroote school of Business says he sees both sides.
“If we’re refinancing electricity assets it should be done by Ontario Power Generation, that’s the right place to do it. On the other hand if I could save $4 billion over 30 years, I might be tempted to find a hybrid solution.”
Lysyk estimated it will cost an extra $4 billion in interest to borrow money through OPG instead of the government, but that number really depends on interest rates over the next 30 years. The more immediate impact will be in the provincial election next year and which argument resonates with voters.