Electricity pylons run through Toronto's Thorncliffe Park neighbourhood. The Ontario government’s public accounts report spending of nearly $6.9-billion on price mitigation programs during the most recent fiscal year.Fred Lum/The Globe and Mail
The government of Ontario’s spending to lower electricity prices for residents, businesses and other consumers reached an all-time high last year, its financial statements show.
The government’s public accounts, released Thursday, report spending of nearly $6.9-billion on electricity price mitigation programs during the fiscal year ended on March 31. That is equivalent to more than half of the government’s $13-billion deficit in the same period – and is nearly enough to pay for a new nuclear reactor the province is building.
Though other provinces subsidize electricity rates in various ways, Ontario stands out. In recent years, it has offered more than half a dozen programs intended to lower rates for various consumer classes. The largest, the Comprehensive Electricity Plan, was introduced in 2021 to remove most of the cost of renewable electricity generation contracts from power bills for large and mid-sized industrial and commercial consumers. Its cost has held steady since 2022 at about $3.2-billion annually.
Nearly as large is the Ontario Electricity Rebate, a 23.5-per-cent rebate directed at residential, small business and farm consumers. The Ontario Energy Board says that rebate decreases monthly bills by about $36 for a typical residential customer.
In a report published in June, the C.D. Howe Institute found that one result of these subsidies is that Ontario’s residential and small-business customers pay lower rates relative to large commercial and industrial consumers. (Industrial users pay the least in most provinces.)
Amid rapidly rising costs for power generation, and lobbying by industrial users, the province is under sustained pressure to boost subsidies even higher.
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The Association of Major Power Consumers of Ontario, which represents large industrial power users such as auto plants and steel mills, has lobbied the government for further rate relief. Its president, Brad Duguid, said his members face steeply rising electricity costs at the same time as the U.S. is imposing increased tariffs. Continued rate increases could put many AMPCO members out of business in coming years, he warned.
Mr. Duguid said the additional relief AMPCO seeks would not increase provincial spending, because the Comprehensive Electricity Plan, the primary rate relief mechanism industry benefits from, has lately cost roughly $1.5-billion less than expected annually – savings he wants the government to send “back into industry to keep industry alive during this challenging period.”
Ontario Power Generation, the province’s largest generator, sought in its latest rate application to significantly increase payments it receives for power generated by its nuclear plants. If approved, OPG expected that a typical resident’s bill would increase nearly $8 a month in the next year, followed by smaller increases every year between 2028 and 2031.
(Earlier this month, OPG notified its rate regulator, the Ontario Energy Board, that it had reached “a substantial tentative agreement” with intervenors over its proposed rates; details of that agreement were not available at press time.)
According to the C.D. Howe Institute report, costs of Ontario’s subsidies are expected to decline once renewable energy contracts begin expiring around 2028. Meanwhile, the province is also looking to make its spending on rate relief more efficient; its latest budget promised that the government would review those programs “to reduce duplication and streamline program delivery.”
Ontario’s spending on rate relief began rising dramatically in 2018 after the previous Liberal government introduced a rate mitigation scheme known as the Fair Hydro Plan, intended to refinance pricey contracts with renewable generators. It has continued rising throughout Premier Doug Ford’s time in office.
Asked at a press conference Thursday how much further rebate costs could rise, Finance Minister Peter Bethlenfalvy did not respond directly. But he identified a series of large nuclear projects his government is pursuing: refurbishment of four reactors at the Pickering Nuclear Generating Station east of Toronto; a small modular reactor under construction at the Darlington Station; and a proposed station known as Wesleyville, which would be the world’s largest by output.
“Making sure that people can have affordable energy rates is part of our plan,” he added.
“And yes, I’m very comfortable with that.”