People across Newfoundland and Labrador will receive an eight per cent rebate on electricity and heating fuel, according to the provincial 2011 budget announced Tuesday.

The program is expected to cost the provincial government about $38 million annually – a loss the government says it can afford, as it announced a surplus of $485 million for the past fiscal year and is forecasting a $59-million surplus for the coming year.

"Oil prices are high and it appears that these prices are going to be sustained at high prices," said Finance Minister Tom Marshall. "So we felt it was time to give back."

The new rebate program will begin on Oct. 1, 2011 – 10 days before the next provincial election – but Marshall deflected criticism that the budget aims to buy votes.

"It is an election year but I don’t see any difference between this budget and the budgets I’ve done in the past," said Marshall, who delivered his fourth budget Tuesday.

The rebate will apply to all residents using fuel and/or electricity to heat their homes.

NDP claims victory

After the announcement NDP Leader Lorraine Michael celebrated the home-heating rebate announcement.

"To quote another politician 'We got it'," said Micheal, referring to what Danny Williams said after negotiating the Atlantic Accord deal with former Canadian Prime Minister Paul Martin.

Michael who had called for the rebate as recently as last week said the announcement Tuesday shows the difference one lone voice house of assembly can make.

The new rebate will be in addition to the existing the current home heating rebate program for low-income individuals and families.

According to the government’s plan, the savings will appear on bills consumers receive from oil and electricity companies and those companies will then invoice the province for the rebated amount.

Government officials said details of how it will work with those companies have not been hammered out yet.

The rebate is equal to the eight per cent provincial portion of HST on residential electricity and heat.