Ontario Finance Minister Dwight Duncan says his government will introduce a 10 per cent rebate program for electricity bills, but admits rates will jump 46 per cent over the next five years.
Duncan made the announcement Thursday afternoon during his fall economic update.
Electricity rates will continue to rise as the province shifts away from coal-fired generation to renewable, green energy sources for which the government pays much higher prices, and will only start to moderate after 2015, said Duncan.
The 10 per cent Ontario Clean Energy Benefit will be applied monthly after all other items on the electricity bills, including taxes, and will kick in starting Jan. 1. The rebates may not show up on utility bills until next May, but they will be retroactive until the start of the year.
According to government figures, the rebate would save the average household $153.40 annually. But those figures do not account for the increase in rates that the government is projecting.
It will cost the government $1.1 billion a year to pay for the rebates, which are scheduled to last five years. That's when a "debt retirement charge" will be removed from electricity bills. The charge goes towards erasing the debt incurred by Ontario Hydro, which was split into five companies in 1999 by the Mike Harris government.
Ontario by the numbers:
- Budget deficit (2010): $18.7 billion
- Annual cost of hydro rebate program: $1.1. billion
- GDP growth (2010): 3.2 per cent
- Debt: $212.1 billion
"Though Ontario is emerging from the recession, families want to know they can feel secure about their economic future," Duncan said in his speech at the legislature.
But the opposition leaders were quick to cast doubt on the government's intentions.
"Now the premier, just a few months out from an election, wants to give back a few mere drops in the bucket," said Progressive Conservative Leader Tim Hudak after Duncan's speech.
"And while hard-working families deserve relief in any form they can get, they see this gesture for what it really is — a transparent shell game played by their own money by a government that is out of touch, out of gas and increasingly, out of time."
NDP Leader Andrea Horwath, who said she supports giving consumers a break, nevertheless said the rebate program was really about "solving the premier's problems until the next election."
HST revenues up $326M
Duncan reported earlier this week that the projected deficit had fallen to $18.7 billion from the $19.7 billion forecast in the budget.
Figures revealed Thursday showed that while income tax revenue was $1.1 billion lower than expected, corporate tax revenues exceeded expectations laid out in the March budget by $696 million. The revenues brought in by the controversial harmonized sales tax were $326 million higher than first expected, due in part to strong consumer spending.
Duncan insisted the government isn't filling its coffers with the extra money.
"Every additional nickel of revenue that we are collecting from the HST over and above the old provincial sales tax is going back to Ontarians through tax cuts elsewhere," he said.
Figures released by the government also said the province has regained 75 per cent of the jobs lost during this recession.
Overall, Revenues rose 0.67 per cent while expenses decreased by 0.2 per cent after the province paid $246 million less in interest than was forecast in the budget last March.
Real GDP growth is expected to average 3.2 per cent for 2010 and fall to 2.2 per cent next year, while unemployment is expected to average 8.8 per cent from nine per cent in 2009.
Duncan also announced the province would introduce legislation to have the Ontario Securities Commission regulate the $12-trillion derivatives market.
50-year contract nets $1B
Duncan also announced a 50-year extension of a contract with Teranet, the company that operates the province's electronic land registry. The $1 billion from that deal will be applied to the province's $220-billion debt, and also lower interest costs by $50 million a year.
The contract has built-in consumer protections, freezing its fees for five years and limiting increases after that to half of the inflation rate. It also includes new royalties for the province of about $50 million a year, starting in 2017.
"That approach stands in stark contrast to the Progressive Conservative government that sold off Highway 407 without protecting consumers and used the money to pretend there was no deficit," said one senior government source.
The New Democrats were not impressed with the Teranet deal, but like the Liberals, were reminded of the Highway 407 sale in 1999 by then Premier Mike Harris, just before a provincial election.
"It looks like another fire sale of an opportunity to have long-term revenues for the province being paid off in a short-term amount. It's another 407-type of deal," said NDP Leader Andrea Horwath.
"A 50-year deal to a company for a short-term, $1-billion cash grab doesn't make a lot of sense and doesn't ever pay off for Ontarians."