Ontario families could see their electricity bills go up by hundreds of dollars a year once the province's Green Energy Act takes effect, according to a new report released Monday.

Higher energy costs brought on by the legislation means household bills could go up by $280 to $780 a year on average between 2010 and 2025, said the independent study commissioned by the Opposition Conservatives.

That doesn't include the impact of tax harmonization, which will tack on another eight per cent on home heating costs when the province merges its sales tax with the federal GST in 2010.

Government claims that the legislation will create more than 50,000 jobs over three years are unsubstantiated, the report by London Economics International added. The province could actually lose jobs if it becomes less competitive as a result of higher energy costs, it said.

"Our analysis suggests that more cost-effective ways may exist and should be explored to achieve similar and higher amounts of avoided emissions," said Benjamin Grunfeld, a senior consultant at the advisory firm that specializes in energy, water and infrastructure.

Other approaches, like the cap-and-trade system in the U.S. Northeast and British Columbia's carbon tax, make "better use of market forces" and provide environmental benefits at a potentially lower cost, the report said.

Energy and Infrastructure Minister George Smitherman insisted that the additional costs to consumers will be minimal, saying the report had "wild fluctuations" in its projections.

Conservation efforts could reduce energy bills

"What have our presumptions been? I've been very, very clear about it: one per cent per year, incremental on the costs of a person's electricity bill," he said.

Residents can also reduce their bills through conservation efforts that will cut down on energy consumption, he added.

"Our strategy isn't just about more renewables on the one hand," he said.

"It's also about investing with people in their homes and businesses and institutions, to be able to go about their lives and to use less electricity, which is a big, big thrust of it."

The government insists that the bill is key to attracting investment in renewable energy to Ontario by streamlining project approvals, mandating more efficient appliances, and providing low-interest loans to homeowners who wish to build their own small-scale wind or solar projects.

But the report shows that it will add another burden to hard-hit residents that are already struggling in tough economic times, said interim Progressive Conservative Leader Bob Runciman.