The cancelled gas plants in Mississauga and Oakville have persisted as a never-ending nightmare for the governing Ontario Liberals. Although they fervently attempt to put the damning incident behind them, taxpayers will not soon forgive or forget the $1.1 billion frittered away to save a few Liberal seats in the 2011 provincial election.
When it comes to the mismanagement, deception, and exorbitant waste in Ontario’s government-controlled energy industry, however, the gas plants are just the tip of the iceberg.
For instance, take the ‘debt retirement charge’ that Ontarians pay on their monthly hydro bill. Thanks to hopeless mismanagement, the former Ontario Hydro utility was dismantled in 1999 and $
38.1 billion in total debt and liabilities was handed to the Ontario Electricity Finance Corporation (OEFC). The government cooked up a scheme under which Ontario hydro ratepayers would be responsible for paying a portion of this debt (total debt minus hydro assets and business taxes) through a 0.7-cents-per-kilowatt-hour ‘debt retirement charge’ on our hydro bills.
At the time, ratepayers were told the outstanding debt load to be borne by ratepayers was $7.8 billion.
This charge started clawing away on hydro bills in 2002 and, according to figures from the OEFC, the charge brings in, on average, $
965 million per year. Simple math would tell us this debt should have been paid off by 2009. But it wasn’t. And in 2014, the typical residential ratepayer in Ontario still pays about $7 per month towards this everlasting debt load.
What happened?
In his
2011 report, then-auditor general Jim McCarter noted that the ‘debt retirement charge’ had collected well over $8 billion since it was introduced – hundreds of millions above what was originally owed – but that the government had failed to provide detailed accounting on the status of the debt, despite being
required by law to do so.
Conveniently for the government, there is a loophole in the law that allows ‘debt retirement charge’ revenues “to be used for any purpose that is in accordance with the OEFC’s objectives and purposes, not just the retirement of the residual stranded debt.”
The government was forced to fess up and explain what was going on. And we learned that in 2004 the government had “reset” the debt to $11.9 billion. Apparently, they can do that. They have the power to simply change the numbers on a debt clock with a snap of their fingers. Poof: we owe $4 billion more.
And the Liberal government conveniently kept this secret from the public until after the 2011 provincial election. In 2011, the public finally learned that the government had retroactively added billions to this debt.
The recent
Ontario budget shows that ratepayers still owe $3.9 billion, and Energy Minister Bob Chiarelli actually
touted the fact that his government planned to have this debt fully paid off by 2016.
Fifteen years after it was introduced, and after raising approximately $14.5 billion, we will finally retire the hydro ‘debt retirement fee’.
But many questions still loom. Why was the public deceived? How was the extra money spent? Did the funds go into general revenues? How does $6.7 billion go unaccounted for in a modern government?
And most importantly, if this is how the Ontario Liberals manage the debt of a public utility, can we actually trust them to manage the province’s staggering $289-billion public debt?
Candice Malcolm, Ontario Director
