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June 15, 2021

Taxpayer Electricity Subsidies Out of Control

  • Ontario’s electricity sector has struggled with rising system costs for more than a decade. Why? The crux of the problem are increases in the cost of supply from high-cost contracts spread over less electricity consumption than forecast when the contracts were struck. The result has been upward pressure on prices that has only been mitigated by government rebates that have shifted costs to taxpayers.
  • The Ontario government should provide sound policy direction that focuses on empowering and resourcing the regulator, the Ontario Energy Board (OEB), to oversee decisions on procuring electricity, moving electricity procurement decisions to local buying groups.
  • For residential customers and small businesses who pay regulated energy rates, we propose giving consumers the option of a lower price than otherwise most of the time, but with an incentive to reduce use at extreme peak demand hours.
  • Lastly, the province should reduce rate subsidies, which have climbed to $6.5 billion in the 2021/22 fiscal year. For comparison, this is $700 million more than what the province plans to spend on long-term care. They are not sustainable.
Benjamin Dachis

Benjamin Dachis is Associate Vice President, Public Affairs for the C.D. Howe Institute. In his role, he furthers the Institute’s mission to improve Canada’s economic performance by enhancing the visibility, reputation and impact of its research and activities.

Joel Balyk

Joel Balyk is a former research assistant at the C.D. Howe Institute.