Cutting Through The Spin on Ontario’s Electricity Prices

What do electricity prices have in common with the rain? Politicians don’t control either. However, hearing the Ontario Conservatives and NDPs slamming the Liberals this week for rising electricity costs and pretending they somehow have the answer, you’d hardly know it. But the fact is, any politician who promises low electricity rates is selling a lie — one that all of us end up paying for sooner or later.

Ontario’s electricity woes stem back to the late 1970s and, over the past 40 odd years, all three parties have had a hand in them. It started with the building of the Darlington nuclear station, which the Bill Davis Tories approved and the David Peterson Liberals saw through to completion — 10 years late and almost $12 billion over budget. No one could afford to pay the real cost of Darlington, so Ontarians carried that debt for the next three decades.

Over that time, electricity — like cars, and coffee, and just about everything else we buy — didn’t get cheaper, it got more expensive. And when the recession hit in 1993, and electricity prices were rising, people got angry. The party in power at that time, the NDP, did the popular thing; it froze electricity rates, halting investment in the power system.

Electricity became a wedge issue yet again in the election that followed. This time it was Conservatives elected on a promise of cheaper electricity through the power of the free market. They broke up Ontario Hydro and created Hydro One and Ontario Power Generation to unleash competition.

But instead of prices going down, they skyrocketed — increasing a-250-fold at one point. Why? Years of artificially suppressed electricity prices, massive nuclear debts, and U.S. trading partners that paid far more for electricity than Ontario. It turned out that no one wanted to pay the “fair market price” of electricity after all. And, just as the NDP before them, Conservatives quickly shut down competition and froze electricity rates.

However, they didn’t do it quickly enough to win the next election, which was, again, all about electricity prices. The year was 2003, and the McGuinty Liberals had inherited a seriously broken system. Not a single power plant had been built in Ontario in 10 years, and blackouts were forecast for the coming summer. So the government had a choice: build infrastructure and raise prices, or do nothing and risk the political fallout of failing to maintain basic electricity service to the province. They built. Costs leapt. And the lights stayed on

Cutting Through The Spin on Ontario’s Electricity Prices https://t.co/Yv01pUX6sv #cdnpoli #onpoli @brucelourie pic.twitter.com/yDbSqvFrIm

— DeSmog Canada (@DeSmogCanada) February 28, 2017

Once the reliability was stabilized and the electricity planning function restored, the government began the challenging process of ramping down the aging and polluting coal fleet and augmenting the gas plant investments with hydro upgrades, nuclear refurbishments and renewable power. Huge investments in distribution and transmission infrastructure continued apace.

Billions of dollars were spent over a 10-year period to make up for more than 20 years of neglect and ill-informed policy decisions by all three political parties. And that is the long answer to why Ontario’s electricity rates have risen over the past decade.