ONTARIO’S PRICE ON CARBON WILL DO FOR HOME HEATING PRICES WHAT THE GREEN ENERGY ACT DID FOR ELECTRICITY RATES
There’s a well-known anecdote about a boiling frog, which describes how if a frog is thrown into boiling water, it will jump out. But if the frog is put in cold water that is slowly brought to a boil, it will not perceive the danger and will be cooked to death.
That’s what the Ontario and federal governments are hoping will happen with their new carbon tax, which will be applied to home heating bills and gasoline bills starting January 1st, 2017. They are promising the new tax will be so small, we will barely notice it.
But what starts as cold water can very quickly come to a boil.
The Ontario government will start to apply the new tax at a rate of around $18 per tonne. But the federal government has announced it wants the tax to be $50 per tonne by 2022. That’s an increase of 177 per cent over just five years.
We’ve seen this story before in Ontario.
Shortly after passing the Green Energy Act, Dalton McGuinty promised voters that increases we’d see on our hydro bills would temporary, would create jobs, and would be worth the 46 per cent rate increase he predicted.
It turns out that rates since the Green Energy Act passed in 2009 have increased an average 89 per cent – with off-peak rates increasing by 102 per cent. And that’s only the increase for rates. For many consumers, the global adjustment can be as much as, or more, than the cost of the electricity they consumed.
The global adjustment is the difference between the market rate for electricity, and what Ontario agreed to pay for the electricity. Because of the Green Energy Act, the government agreed to pay far above market rates for certain forms of renewable power. The price difference is put on consumers. Since 2010, the global adjustment has risen by an average of 219 per cent. That’s on top of rate increases, and on top of increases to delivery charges.
McGuinty also promised that after five years, by 2015, price increases would slow down. It does not appear to be happening. In fact, the largest single rate increase occurred between 2014 and 2015 – a 22 per cent increase to average on-peak prices in a single year.
We are now in our seventh year of the Green Energy Act, and our province has some of the highest hydro rates in North America, with no sign of slowing down. A recent study found that the highest North American rates are now paid by low density (i.e. rural) Hydro One consumers, and the second highestrates are paid by medium density Hydro One consumers. The tragedy of this is that these are rural consumers, with lower average incomes than urban consumers, and are therefore less able to bear the costs of these high rates and dramatic increases.
These are the same people who will pay the most under the province’s new carbon tax. People in rural areas need to drive longer distances and rely on their vehicle, because there is no public transit. And lower average incomes mean there is less available cash to upgrade older homes. The government’s goal is for homeowners to upgrade their homes to make them more efficient, so the government imposed cost increases to home heating is less dramatic. But those with lower incomes with less disposable income for big upgrades are the least likely to be able to afford these big one-time purchases, and therefore bear an even bigger burden.
The government has said that their planned carbon tax will cost families only a few dollars a month, but we should all know that this is only the beginning. Ontario politicians are going to do to our home heating and gas bills what they’ve done to our hydro bills – which is send them sky high.
We don’t want to be like the boiling frog. We need to sense the danger of the government’s plan before it gradually creeps up on us and we’re cooked. And besides, who in this province can spare the electricity to boil frogs?