BRACE YOURSELF MEME GENERATOR FULL
In 2005, the McGuinty government increased power rates, in part by allowing OEFC to flow through directly to consumers the full extent of the bloated costs of old money-losing non-utility generators (NUG) costs. However, OEFC reports that the initial unfunded liability - all the stranded debt including residual stranded debt - has declined by only $3.2-billion (see graph above).Įven the modest actual progress exaggerates the gains attributable to DRC proceeds. Since it started, OEFC has collected $36.3-billion from rate payers through various channels, including $6.85-billion from the DRC. Worryingly, the Ontario government’s electricity planning authority’s only public statement on the subject forecasts that the DRC will continue to be collected until 2020. The officially estimated date for retiring the electricity debt has been skidding - now OEFC says 2014-2018. OEFC’s annual reports reveal how cost growth has overwhelmed the original debt elimination plan, slowing debt repayment to a trickle. Under the plan, this residual debt would be paid down by the DRC tax on electricity consumers, pegged at 0.7¢ per kilowatt-hour. The “residual stranded debt” was left over and pegged at $7.8-billion. With new special taxes on electricity distributors and by earmarking future profits of Crown-owned Ontario Power Generation and Hydro One, most of the “stranded debt” (about $13-billion) was considered serviceable. Officially $20.9-billion was not supported by any assets, or stranded. A portion of the $38.1-billion was supported by the assets of Ontario Hydro’s successor companies. Ontario Electricity Financial Corporation (OEFC) was created out of Hydro’s ashes with $38.1-billion in total debt and other liabilities. Let’s examine the special electricity tax on the power bills of Ontario consumers, called the Debt Reduction Charge (DRC), created to eliminate the most troublesome subset of Ontario Hydro’s liabilities, called the residual stranded debt. With 10 years of results reported for the debt reduction program, how is it working? In 2001, Mike Harris’s Conservative government promised to wipe out the debt within 10 years. When Ontario Hydro collapsed, a major concern was its liability legacy - bonds, nuclear wastes and costly power purchase deals. With the McGuinty government outdoing the causes of Ontario Hydro’s bankruptcy in 1998 - it is investing heavily again in CANDU nuclear power and signing 20-year power purchase deals at up to 12 times current consumer cost - reviewing the last bankruptcy is timely. Still loaded with debt, Ontario’s electricity sector is headed for another meltdownīy Tom Adams Wednesday’s article on this page by Parker Gallant, “Still stranded after all these years,” shines much-needed light on the finances of Ontario’s power system. Manage Print Subscription / Tax Receipt.