Ontario will use a $1-billion windfall from licensing its interest in an electronic land-registry system to reduce its massive debt even as it provides relief to hydro consumers.
Electricity consumers, including residential and small business consumers, will receive a 10-per-cent rebate on their hydro bills. The rebate, which will be in place for five years beginning Jan. 1, will reduce the average residential consumer's bill to $115.20 a month.
The rebate will cost the province $1.1-billion a year when the program is fully implemented in fiscal 2011-12. Despite the added cost - aimed at neutralizing a growing backlash over soaring hydro rates in the lead up to next year's provincial election - the government will reduce its borrowing by $2-billion during the current fiscal year.
Ontario Finance Minister Dwight Duncan announced in his fall economic statement on Thursday that the government has struck a deal to extend the licence on Teranet Inc., the land registry, for another 50 years. Teranet's owner, Borealis Inc., an arm of giant pension-fund manager OMERS, will pay $1-billion up front to the province.
Mr. Duncan said the Teranet deal will save the province $50-million in annual interest costs and help the province borrow $2-billion less.
He revealed earlier this week that the deficit for this year will be $18.7-billion, $1-billion less than previously forecast.
The rosier outlook is due to a rebound in corporate tax revenues and spending constraints. The economy is growing, Mr. Duncan said.
However, he added, growth is going to be slower in coming years.
But the government acknowledges that many Ontarians are not feeling the benefits of a rebound from the global economic recession.
The hydro rebate, known as the Ontario Clean Energy Benefit, will help more than four million residences and 400,000 small businesses.
"The OCEB would help Ontario families through the transition to a cleaner electricity system," Mr. Duncan said. "Every little bit of assistance helps during lean times."
Progressive Conservative Leader Tim Hudak threw cold water on that suggestion.
"He's playing a shell game with people's own money," Mr. Hudak said of the break on hydro rates.
"The so-called benefit will be erased in short order," Mr. Hudak told reporters. "We see hydro policy as an economic policy. It's time to stop seeing it as a social program."
With a report from Karim Bardeesy