Any Ontarian who pays even the slightest attention to provincial politics is by this point acutely aware that their government has spent much of the past year-and-a-half trying to atone for costly, politically-motivated decisions before the last election to cancel construction of a pair of power plants.
But in this Thursday’s budget, the governing Liberals will be trying to clean up another expensive energy mess similarly borne of an attempt to appease voters before the last campaign.
The Clean Energy Benefit, a 10 per cent rebate on hydro bills that costs the deficit-plagued province well over $1-billion annually, was practically scrawled on the back of a napkin in late 2010 as the Liberals frantically sought to counterbalance skyrocketing energy costs. Labeled a “perverse incentive” by the province’s Environment Commissioner, it’s almost indefensible as public policy because it disproportionately rewards those who use the most power – most often relatively affluent owners of large homes.
It’s debatable whether the policy has even been especially useful politically, since many Ontarians are likely unaware of its existence on their crowded bills. But it is difficult to now get rid of, since that would effectively constitute an across-the-board 10 per cent hike. Even once the rebate expires in 2015 – it was billed only as a temporary measure – the government may feel compelled to extend it in some form, at least for those who actually have trouble paying their bills.
The obvious solution, which the Liberals have been discussing for months behind the scenes, is some form of income testing to limit how many energy consumers qualify for the rebate. But it’s not as simple as just implementing that mechanism from one minute to the next, which explains why Finance Minister Charles Sousa got himself into all sorts of trouble when he broached the issue last week.
After more or less saying during a speech to the Economic Club of Canada that he wanted to start income-testing the benefit, Mr. Sousa rather clumsily tried to backtrack during his subsequent press conference. The rebate would remain on bills, he insisted, before informing reporters they had taken the comments in his speech “out of context.”
Based on conversations with sources, it appears the move toward narrowing eligibility will indeed be in the budget. But it probably won’t actually take effect for at least a year, and it’s unlikely that all the specifics will be provided – because the government hasn’t actually figured out just yet how it’s going to make it work.
The big challenge, though there may be more than one, is that the benefit is applied to bills by hydro utilities that know only how much energy families and individuals are consuming, not how much money they make. And for the government to start sharing that information would have the potential for some fairly spectacular privacy violations.
The next best option might be just to lower the maximum amount of monthly usage to which the rebate can be applied from the current cap of 3,000 kilowatt hours, which is far more than most consumers actually use. But that would mean that people who don’t really need government help to pay their energy bills would still be getting some anyway. (It also wouldn’t really qualify as “income testing,” which was the specific term Mr. Sousa used in his speech last week.)
Alternatively, the government could try to use the tax system to allow lower-income consumers to apply for their rebate when they fill out their returns. But that would require federal co-operation, could get gratuitously complicated, and might not be of enough use to those with immediate difficulties paying their bills.
Perhaps, with all the time they’ve spent thinking about this, the Liberals will arrive at a more elegant solution. And in any event, it’s probably to the credit of Premier Kathleen Wynne that she’s prepared to reopen this can of worms left behind her predecessor Dalton McGuinty, since unlike with certain other past decisions it hasn’t generated any opposition pressure.
But the fact remains that a government already deep in red ink is currently stuck wasting an awful lot of money well past the point at which it realized it was making a very poor investment. Such is the cost of overly politicized and hastily conceived energy policy, even when it’s less obvious than paying developers to not build power plants.