The McGuinty government plans to take the sting out of soaring hydro rates in its fall economic update, sources say.
Finance Minister Dwight Duncan is set to table the government's economic statement in the legislature on Thursday. And a senior government source said electricity prices will be a key part of the financial outlook, which will provide "relief where relief is needed."
The measures will mark a policy shift for Premier Dalton McGuinty's Liberals, who have previously asserted that higher electricity prices are a necessary cost of updating the power grid after decades of neglect, while also replacing pollution-spewing coal-fired plants with cleaner, green energy sources.
Senior Liberals acknowledged that rising energy costs for homeowners, a target of both provincial opposition parties, have emerged as a growing liability heading into next year's Ontario election - particularly since the harmonized sales tax was added to bills this past July. Politically, sources argued, the issue seems to be a more pressing concern to Ontarians than the province's deficit, which is projected to hit $19.7-billion in fiscal 2010-11.
The government has already rolled out tax measures for residents of Northern Ontario as well as seniors to give them a break on their hydro bills. But amid worries that hydro rates will become an election issue, the government is under pressure to introduce measures covering a broader group of Ontarians.
Speculation was rampant throughout the energy industry that the government plans to tackle hydro rates. But energy sources said an across-the-board rate freeze is unlikely. Such a move would leave the Liberals in the unenviable position of following former Progressive Conservative premier Ernie Eves, who froze household and small-business electricity rates in 2002. A McGuinty government rate freeze would repudiate its assertions made in 2004 that consumers would have to pay the real cost of electricity, said energy consultant Tom Adams.
"Every power consumer's got a complaint, so I really don't know where they're going to hand out the favours," he said in an interview on Monday.
New Democratic Leader Andrea Horwath has been pushing the government to remove the HST from electricity prices.
"The HST is salt in the wound to Hydro costs," she told reporters on Monday.
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