The first rule of political holes: If you get into one, stop digging. When it passed the 2009 Green Energy Act, Ontario's Liberal government built itself the political equivalent of a giant, supercharged auger. A half-decade later, the government still hasn't figured out how to turn the machine off. And the hole keeps getting deeper.
The act, a misguided industrial strategy masquerading as an environmental plan, has been driving up electricity prices ever since its passage. On Monday, a government that continues to search for ways out of this fiasco of its own making released its latest long-term energy plan. Electricity prices are expected to continue to climb sharply in the coming years – though less sharply than previously estimated. It's a promise to keep digging, just more slowly.
According to the latest government estimates, Ontario residential electricity rates will rise 9.6 per cent next year, 5.8 per cent in 2015 and 15 per cent in 2016. Ten years from now, the average family will be paying 50 percent more than today. All of that is well above the rate of inflation.
The pain would be even greater if government were not subsidizing residential electricity bills with something known as the Ontario Clean Energy Benefit – which has nothing to do with clean energy, and is not beneficial. It's a straight, $1-billion-dollar-a-year payment from taxpayers to electricity users – your right pocket is paying your left – financed through deficit spending.
The only thing Ontario has learned from the mess is that prices work. What happens when electricity prices are jacked up? People use less electricity. A few years ago, the province worried about having electricity demand outpacing supply, but demand is so depressed, that's no longer a concern. In most markets, lower demand equals lower prices. But thanks to a badly designed system, the opposite is happening in Ontario.
The government has tried to lessen the worst effects of all of this, somewhat reducing the Green Energy Act's hefty subsidies to expensive, inefficient and environmentally ineffective wind and solar power producers. The rate of electricity price increases has been slowed but it hasn't been stopped. Ontario now has among the highest prices in North America, a state of affairs that, even in the government's best-case scenario, is about to get a lot worse.
Ontario can't just tinker around the margins any more. Electricity policy is kneecapping consumers and business, and needs a complete rethink. Somebody at Queen's Park might want to find Don Drummond's phone number.