05.19.2011 09:51 AM

Timmy Hudak’s energy “plan”

1. HST on hydro: Lost in all the piffle and spin: Timmy is now admitting he will keep the HST, after saying for years that he’d kill it.

2. Debt retirement: Also unaddressed: the “debt retirement fund” was created to retire the billions in debt Hudak’s party created in the first place. Where’s he gonna get the dough, hmmmm?

Looked like there were lemons on the kitchen table where Timmy made his announcement this morning.

Fits.

10 Comments

  1. Ottawacon says:

    So, he is going to eliminate time-of-use (increased peak use) and lower the price (increased demand), and he had nothing to say about generation? he is going to lower/fix consumer price while keeping suppliers exposed to a market price – which will inevitably go up for at least the imported power.

    We saw a variation on this in California about ten years ago.

  2. MS says:

    Lot of confusion surrounding the stranded debt and the debt retirement charge, and it’s all boiled down to talking points. Let me try to clarify a few things:

    1) The debt is not just a Tory creation. Yes, it was their privitizaiton of the energy sector that forced the Crown to assume those liabilities. But the debt didn’t come into existence at that time. The old Ontario Hydro, a public utility, held that debt, and so ratepayers were going to have to pay for it one way or another. OH got this debt through billions in cost overruns on nuclear plant projects, and these projects were done under governments of all stripes. It is not just a Tory problem.

    2) There is A LOT of confusion surrounding the terms “stranded debt” and “residual stranded debt”, and the Liberals have purposely encouraged that confusion. Let me explain the difference:

    -When the Tories broke up Ontario Hydro, they had to assume $20.9 billion in unfunded liabilites. This is known as the “stranded debt.” They then came up with a long term payment plan, that consisted of three types of payments. The first are called payments-in-lieu of taxes. Because Ontario Power Generation, Hydro One and the municipally-owned electric utilities do not have to pay income tax, the Electricity Act, 1998 states that they must make payments to the stranded debt for the equivalent amount of taxes they would have had to pay if they were not exempt. The second payment is called dedicated electricity sector income. OPG and Hydro One have to use all their profits exceeding a combined $520 million to pay down the stranded debt.

    -When the Tories deducted the projections for these amounts from the $20.9 billion, they were left with $7.8 billion that still needed to be funded. This became known as the “residual stranded debt.” So these two terms do not mean the same thing. The residual debt is the stranded debt, minus payments-in-lieu and dedicated sector income. The Tories then created the Debt Retirement Charge to pay for this residual portion, and the residiual portion only. It says that quite clearly in the text of the Electricty Act. It should have come off bills once $7.8 billion was collected, but to date ratepayers have paid over $9 billion.

    -My best guess as to why the DRC has not been removed is because OPG is in terrible financial shape due to cost overruns and other factors that are laid out in the 2010 Auditor General report. The 2011 Ontario Budget projects payments-in-lieu and dedicated income from OPG to drop significantly, over $500 million in the next two years, meaning ratepayers are having to cover their difference. Mismanaging OPG, the extravagant payments to clean energy companies, and the short-sighted political move to introduce the Clean Energy Benefit just add to the debt. This whole file has been mismanaged, and it means ratepayers have to pay the debt retirement charge much longer than planned.

    There is no doubt the Tories made a mess of the energy sector. But the Liberals have shown incompetence in paying the debt down on time, and are now trying to confuse the public as to where the debt came from and what is really happening to it.

    Minister Duncan says that the stranded debt has not been paid off. He is correct, and the Liberals have been paying it off slowly. However, the Residual Stranded Debt has been paid off, and now the Liberals are in direct violation of the Electricity Act by keeping the DRC on bills.

    My source for all the debt figures is the Ontario Electricity Financial Corporation 2010 annual report.

  3. Phil says:

    I’m confused Warren, all I see on the net is HST to be scrapped from Hydro bills. Here’s one from your employer:

    “TORONTO – A Tim Hudak Ontario government would take the HST off home hydro and heating bills.”

    http://www.ottawasun.com/2011/05/19/hudak-vows-to-scrap-hst-on-hydro-bills-2

    So, who’s right, you or the man?

  4. Ted says:

    “Looked like there were lemons on the kitchen table where Timmy made his announcement this morning.”

    If only he had a plan for lemonade though. Without water or sugar, your lemons are only lemons.

  5. Tim says:

    A couple of comments

    1. The NDP and Andrea Horwath can quite right fully say they had this same idea months ago and Hudak is just a copy cat.

    2. The Federal NDP demanded the Federal Conservatives essentially do the same thing with the Federal portion of the GST/HST leading up the budget earlier this year. The Federal Conservatives refused.

    3. There is some precedent for a provincial Conservative party to do this in form of Bernard Lord’s NB tories. However, one should note that Lord put the HST back on Hydro only two years after he originally took it off. In the last NB election both PC party leader David Alward and Liberal Premier Shawn Graham both strongly stated that they were both against taking the HST off of Hydro.

  6. Tim / JenS: Not only was the HST thingy lifted from a September 27, 2010 NDP announcement, but the elimination of the Debt Retirement Charge was lifted from a Freedom Party election plank released October 12, 2010: http://www.freedomparty.on.ca/electricity/electricity.htm (see item 7)

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