Tabuns on Fair Hydro Act 2017 May 15th. Hansard
Mr. Peter Tabuns: I appreciate the opportunity to stand up and speak about the bill before us. Always, when you’re talking about a bill, it’s best to understand the context within which that bill has been introduced.
The context, I think, is fairly straightforward. Hydro bills have gone up 100% over the last decade. We have a government that is floundering in the polls, as has been referenced by one of my colleagues. There was a Liberal loss in a riding that they never expected to lose: Scarborough–Rouge River. Suddenly, the crisis that was affecting people and businesses across Ontario became a crisis for the Liberal government. Until that point, it wasn’t a crisis, because as long as they’re fine, nothing matters.
We have a government that’s facing a very unpleasant year leading up to an election that they also expect will be very unpleasant. They have to find some way of calming the waters. They have to find some way of making things look good. They have to find some way of saving their bacon. And so, Speaker, today we are discussing this bill.
This is almost a perfect Liberal energy policy, and it’s perfect in a few areas. First of all, it’s very expensive, which is something they seem to like. We’re talking $40 billion or more that will be spent to give the Liberals approximately four years of calm on the electricity file—four years, including the election in 2018, and, should they be successful by some strange stroke of fate, an election in 2022. So four years of peace and calm, after which point the bill comes due. Ratepayers all over Ontario will find that their bills are going up sharply, that they will have a surcharge added onto their bills—we can call it the Kathleen Wynne memorial electricity charge; take your pick—that they will be paying for decades, all so that this government can have four years in which, in their hopes and dreams, they will have some electoral success. I have to say, Speaker, that $40 billion is a very pricey item to help the Liberals in the next election. It’s a very pricey item.
We went through this before, Speaker. You were in the House when we went through the gas plant stuff. You know when they proposed a gas plant in Oakville? I had the opportunity to stand up and tell the Minister of Energy at the time—they change so frequently, you never quite know who you’re going to be talking to. But to the minister—
Hon. Jeff Leal: It was Chris Bentley.
Mr. Peter Tabuns: Actually, no, not Chris Bentley—and to the Premier, saying this was a total mistake, that there was a surplus of power, that it was possible to deal with the problems in Oakville with conservation, that this was a total mistake to go forward with this.
The government didn’t listen to me; nor did they listen to the people at the time. They went ahead and found that they had a number of seats that were in peril, and when seats are in peril, that is when the purse strings are loosened. That is when the wallet is opened up and the dollars shaken out so that the votes will turn up the right way in the ballot box.
I’ve been through this, Speaker. I’ve seen this happen. This is not a new phenomenon. It may be one of the most expensive I’ve seen so far, the most ambitious plundering of the public purse, but it is not unique. It is not something that has never been seen before around here. It’s simply the scale that is different. You can qualify this or describe this as short-term gain for very long-term pain—about 26 years of long-term pain.
I’ve heard the minister, I’ve heard the Premier and I’ve heard government members talk about the plan before us as akin to a mortgage, and I have to say to you, Speaker, that with a mortgage you are buying a property. You pay for that property and at the end you own it. As you’re well aware, in the world of Liberal privatized electricity, we don’t own the assets that we’re paying for.
This is much more akin to a payday loan to pay the rent: The rent’s coming, and you’ve got to have the cash. You go down to the corner, you pledge your first and second children, you get a loan and you get to pay that rent. At the end of the day, you paid the bill, but you still don’t own the unit you’re living in. At the end of the day, we’ll have spent tens of billions of dollars, and we still won’t own that infrastructure.
There’s an assumption that at the end of these private power contracts, the government, or whoever will be in charge at that time, will be able to renew them at an affordable rate. That’s not always certain, Speaker. There’s a big gamble that’s included in all of this.
This bill is short-term gain for long-term pain. It’s expensive, and it is murky. It is non-transparent, to put it as kindly as possible. The idea that Ontario Power Generation is a fund manager for all of this is, at the very least, passing strange. You may well be aware, Speaker, that the government of Ontario has other financing bodies that have expertise in these matters.
The Ontario Electricity Financial Corp., which 99% of humans in this province have never heard of, handles the debt left over from the old Ontario Hydro. It manages that debt. It buys bonds, it sells debt and it pays off debt—not very often, but it has the ability to pay off debt when it’s given money. It’s familiar with debt markets. It’s familiar with the electricity sector. It’s got an established format. It has established managers, I am sure, but it is not being used, which you have to say is very odd.
There’s the Ontario Financing Authority—to my knowledge, also dealing with electricity-related debt—not being used. The Ministry of Finance, which deals with large volumes of money and has a lot of exposure to and familiarity with electricity, isn’t being used. So why on earth is the Ontario Power Generation, which primarily generates power, becoming the payday loan company for this government? Now, the only thing I can think is that they’re trying to move the debt off the government’s books, trying to say, “No, this is not our debt; this is OPG’s debt,” to somehow try and make things look better. That, Speaker, is very strange. It’s definitely a move to obscure reality and to make it difficult for people to figure out what’s going on.
Again, as with the opposition, I had the opportunity to be briefed this morning by ministry staff, political staff, about this plan. I think they did their job credibly well. But I have to say that I asked a number of times, “Where does the Ontario Energy Board fit into this? Where does it have the hearings on the money that’s going to be borrowed and the rates that will be set?” The OEB is cut out. The OEB, the Ontario Energy Board, which is supposed to protect ratepayers, is cut out of this whole process. I have to ask all of you: Really? When you have a process in which tens of billions are going to be spent and borrowed, there’s no review before a public tribunal, no opportunity to ask questions about why this decision was made instead of that or why this rate is being charged instead of that rate, no opportunity for putting people on a witness stand and grilling them, under oath, about what’s really going on?
So we have a plan that’s expensive, that’s short-term-focused and that is murky: perfect Liberal energy policy.
I want to say, Speaker—and this is not at the heart of this, but it needs to be said. I think the terms “clean energy benefit” and “clean energy adjustment” are misleading. Once again, the Liberals have determined that saying that the reason the costs are so high is because of clean energy is extraordinarily convenient to them. Large numbers of people in Ontario understand how important it is to take on climate change and air pollution—a very big chunk of the electorate. So to say to those people, “Yes, we’re going through pain so that we can deal with those issues” gives some validity to this exercise, but it is not accurate, nor is it fair.
The Conservatives go after green energy on a regular basis. Bills have gone up 100% from 2006 to 2016; 12% of our bills relates to green energy. If there had been no green energy, bills would have gone up 88% in that decade. Frankly, there may have been other charges that came in to fill that in.
Green energy has not driven the higher bills in this province. Privatization has driven it, profit has driven it, oversupply has driven it, but green energy is not the heart of it. So when the Liberals say that we’re dealing with this because of green energy or clean energy, that’s bunk. It’s just simply that—and it poisons the well. It prejudices people against climate action and against investment in renewable energy, and it undermines the ability of the people of this province to do what’s going to have to be done over the next few decades to develop new industry and to deal with the environmental problems that are before us.
This bill has many elements—and I talked about the misleading; I talked about the financing. But in every bill, there’s a little golden kernel, something that speaks to the heart of why we’re here and why we’re dealing with all this. I want to let people know that the Ministry of Energy posted a proposal on the Regulatory Registry postings—I believe, the Ontario Energy Board. They want to make a number of amendments under the OEB Act. I’ll just read it out, and I’ll editorialize as I go along:
The Ministry of Energy “is proposing to amend existing regulations and introduce new ones related to electricity invoicing to implement the changes introduced by OFHPA, if passed.” So they’re going to change the rules around the invoices, around your hydro bills.
Mr. Percy Hatfield: Again?
Mr. Peter Tabuns: When you’re desperate, when you’re flailing about, you try things multiple times. Hopefully, you’ll hit something that will stick.
These proposed amendments would remove outdated informational messaging from invoices—I don’t know which outdated ones those are; I’m sure we’ll find out—introduce new messaging requirements related to the Ontario Fair Hydro Plan Act initiatives, and inform customers about resultant bill impacts.
The bill that you get for hydro used to be every two months. It’s now once a month, so the bill looks smaller. Thank you, Kathleen Wynne. Thank you for increasing the administrative costs that local distribution companies incur. It is now going to have—
The Acting Speaker (Mr. Ted Arnott): I apologize for interrupting, but I need to remind all members that we refer to other members by their ministry title or by their riding, not by their name.
The member for Toronto–Danforth has the floor.
Mr. Peter Tabuns: I appreciate your correction, Speaker. I will refer to the Premier.
I look forward to seeing a picture of the Premier on the hydro bills—your amount, and then a picture of the Premier, with the cut that she has proposed over the next four years.
Hon. Deborah Matthews: A great idea.
Mr. Peter Tabuns: I have no doubt you’re going to do it. You’re changing the laws so that you can put that in there.
Not everybody comes to this chamber with the idea that not only are they going to change the law, but they’re going to make sure that they can advertise on hydro bills about it. I’m impressed. Others may not have thought of that detail, but this government does. It will be interesting to see how colourful those bills look, how much will be packed into those hydro bills. I look forward to it.
That, Speaker, is really one of the golden kernels of this bill. The idea that whatever else happens—no matter how big a debt we take on, no matter how fast bills rise after the four years of relief—remember, it’s only four years. That’s it, folks: 40 billion bucks, four years. It’s pretty pricey. In those four years, those golden four years, we will all get to see heartwarming messages from the government about how they cut our hydro bills. All of us are looking forward to it; I have no doubt about it.
This bill won’t address the fundamental issues that are facing Ontario’s electricity system. Will it stop privatization? No. It won’t stop it with Hydro One, it won’t stop it with generation, and it won’t stop it with whatever other things this government is thinking about but has not yet announced. One thing I’ve learned, watching them now, watching them with the sell-off of schools, watching them with the sell-off of Hydro One, the sell-off of the LCBO operations—
Hon. Deborah Matthews: No, not the LCBO.
Mr. Peter Tabuns: They will sell everything. They will sell anything, even if it’s nailed down. Even if it’s rooted in concrete in the ground, they will sell it off. It doesn’t matter whether it’s moving or not moving.
This is a government that really is a group of Tories in a hurry. These guys over here, they were pretty slow-moving when they were in power. They didn’t get Hydro One sold off. They tried, but it took this government, this Premier, to sell off Hydro One. They didn’t sell off LCBO operations or undermine it, but this government did. Ontario Lottery and Gaming: Who moved more and more into the private sector? This government.
Who are the great privatizers in this province? Behold, Speaker: They sit before you. Behold.
They’re not going to deal with privatization. They’re not going to deal with oversupply. We generate about $2 billion a year of more power than we need—$2 billion—and we sell it for dimes on the dollar.
I’ve heard energy ministers over here tell us—and I have to say, this is extraordinary chutzpah—that they’re making a profit when they’re selling stuff at a loss. If I buy a car and it costs me, let’s say—
If I buy it for $30,000 and I sell it for $10,000, have I made a profit? I don’t think so. But if I was this government, I would say I’d made a profit. They have no restraint when it comes to that, no restraint whatsoever.
Speaker, I don’t see this government doing what needs to be done to deal with the fundamental problems in the hydro system: privatization, oversupply, a strategy that speaks about conservation but doesn’t really put it at the heart of its activities. Because of all of those failings, this bill may well give them some comfort and solace in the months leading up to the next election, but all of us, for decades to come, are going to be paying a lot of money.
So in summary, this is a borrowing scheme. It will cause prices to soar. The government doesn’t get it that simply moving the soaring prices back four years doesn’t help people; it just means that they’re going to have higher prices further on—higher prices that will be very hard to get around.
Frankly, last week when this whole matter came up about whether or not the leaked cabinet document was real or not, the Minister of Energy talked about, “There are other numbers”; that this was not an accurate number. Well, one has to ask: Where are those numbers? What are those numbers? We’d be very interested to see those documents. I have to say, it’ll be interesting to see how they stack the numbers. But if you effectively reduce prices for four years, you incur huge debt, and you have to start paying it back. It only stands to reason that that which has gone down is going to have to come up again; there’s no getting around it.
I will say, Speaker, there are a few things here. First of all, this bill has almost nothing to do with electricity. It has everything to do with financial engineering. It doesn’t actually get at the electricity system. What it does get at is a political problem the Liberals have. Once you understand that, once you understand that it’s not really an electricity bill or a hydro bill but a financing bill, then it’s much clearer as to what’s really going on here—because it isn’t touching on the system.
This is a system where more and more private interests are going to be intruding into the system. Let’s face it: The debt that is being created will be sold off to bond markets. Those bond markets and those bondholders will have a great interest in the way that the system is working. They want to make sure that their return comes to them. Don’t be surprised that what’s going on with this is a deepening, a doubling-down, of the government’s intent to make the system more and more private, less and less publicly controlled or controllable.
Higher costs of private debt: The idea that the debt would be hived off to Ontario Power Generation, not borrowed by the government of Ontario, opens up the likelihood that we’ll be paying much more in interest than we otherwise would have been. Just so this government doesn’t have to say that debt has increased on their watch, just so the government can hive it off and try to hide it behind OPG doesn’t mean that that’s good for us; it means that a bad plan will be made worse. There will be less in terms of governance and ability to actually have an impact on all of this.
The Ontario Energy Board is going to be dealt out. It is going to be a minor player in all of this—minor may even overstate its ability and impact. It is the opposite of good utility regulation. Good utility regulation would have substantial matters like this brought forward to an open tribunal, again, where witnesses could be questioned, where evidence could be presented and tested. But that isn’t what’s going on. What’s going on is large-scale borrowing to deal with a government in panic, and future governments will have to collect those debts.
Just as the Conservatives moved the debt off the nuclear power plants so that they could sell them—which they ultimately didn’t do; they leased out Bruce. But I talked to people in the energy field in the late 1990s, and this was all about making the nuclear portfolio saleable, and we got stuck with that stranded debt for quite a while afterwards. It’s still working its way through—something that made people crazy.
I don’t know about the member from Hamilton East, but people would say to me, “Why do I have a debt retirement charge on my bill? I’m not retiring. Why am I paying that debt?” Eventually, when you have the Premier’s memorial electricity surcharge, then we’ll be able to say, “Well it wasn’t any retirement”—well, maybe her retirement. But you’re paying it because of the decision they made that is going to have a negative impact on this province for years to come.
Speaker, there are alternatives. I want to talk for a bit about the Ontario NDP’s plan to cut hydro prices that we brought forward a few months ago. For those who are interested, you can go to the ontariondp.ca website. It’s: Pay Less. Own More. The Ontario NDP’s Plan to Cut Hydro Prices. It’s a useful plan. It doesn’t involve borrowing $40 billion. It does involve dealing with privatization. It does involve dealing with a number of expenses that could be used to reduce the costs that people are paying on their hydro bills.
One of the things we will do, Speaker, is return Hydro One to public hands. This government doesn’t believe in this. It doesn’t believe that governments should run things. They don’t have any confidence in government at all—none. They have no confidence in government. They think it’s a bad idea. But, in fact, Hydro One has been making money, and it is making substantial money. They’re selling off an income-producing asset. No one who knows how to make money in the business world sells off a high-earning, income-producing asset. You only do that when you have to cover something over, when you’ve got to fill a hole. And they want to fill a hole: They’ve got a deficit.
This one-time source of income, this undermining of the long-term financial stability of Ontario, is completely fine by them because they don’t believe that governments should run anything anyway. They don’t think they should clean roads. They don’t think they should be selling alcohol. They don’t think they should be doing anything. They should be out of it. It’s a vision that is extraordinary for a government that, on occasion, when it’s not feeling well, bills itself as progressive.
There are a number of things, Speaker, that we want to do with this. We believe that we can deliver up to 17% savings on average residential bills and as much as 32% savings for rural residential bills. One of the things that we’ve said is making time-of-use voluntary so that people, many of whom—new moms with young babies, seniors who are home all day long, paying peak prices? No. We would even that out. That would be roughly a 10% reduction for all those who wanted to go off time-of-use, because it hasn’t actually reduced consumption that much. What it has actually done is increase the amount of money that has come out of people’s pockets.
This government has talked about doing pilots or looking at it, but this measure has not actually delivered the conservation savings that were originally billed. It has meant real financial difficulty for people. We believe that that can be corrected, and it’s something that we will correct.
We’ll begin the process of returning Hydro One to public ownership and control. We will change the goal of our hydro assets from making profit for investors to providing power at the lowest cost consistent with paying our bills. Power at cost is something that built Ontario’s economy, something that this government has abandoned because they felt the need to have the cash in hand.
We’d re-establish the transparent, independent public oversight of Hydro One by bringing back the authority of the Auditor General, the Financial Accountability Officer, the Information and Privacy Commissioner, the Ombudsman, the Integrity Commissioner and the French Language Services Commissioner. In the period that would remain after the election, while it was still private, I’m sure that the private owners would be a bit cranky about that, but the people of Ontario believe that that sort of oversight is required, as you, Speaker, fully understand; I know that.
We’d also ensure that we would put mechanisms in law that would prevent future sell-offs of the hydro system, requiring referenda if some government wanted to sell off these critical public assets.
We believe that we could buy Hydro One back over a period of four to eight years. Having bought it back, we would be generating hundreds of millions of dollars—over years, billions—that could be used for Ontario’s needs: for schools, for hospitals, for child care, for all of the things that we know we need. Those would be far more affordable if we had Hydro One, a revenue-producing asset, back in our hands.
Ontario’s Financial Accountability Officer calls the sell-off of Hydro One something that will have an ongoing negative impact on budget balances from forgone net income and payments in lieu of taxes from Hydro One. People should be aware that with the privatization of Hydro One, money that used to come to the province now goes to the federal government as income tax. Why on earth would you do that? We need that money.
People on that side—most of them—understand that. When their constituents come to them and say, “We need help with this school, this hospital, this road,” they don’t say, “We can’t do that. We don’t have enough money. Sorry, we sold off Hydro One.” No, they have to go through a whole song and dance. But selling off Hydro One undermines our financial viability.
Speaker, we have put in our plan assistance for Hydro One customers who are paying delivery costs that are significantly higher than urban customers. That unfairness is compounded by the fact that many of those rural and northern customers are heating their homes with electricity. It’s expensive. We would change the system so that rural and seasonal Hydro One distribution customers pay the same delivery costs as current Hydro One urban customers, as well as ensuring that people and businesses pay delivery only for power they use.
Right now, Ontario Power Generation pays rent to the province of Ontario for the water that goes through their dams—hundreds of millions of dollars a year. I’m sure it’s a useful income source. We would take that money and, instead of borrowing tens of billions on the debt markets, we would use those hundreds of millions a year to reduce rural delivery rates. I think it makes sense, Speaker. It would help people in rural and northern areas, no question about it, and it wouldn’t put us in a position where we were borrowing money at 5% or more and having to spend 26 years paying off debt—26 years, a long time.
We would cap private profit margins. When the Ontario Energy Board approves rate increases for privatized companies, it builds in a profit margin. It allows a company to increase rates to cover costs for new investments that include their cost of borrowing plus a 5.5% return on equity. In contrast, Manitoba’s public utility has allowed 3%, almost cutting in half the amount of profit that’s allowed on the rates for new installations.