End to hydro rate subsidy urged

Tyler Hamilton

environmental research group says $5 billion annually that goes toward
subsidizing Ontario electricity rates should be completely eliminated
over the next 10 years and instead given back to citizens in the form
of an annual hydro rebate.

Such a move would cause electricity
rates to rise 35 per cent over that time, but the Ontario Clean Air
Alliance argues that higher power costs would encourage more homeowners
and businesses to conserve energy and force industry to operate more

"If you want to promote energy efficiency you don't
subsidize the price of electricity, you've got to raise it," said Jack
Gibbons, lead author of the study, called "Tax Shift: Eliminating
Subsidies and Moving to Full Cost Electricity Pricing."

He said
more people are likely to ease off on their air conditioners, turn out
the lights, and purchase EnergyStar products if they see a 35 per cent
hike on the power bill.

At the same time, the province should
take the billions of dollars it would save by eliminating the subsidies
and give it back to citizens in the form of an annual hydro rebate
amounting to $386 for each person in the province, the group proposes.

a rebate would more than offset higher power bills in the typical
household. A family of four, for example, would get back $1,544 under
the plan compared to the $503 increase the average home would see on
its electricity bill – excluding any savings through personal
conservation efforts.

"It's true that one could use the (annual)
tax reduction to pay for one's status quo level of electricity
consumption, but that is not likely to happen," Gibbons said. "For
example, when you get a $1,500 pay increase, you don't typically spend
one-third of that on increased electricity consumption."

study, funded by a number of philanthropic organizations – including
the EJLB Foundation and the Laidlaw Foundation – identified a number of
subsidies that keep electricity rates in the province artificially low.

Read the full article online at the Toronto Star.

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