“Smoothing out” the costs of Ontario’s energy system by taking longer to pay off generating contracts, as the Ontario Liberals are reportedly planning to do, means borrowing from the future to make ourselves more comfortable now.

The Toronto Star reported the government’s plan Wednesday morning, citing unnamed sources speaking before Premier Kathleen Wynne had made sure her cabinet was on board. “We will make sure that we have immediate relief for Ontarians in the very near future, but no decisions have been made at this time,” Energy Minister Glenn Thibeault told the legislature.

As described, the plan is like refinancing a mortgage, taking longer to pay it and increasing the total amount you owe in exchange for smaller monthly payments now. A typical power contract pays off the generating company’s capital expenses, plus operating costs and profit, over 20 years. If that contract pays the company 10 cents a kilowatt-hour, maybe we can extend it a decade but lower the price to eight cents a kilowatt-hour.

Yes, we’re locked in for 10 more years and the contract will be worth more to the company in the end, but boom: we’ve cut the immediate cost by 20 per cent.

The idea makes political sense. After 15 years in power the Liberals will be in rough shape for 2018 no matter what, but no single thing hurts them more than the monthly bills we get full of cryptic arithmetic that always seems to add up to higher and higher numbers. Extending contracts is essentially a finance gimmick but it would make an immediate difference.


See Also:

Don’t be fooled again by Wynne’s Liberals

Support for Wynne Liberals crumbling: Poll

Kathleen Wynne’s sleazy, desperate hydro ploy to fool Ontarians is, well, brilliant

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Yes, it’s a stroke of political genius … but it’s not unassailable. Quothe our spendthrift Premier: “We asked one generation — today’s generation — to unfairly shoulder the burden of nearly all of those costs.” Really? It’s unfair to pay costs incurred now? See how far you can go if you demand a 100 year mortgage for that nice house in the heart of downtown TO. The underlying sense of entitlement is mind-numbing, ameliorated only by the premise that it’s “for the public good”. That, in essence is the heart of the scam: make the suckers (us taxpayers, that is)… Read more »