Electricity rate increase a useful crisis for Liberals to solve

First published: May 19, 2006

In 1995, then-Education Minister John Snoblen made an off-the-cuff remark saying it is sometimes necessary to “create a useful crisis” in order to pave the way for dramatic unwanted change. The quip became a rally point against the Tory government of former Premier Mike Harris, as an example of the crass manipulative strategy politicians will use to achieve their goals.

As consumers of electricity in Ontario brace for the rate increase set to take effect on May 1, it makes one wonder if this is part of a deeper strategy to create a useful crisis to implement the Liberal government’s plans to transform energy policy and may help them look like heroes as a provincial election looms on the horizon. It may sound crazy, like some kind of warped conspiracy theory, but consider the following.

First, consider what consumers will face. Rates will jump anywhere from five to 15 per cent, depending where people live and the local service provider. Port Hope residents and small business will be slammed with a 12 per cent hike, while Cobourg residents are expected to hear the bad news shortly. This increase is going to hit everyone and it will hurt – some more than others.

The poor and seniors on fixed incomes will feel the pain particularly hard. Certainly, the government tried to soften the blow with an additional $4.2 million energy fund to help people who may get evicted from their homes or apartments for not paying the electricity bill. And there are a host of other programs, up to 47 across the province, meant to assist low income Ontarians.

But as one critic put it following the rate hike announcements, the system is confusing and there are so many programs, it is intimidating. In the United State, New Jersey state government has a single-point access program where those who need assistance can go for help. It is simple and clear what people need to do.

And then, there is the business community. For small business people, it could be the difference between being viable and closing the doors. For major industry, it will throw fiscal plans into a spin, as resources must be reallocated to cover this sudden mid-year adjustment to the budget. But there is a ripple effect, as well. The Association of Major Power Consumers, a lobby group for large industry who use electricity, says 100,000 jobs could be lost and cost the economy $16 billion. It may also affect people wanting to start a business or relocated a business into Ontario, which means lost investment.

Farmers will also find this devastating. With the agriculture industry already in the throws of a crisis, higher electricity bills are yet another heartless betrayal and unneeded burden.

Premier Dalton McGuinty and the Liberals are soft-pedaling the increase by saying it was about time consumer pay the real cost for electricity. The price was kept artificially low for some time. In fact, the government as accumulated a $377 million debt as of Feb. 28 due to subsidies and lost revenue. It makes sense to say the system was not working. And the government is hell-bent to close four coal-fired power plants by 2009, reducing the overall capacity to generate sufficient power.

But timing is everything. The government could have introduced higher rates before last summer, during the power crisis when the heat wave drove power consumption through the roof. While it would have meant some political heat, at least consumers would have realized the need for conservation. Instead, this has lead to the huge deficit and compounded the need for increasing hydro rates.

Also, the government calls on Ontarians to conserve. But what about the smart meter program, where computerized hydro meters would allow consumers to get a lower rate by using power during off-peak hours. The government plans to only have 800,000 of these smart meters in place by 2007 and for all residents by 2010. Forget all the other conservation methods, this is one that would make a massive difference and it is not being pushed.

In line with these efforts, the province proudly announces last week a massive wind farm opening on the shores of Lake Erie as an example of the great efforts to create alternative energy sources. The project will create energy for 25,000 homes. While admirable and worthy, it is barely a dent in the overall market.

Once the first energy bills arrive in homes and businesses across Northumberland and Ontario, there will no doubt be a sense of crisis, if one doesn’t exist already, as many will wonder what can be done. For those within the government pushing an agenda, the moment will be ripe. The sense of desperation will be blinding. If the Liberals renege on their promise to close the coal plants, no one will care. If nuclear power plants suddenly get fast-tracked, environmental activists will be shoved out of the way by the hordes of people calling for relief.

And, those wanting to create wind power will have carte blanche. Right now, companies are approaching farmers offering money, in some cases $5,00 or more, to build turbines. Farmers facing hard times would be crazy not to sign up. And while this appears to be a clean, renewable energy source, there is no environmental assessment process in place to deal with the unique impact these towers have on the landscape or the wildlife habitat, turning the rural landscape from one of natural beauty into an eyesore. Opponents will be laughed out of any public meetings.

With a hot summer on the horizon, huge electricity bills in the mail and Liberals preparing to face an election in just over a year, a useful crisis may just be the ticket to solve a lot of problems for a troubled government.

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