[La version française suit le texte anglais.]
ONTARIO’S ENERGY AND ELECTRICITY SUBSIDY PROGRAMS TO COST $118 BILLION OVER 20 YEARS
TORONTO, February 16, 2022 – Today, the Financial Accountability Office of Ontario (FAO) released a report that estimates the cost of the Province’s energy and electricity subsidy programs and reviews how the programs affect the electricity bills of Ontario households and businesses. The report also identifies changes to the subsidy programs since the introduction of the Fair Hydro Plan (FHP) in 2017 and estimates the cost of those changes. Finally, the report discusses how the Province plans to achieve its commitment to lower electricity bills by 12 per cent.
The FAO identified nine provincial energy and electricity subsidy programs that will cost a total of $118.1 billion over 20 years, from 2020-21 to 2039-40. Two-thirds of the spending will benefit Ontario households, while one-third will benefit businesses. The annual cost of the programs will reach $6.9 billion in 2021-22, but then gradually fall to $4.2 billion in 2039-40, a 40 per cent decline in the programs’ annual cost.
The Province has made two key changes to its energy and electricity subsidy programs since the introduction of the FHP in 2017. In 2019, the Province replaced the FHP with the Ontario Electricity Rebate and, in 2021, the Province introduced the Renewable Cost Shift. These two program changes will nearly double the overall cost of the Province’s energy and electricity subsidy programs, comprising $52.9 billion of the $118.1 billion total cost over the 20-year period.
The government has informed the FAO that it intends to meet its commitment to reduce residential electricity bills by 12 per cent by comparing electricity bills under the current subsidy programs against what electricity bills would have been under the FHP. Beginning in 2022, electricity bills under the FHP would have increased by approximately six per cent annually through 2028, while electricity bills under the current subsidy programs will increase by two per cent each year. Consequently, by 2025, the FAO estimates that a typical residential electricity bill under the current subsidy programs will be over 12 per cent lower than what the electricity bill would have been under the FHP.
Find our full report on our website, here.
- From 2018 to 2021, a typical residential electricity bill increased by 4.3 per cent.
- Approximately $78.3 billion in spending on energy and electricity subsidy programs will benefit Ontario households over 20 years, with $16.9 billion to support low- and moderate-income families, $17.1 billion for rural and on-reserve households that face higher electricity distribution costs, and $44.3 billion to reduce electricity costs for all households based on electricity consumption levels.
- The FAO estimates that the electricity subsidy programs reduced a typical residential after-tax electricity bill by 29 per cent in 2021, from $171 per month to $121 per month. By 2040, the programs will reduce a typical residential electricity bill by nine per cent, from $194 per month to $178 per month.
- The replacement of the Fair Hydro Plan with the Ontario Electricity Rebate included a significant policy change: electricity ratepayers will no longer have to repay any funds borrowed by the Province to reduce their electricity bills through future additional charges.
- Approximately $39.8 billion in spending on energy and electricity subsidy programs will benefit non-residential ratepayers over 20 years, with $24.3 billion going to small businesses, farms and long-term care homes, $8.4 billion to large commercial ratepayers and $7.2 billion to industrial ratepayers.
About the FAO
Under the Financial Accountability Officer Act, 2013, the Officer provides independent analysis on the state of the Province's finances, trends in the provincial economy, and related matters important to the Legislative Assembly of Ontario. Visit our website and follow us on Twitter and LinkedIn.
For further information, please contact:
Jessica Martin l 647.527.2385 l firstname.lastname@example.org l fao-on.org