Auditor General Blasts Kathleen Wynne's 'Fair Hydro Plan,' Improperly Keeping Hydro Debt Off Government Books
The Wynne government created a "needlessly complex" scheme to pay for its hydro rate cuts without showing the costs on its own bottom line, Ontario's auditor general said in a critical report released Tuesday.
Auditor General Bonnie Lysyk investigated the financing of what the Ontario Liberals call the "Fair Hydro Plan." The plan has reduced the average household electricity bill in the province by 25 per cent from the peak in the summer of 2016.
Lysyk said the government is "improperly" accounting for the $26 billion in debt the province is taking on to cut hydro bills in the short term.
The $26 billion is being borrowed through Ontario Power Generation, so will not appear on the province's books. Electricity customers will pay off that debt through rate increases spread out over the next 30 years.
The government chose that financing scheme "to keep deficits and an increase in net debt from showing up on the Province's books," Lysyk said in the report, tabled Tuesday morning in the Legislature.
"The government created a needlessly complex accounting / financing structure for the electricity rate reduction in order to avoid showing a deficit or an increase in net debt," writes Lysyk .
The auditor says the plan could also result in Ontarians paying "up to $4 billion more than necessary" in interest. That's because OPG will be required to pay higher interest rates than the province would if the government took on the debt directly.
Lysyk told a news conference that the government is "wrong" in how it's accounting for the borrowing.
"Anywhere else in Canada, you won't see this done," she said. "The government's proposal is to treat that loss as an asset.
"That's like you treating your credit card debt as an asset in your books. Does that sound right to you?"
Rate cut won't last: Lysyk
The hydro rate cuts will not last, Lysyk found. "From 2028 on, ratepayers will be charged more than the actual cost of the electricity being produced in order to pay back the borrowings," she said in the report.
"The improper accounting also inappropriately transfers long-term accountability for significantly higher electricity bills to future governments," writes Lysyk. "Future governments will have to explain to ratepayers why electricity rates charged in 2028 and beyond exceed the actual cost of electricity."
The Wynne government is already trying to dismiss all of the auditor's findings.