As of November 1st, Ontarians were hit with a 29% electricity rate hike. But Premier Doug Ford will also be hiking the electricity subsidy, meaning the sticker shock won't be as substantial. What's driving the spike? And does spending billions in subsidies make sense? Reader Mike Shriner certainly doesn't think so. Ratepayers won't feel the full brunt of this dramatic price increase brought on by the Ford government because they've increased the amount of money subsidizing electricity prices, which have been over $6 billion a year, likely climbing, according to the financial accountability officer, disproportionately benefiting wealthy households at the expense of working people.

Then more and more Canadians say they don't support 100% tariffs on Chinese electric vehicles, up from 27% in 2024 to 47% this year, according to Nanos. Is there a way that the feds could change or scrap them without hurting our auto sector and angering Trump? Welcome to The Rundown.

Electricity prices are rising in Ontario and in response, Premier Doug Ford is hiking the electricity subsidies. But what's behind the increase? Do the rebates make sense or is there a way we could drive down costs in the first place? I asked Mark Winfield, associate professor at the Faculty of Environmental and Urban Change at York University.

Mark, great to have you on the program. How are you doing today?

Great. Thanks very much.

All right, let's start with you connecting the dots for us. What is the relationship between new nuclear projects that are happening in this province and the increase in electricity rates?

Well, I think what we're seeing is the beginning of the impact of the province's commitment around nuclear. I mean, what we're seeing already is the beginnings of rate increases. Now those at the moment are probably mostly related to the refurbishment projects of existing facilities. But what we need to look at down the road is the impact of the very large nuclear expansion program that the Ford government has set in motion, and that will inevitably have a very large impact on rates in terms of moving them upwards.

Is it fair to say with the government's push for nuclear that these rates and these increases are fairly permanent?

I think so. I mean, if the government stays on the pathway it's on, which is this overwhelming commitment not just to the refurbishment of existing facilities, but a series of major new build projects at Welssleyville, at the Bruce site and at the Darlington site, we are effectively embedding very, very high costs into the system in the long term.

All right. So the province is going all in on this very expensive and what you have written as untested technology, things that haven't actually been built before. Help us understand that. But also, is there no sort of provincial oversight body that would be monitoring this build, the cost, the technology?

Well, two questions there. One around the one new build reactor project which is underway, which is what's called a small modular reactor at Darlington, although it's not modular at all. And that would be the first of its kind in the world. So, it is untested and certainly one that Canadian regulators have never seen before. It uses a type of fuel we've not seen used in Canadian reactors. It requires enriched uranium, which we don't actually have the capacity to produce in Canada. We'd be relying on the United States, which makes it a strange choice from an energy security perspective.

In terms of oversight, the short answer is no. There is no oversight or review process around these plans. A combination of steps taken by the previous Liberal government and the current government effectively eliminated what oversight and review process we have. So the system is effectively running on political directives from the minister's office and the premier's office, and the various agencies are mandated by statute to implement the directions laid out in those directives, whether they make sense or not.

Well, help us understand that. So when we think about energy and electricity specifically, I'm thinking of IESO, the independent electricity system operator. We have the Ontario energy board as well. What do they do if not monitoring any of this?

Well, the board has some oversight of rates, but it has explicitly no mandate to review the overall strategy or plans which the province has articulated, that role was eliminated back in 2015. So that element is not present. I mean the clearest we get is in rate hearings where some of this gets revealed, but there's no point at which the board looks at the overall plan and asks questions about is this the most cost-effective or prudent or lowest carbon option available to the province.

In terms of the independent electricity system operator, it's independent, somewhat complicated question. It has a degree of independence in terms of the actual day-to-day, minute-to-minute operation of the electricity market, of sort of aligning supply and demand on an ongoing basis. But it has certainly no regulatory role, and its planning functions are deeply attenuated again by the fact that it is fundamentally subject to the directives issued from the political level. Its job is to implement those directives, not really to ask questions about do they make sense or are there different pathways the province could be considering that might offer a lower cost and more reliable and safer pathway forward.

All right, let's have a look at electricity rates in Ontario. I want to show this chart. This is dating back to 2006 looking at 2024. You can see in the green line that's your off peak, in yellow mid peak and red on peak. The off peak in green, you can see in 2006 starting just under 4 cents per kilowatt an hour to about just under 10. And if you look at all three rates kind of doubling in that. Now I should mention that these new rates are not included in this data, but I am curious what's important to understand about previous rate increases under other governments?

Well, what's happening here is a number of things. I mean, some of this is also just accounted by straightforward inflation. But more fundamentally, we've been through a period, we went through a long period of disruption in the 1980s and '90s when there was very little investment in the system, and so when we reached about the beginning of the 2000, 2003, there's a realization about 80% of the system needed to be either refurbished or replaced or rebuilt, and that was going to require significant capital investments, whatever choices you made. And that is part of what you're then seeing reflected in the rate increases, is as if we had a house and we'd done nothing with the roof for 20 years, and now all kinds of repairs need to happen.

So that explains in large part the steady increase in rates over this past 20-year period, is we've been in a period of reconstruction. Now there are debates, did we pay too much for nuclear refurbishments? Did we pay too much for renewables? But the fundamental trajectory, I think, was going to be upwards during this period because we were in a period of reconstruction after an extensive period of capital underinvestment or non-investment in the system.

All right. As you mentioned, it seems like energy in this province is very political. The Ontario government is also mentioning that they are boosting the Ontario electricity rate by 2 billion to 8.5 billion. A lot of money there to cover the increase rates. What happens? Rebates are not permanent. So what happens if the governments decide to roll back these rebates?

Well, that's an interesting question at this stage. I mean, the rebates are in place so far as we know indefinitely. Presumably the bottom line of what people pay on their electricity bills would rise if the rebate program were terminated and nothing else changes. I think the question is that the government does have some agency to control future costs. But that's going to be a function of the choices it makes. At the moment, it's making choices in direction of very, very high cost options in terms of new build nuclear and has been emphatic in its rejection of lower cost options like renewables or there were discussions about imports from Quebec and a number of other options.

So, so part of the problem is that we've got the rebates which are eating a larger and larger piece of the provincial budget. But we're also embedding higher costs going forward, which also has to be a major concern.

Can you explain, sort of, take us through a little bit of a history lesson here in terms of the transparency between these rebates versus under the Conservative government versus the Liberal government because I know there's some criticism there as well.

Yeah, I mean, this notion of effectively hiding electricity costs goes back a long way. I mean, this happened during the Davis government when it effectively hid the costs of the original nuclear construction program in Ontario's hydro's debt until that reached the point where Ontario hydro ceased to be viable.

The current version really goes back to the Liberal government's Fair Hydro Plan in 2017 where they took 25 cents off hydro rates overnight. That was largely done by refinancing it and effectively adding to debt in the long term. In fairness to the Conservative government, at least they are more transparent about what's going on in a sense that they're paying this out of current expenditures. So, it's very clear what this is costing.

The concern is though that this is eating a larger and larger portion of the provincial budget at 8.5 billion. That's two-thirds of the current deficit. It's more than they spend on the entire justice sector. So this must be reaching some kind of upper limit and is really in a sense unsustainable in the long term. But that's sort of where we've at least we have a degree of transparency about what's happening. But I think that then begs questions about both should we be subsidizing to this level given the pressing needs in other areas in the province and health care and education and daycare everything else. And also how are we going to control these costs going forward?

Mark, we are going to leave it there. Really appreciate your time and your insights on this.

Great. Thank you very much.

Chinese EVs are seen as practical and affordable, but you won't see them on Canadian roads, and that's because the Trudeau Liberals slapped a 100% tariff on them in 2024. Flash forward to 2025, things are different. The relationship between China and Canada is beginning to thaw, and the federal government is trying to diversify our trade relationships. So, talk has ramped up about lifting that tariff. So what should Prime Minister Mark Carney do? I got insight from Joanna Curassis, director of policy and strategy at Clean Energy Canada and Adishu Lashau, an associate professor of strategic management at McMaster University's Degrroot School of Business and a non-resident fellow at the Brookings Institution.

Adisu Joanna, welcome to The Rundown. How are you two?

Doing well, thanks.

Good, thank you.

All right, let's start our conversation with a poll. This was released by Nanos Research in October. It illustrates diminishing support among Canadians for the 100% tariff rate on Chinese-made electric vehicles. Now, the poll showed that 22% of Canadian respondents, that's in the green right there, support the tariff versus 43% last year. Now, 27% of respondents somewhat opposed the tariff. That's in the pink color versus 17% last year. And in red, 20% of respondents outright opposed the tariff compared to 10% last year. Joanna, I want to come to you first. What factors are pushing Canadians to reconsider their support for this tariff?

I think at least two factors are at play here. So, first, Canada followed the US and applying an 100% tariff on Chinese EVs about a year ago, and the idea was that it was meant to buy our domestic auto sector time to ramp up its own EV production and be able to compete. But instead what we've seen is a number of EV related projects being cancelled, EV ambitions being backtracked, and so that tariff isn't really working as originally it was supposed to.

The second is I think that Canadians are seeing a number of other regions around the world benefiting from lower-priced EV models, whether it's the EU, Australia, the UK, and they would be interested in getting their hands on similarly priced EV models here in Canada because they know it saves them a lot of money on fuel and maintenance costs year after year.

Well, let's pick up on that. Adisu, Joanna had mentioned the EU has a significant auto industry and yet permits the sale of different made in China electric vehicles. Walk us through how the EU determines different rates for these vehicles. Now unlike Canada, these range from 8% up to about 35%. So help us connect the dots there. How does it work?

Yeah, so as you mentioned, adoption rates of EVs in the EU are much larger than in Canada. I think in Canada it's about 10% now, a bit below 10%. In many European countries, it's more than 60%. Norway actually 90%. So that partly has to do with better access to EVs. Many of them made in China, and the EU too had complaints about significant government subsidies on to EV makers in China. They did make a very in-depth investigation a few years ago. I think a couple of years ago now, as they concluded that there have been significant transfer of resources from the government and public owned banks to EV makers in China.

But what they did was instead of placing a blanket ban or a tariff wall on all EV imports from China, they made a very discriminating countervailing duty, meaning that they imposed a duty that was proportional to the amount of subsidy that each EV maker was receiving. So that ranged between, as you mentioned, 8% and 35%. I think that was kind of a measured approach that was convenient for EV adoption, but also at the same time compensating for disproportionate support provided to the EV makers in China as well.

All right, Joanna, I'll get you to add on that as well. We see sort of the response there, but how have EU automakers responded to the entry of these vehicles into local markets?

Yeah. Well, I think the concern is that Chinese EVs would come into the EU and totally take over, and they have done very well. They're popular with drivers, but we haven't quite seen that takeover that others were concerned about. In most EU markets, Chinese EVs make up less than 10% of EV market share. But what the entry of Chinese EVs has done in the EU is it's stimulated competition and driven domestic automakers to start introducing their own lower price models.

So we did an analysis recently that found the EU has over 20 EV models available under the price point of about $40,000 Canadian. Seven of those are Chinese EVs. But 10 are actually coming from EU automakers as they step up to compete and try to meet more of the market.

So competition is good.

Absolutely. If we want high quality and lower-priced vehicles, then competition is good. And if we want Canada's auto sector to thrive in the future, we've got to learn how to produce high-quality, competitively priced electric vehicles.

All right. Adisu, you had talked about the assessment that the EU had done. Could Canada simply follow the EU's lead in adding tariffs based on the level of Chinese subsidy by company, or should it start from the beginning and do its own?

Um so I think the in-depth investigation by the EU provided some basis, some starting point. Obviously things might have changed since then and also Canada might have a different lens in terms of how it weighs different kinds of support measures to EV makers. So I would say that the EU comprehensive report, very in depth, it provides a very good starting point. But Canada could consider finding that and building on that. Obviously this kind of thorough investigative approach is also supported by the WTO. If you are convinced that or if you can provide evidence that the trading partner is providing subsidies, you have you are justified for the countervailing duty as well. So that makes it legitimate, I think, and the EU's reporting could be a good start.

Adisu I want to stick with you. Joanna had mentioned the US in the opening remarks there. How does Canada's tariffs on Chinese EVs increase our dependence on the US?

Yeah, so as J mentioned also, in the EU markets Chinese EV makers are gaining ascendance. They are not dominant by any measure, but they have significantly succeeded compared to American EU makers which are not really that competitor. So on the price basis point but also on the base of quality and innovation and new features coming in as well. So I think if you compare the European Union market and Canadian market, you'll see that American automakers dominate here. GM is the leading EV maker here seller here, but in the EU actually it's mainly European firms followed by Chinese firms as well. So I think this is a distortionary effect of the tariff wall which is obviously harming consumers here.

Joanna, if Canada does permit the sale of Chinese EVs, what does that mean for the billions of dollars governments, private companies have invested in EV battery plants? You look at St. Thomas, you look at Windsor, what does that signal?

We have attracted about $50 billion in investments in Canada's EV battery supply chain over the last few years. Canada right now is ranked number two in the world for our EV battery supply chain potential. But while the previous government really focused on attracting investments some in some of those downstream portions of the supply chain like battery manufacturing and EV assembly, experts have always believed that Canada's real competitive advantages were more in the upstream and mid-stream portions of the battery supply chain like critical minerals, battery materials, battery components.

And so I'm really seeing a shift in focus where as some of these EV assembly plants are getting cancelled or delayed, perhaps we want to double down on those upstream competitive advantages and really position our industries to feed into those and we're already seeing that happen. You know, Prime Minister Carney and various premiers have put critical minerals at the center of our economic strategy and our plans to secure Canada's energy sovereignty.

Half of the nation building projects that have been announced to date are in critical minerals. Many of which are would produce inputs that go into EV batteries whether it's copper mine in BC, graphite projects in Quebec and Ontario, a nickel mine in Ontario, a tungsten mine in New Brunswick. And so I think this is sort of where we can focus on securing jobs and investment, and it will also help in our trade diversification efforts because these critical minerals and battery materials are a lot easier to export globally and are in very high demand with some in some of the jurisdictions that were trying to strengthen our trade relationships whether it's the EU, South Korea, Japan.

If negotiations take place between the Canadian government and Chinese EV makers. What else could Carney and the Liberal government demand from them to make the current ecosystem better?

Uh obviously there's an ongoing trade war. Supposedly there is proc response to the tariffs on EVs. The Chinese have imposed significant tariffs between 76% and 100% on canola imports as well. That's leading to a significant loss of revenue summing canola producers in Western Canada. That would be a starting point. I think the Chinese have hinted that they would be willing to retreat to scrap some of those tariff measures. Obviously, I think that would be an incentive for Canada as well to reduce significantly the 100% tariffs which are very unusually large as well.

Joanna, I'll get your take on that as well.

Yeah, I think there's a lot of other conditions that we could consider if we start letting in Chinese EVs. Maybe it's some requirements to invest in Canada. Like Adisu was just talking about, maybe it's requirements to be using Canadian inputs. So purchasing those Canadian critical minerals and feeding them into some of the Chinese battery or EV assembly plants. It could be around employing Canadian workers, engaging in skills and technology transfer. And then we could even consider environmental or labor conditions that we would want to imply apply on any sort of production or input of Chinese EVs.

Joanna, I am curious to know, viewers who are watching this are probably the first question is probably when when will I get my hands on a Chinese electric vehicle? And I'm curious, help us understand sort of the tricky situation that the current government's in. There is a negotiation, a deal that needs to be made end of next year with the US and Mexico. Does that play into talking about KUSBA, but does that have any play in sort of when a sort of timeline between the Liberal government and the Chinese work together on something?

Absolutely. The federal government is engaged in a very tricky balance where we are stuck between these two major trading partners of the US where of course, Trump has taken a very anti-China approach to building up its EV or auto and other supply chains. And as you said, we're on the eve of the Kusma renegotiation, so we don't want to get off side of the US. On the other hand, we're trying to strengthen our trade relationships with other countries including China. And as Adisu mentioned, other sectors of the Canadian economy have been impacted by the collateral damage of this 100% tariff on Chinese EVs, whether it's the canola industry, the pork industry, the seafood industry.

And then finally, we've got the consumers and the drivers in Canada that we need to be considering who, almost half of Canadians lean towards an EV for their next vehicle. And they know it will save them money, but the upfront cost is still a barrier. And so, we hope that the federal government can find a sweet spot where we're balancing industry protection, national unity, and also delivering more affordable vehicles to Canadian drivers at a time when costs of living are high.

Adis, I'll get you to add on that as well.

Yeah. So, I think the tariffs are not popular in Canada. They're harming consumers. The latest average figure I saw for a new EV car is about $63,000. It's a significant amount. So consumers would have a much better access to affordable EVs if it were not for the trolls. So they are harming our environmental goals and target cells. Well, obviously the main reason why the government is reluctant to scrap them is because of the KUSMA negotiations which are unfolding now.

And I think by July next year, we'd have to resolve that one. That would be the earliest time I think the government, the federal government might script the cap walls, but even then, I think that the American administration have shown that regardless of fair arguments, it might have signed it's willing to retract and go outside the boundaries of the law to enforce what it considers to be an important economic imperative to it. So even after the signing of the KUSMA agreement, I think the Americans might not be happy with us scraping the tariffs, but that could still continue to be a problem.

All right. My last question to you in the in the one or two minutes that we have left. I want to talk about the zero emission vehicle mandate. Obviously this was removed to help alleviate pressure on automakers. Under what conditions, Joanna, should the Carne government maybe reinstate it to help automakers increase sales of electric vehicles?

We would really like to see that policy stay in place. That is a consumer first policy that ensures the Canadian market is prioritized when global automakers are deciding where to send their electric vehicles. That policy has shown also to be effective at driving down the price of EVs as car makers need to meet increasingly stringent targets and deliver EVs that are available for or meet more of the mainstream market. I would also say from a carbon pollution standpoint, this is the main policy that we have on the books to cut pollution in our auto sector.

All right, we are going to have to leave it there. Joanna Adisu, really appreciate your insights on this one. Thank you so much.

Enjoy having him.

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