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?

Uh, 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.

Um but what we need to look at down the road um is the impact of the very large nuclear expansion program uh that the Ford government has set in motion and and that will inevitably have a very large uh impact on rates in terms of moving them upwards.

and that will inevitably have a very large uh 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, uh, which is this overwhelming commitment not just to, uh, the refurbishment of existing facilities, but but a series of major new build projects, um, at Welssleyville, um, at the Bruce site and and at the Darlington site, um, we are effectively embedding uh, very very high costs into the system in the long term.

All right. So the so the province is going all in um 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 the this build the cost the technology.

Um well two questions there.

One around the the one new build reactor project which is underway um which is the what's called a small modular reactor at Darlington, although it's not modular at all.

Um, 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, um, 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.

Um, in terms of oversight, the the short answer is no.

Um, there is no oversight or review process around these plans.

Uh, a combination of steps taken by the previous wind government and the previous and the current government effectively eliminated what what oversight and review process we have.

So the system is effectively running on political directives uh from the minister's office and the premier's office and the various agencies are are mandated by statute to implement the directions laid out in the those directives whether whether they make sense or not.

Well, help us understand that. So when when we think about uh 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 uh monitoring any of this?

Well, the board has some oversight of rates, but but it has explicitly no mandate.

to review the overall strategy or plans which the province has articulated that that role was eliminated uh back in 2015.

Um so that that element is 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 coste effective or prudent or lowest carbon option available to the province.

Um, in terms of the independent electricity system operator, um, 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 uh supply and demand on an ongoing basis.

Um but it has certainly no regulatory role and and its planning functions are are deeply attenuated again by the fact that it is fundamentally subject to the directives issued from the political level.

it its job is to implement those those directives, not really to ask questions about do they make sense or are there different pathways the province could be considering uh 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 four 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 uh I am curious what's important to understand about previous rate increases under other governments.

now I should mention that these new rates are not included in this data but uh I am curious what's important to understand about previous rate increases under other governments.

well what's happening here is is a number of things.

I mean some of this is also just accounted by straight straightforward inflation.

Um But more fundamentally, we've been through a period, we went through a long period of sort 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 um whatever choices you made.

Um, 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.

Um, so that explains in large part uh 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?

uh but the fundamental trajectory I think was 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 uh it seems like energy in this province is very political.

Um the Ontario government is also mentioning that they are boosting the Ontario electricity rate uh by 2 billion to 8.5 billion.

A lot of money there to cover the increase rates.

What happens? Uh rebates are not permanent. Uh so what happens if the governments decide to roll back uh these rebates?

Well, that's that's an interesting question at this stage.

Um I mean the rebates are in place so far as we know indefinitely.

Um presumably the bottom line of what people pay on their electricity bills would rise if if the rebate program were terminated and nothing else changes.

Um I think the question is that the government does have some agency to control future costs.

Um but that's going to be a function of 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 that we've we've got the rebates um which are eating a larger and larger piece of the provincial budget.

Um but we're also embedding higher costs going forward which which also has to be a major concern.

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

Yeah, I mean the this notion of 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 of the original nuclear construction program in Ontario's hydro's debt until until that reached the point where Ontario hydro ceased to be viable.

Um, the current version really goes back to the wind government's fair hydro plan in 2017 where they took 25 cents off hydro rates overnight.

Uh, that was largely done by refinancing it and effectively adding to debt in the long term.

Uh, in fairness to the Conservative government, at least they are more transparent about what's going on in a sense that they're they're paying this out of current expenditures.

So, it's very clear what this is costing.

Um, the concern is though that this is eating a a larger and larger portion of the provincial budget at 8.5 billion.

That's twothirds of the current deficit.

It's more than they spend on the entire justice sector.

Um, so this this must be reaching some kind of upper limit and it's really in a sense unsustainable in the long term.

Um, but that's that's sort of where we've at least we have a degree of transparency, but what's happening?

Um, but I think that then begs questions about both um 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.

Um, and also how are we going to control these costs going forward?

Um, 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.