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Consolidation of local hydro utilities ‘Problematic’ for the North

Thursday, January 17, 2013   by: Kate Adams


Federation of Northern Ontario Municipalities
News Release

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Electricity could get a whole lot more expensive in the near future for the majority of Northerners. “A new Northeastern Ontario regional electricity distribution utility as proposed by a provincial panel that consolidates municipal utilities with Hydro One could mean significantly higher costs and decreased levels of service” according to Alan Spacek, Mayor of Kapuskasing and President of the Board of Directors of the Federation of Northern Ontario Municipalities.

A provincial panel recommended the creation of eight to twelve centralized regional electric distribution utilities across Ontario, with one serving the entire Northeast. Spacek notes “The municipal utilities serving the northeast are profitable and have low rates. Hydro One has much higher rates, much higher debt levels and higher costs. This would drive up average rates for all customers. Under the panel’s proposal, all municipally owned utilities would be forced to give their assets to the new regional entity.”

According to the Provincial Panel’s initial recommendations, Hydro One which is owned directly by the Province of Ontario and servicing the rural and remote parts of northeastern Ontario would also give up its assets to the new regional utility. “Across the entire north municipal utilities serve 434,000 customers out of a population of 531,000. With this model 434,000 people could see their rates increase. This could translate into over $300 per year in higher costs for a residential customer in a northeastern Ontario urban area”, according to Todd Wilcox, Chief Operating Officer of North Bay Hydro.

Spacek continued “Hydro One carries nearly 3 billion dollars of debt which would be transferred from the province to the new regional distribution utilities and to electricity customers in the northeast whether they benefit from the assets carrying this debt or not. This ‘shell game’ does not benefit us here in the North” he claimed.

The panel also did not consider the Growth Plan for Northern Ontario completed by the Ministry of Northern Development , Mines and Forestry in 2011 which identifies the cities of Greater Sudbury, North Bay, Sault St Marie, Timmins and Thunder Bay as economic hubs that anchor the North’s existing and emerging priority economic sectors.

Mr. Spacek request that “We call on the current Premier and on the new Premier to enter into meaningful dialogue that results in lower electricity costs and improved levels of service for all residents of the North.” The province directly controls 80-95% of electricity costs for generation, transmission, debt retirement and taxes while local distributors are responsible for the much smaller difference. “The province must look with equal vigor to control their costs of their 80-95% of the bill if electricity costs are truly to be reduced.”

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