November 17, 2010

Electricity rates in Ontario slashed 10%

CANADA - Ontario's Liberal government has decided Ontarians are paying too much for electricity (or as we call it locally "hydro"). Thus they've decided to slash hydro bills by a whopping 10% starting January 1st 2011.

It will cost the province $1 billion per year and it will only effect homes and small businesses (corporations, factories, etc. will still pay the full rate).

The problem you see is that electricity in Ontario costs about 13.5 cents per kWH to produce, but its sold for approx. 6.5 cents each. The province ends up paying almost 50% of the cost.

So in reality this reduction is nothing new. Ontario has been subsidizing electricity rates since the beginning.

The average hydro bill in Ontario about $125 a month, so this $12.50 / month reduction will save ratepayers about $150 each / year... you will know this because the price discount will be mentioned on your bill as the new “Ontario Clean Energy Benefit” reduction, just above taxes.

This in essence decreases the amount people in Ontario pay, despite the 8% increase due to HST's introduction back in Summer 2010. By roughly 2% overall.

Expect more tax breaks and other things coming in the near future too. Its an election year and the next provincial election is set for October 6th 2011.

The Liberals have also trimmed Ontario's budget.

And there is also plans to scrap the “debt-retirement fees” of around $10 a month from the old Ontario Hydro corp. It is due to come off bills in 2016 anyway, but they might scrap it early to make voters happy if they can cobble together $5 billion towards the project.

In September, an Angus Reid poll found 86% of Ontarians feel “it is harder now than it was two years ago to make ends meet.” Thus helping voters pay for their bills (of which electricity is a chief complaint) is the right direction if they want to get more votes.

While they are a it they need to start pressuring Ottawa on a list of things that should be exempt from HST:

#1. Healthy Food. (This might require grocery stores to include the tax with the price of unhealthy "junk food", but would result in most vegetables, meats, milk, cheese, etc. coming in at a lower price. Ontario has been debating for years of putting a tax on junk food. This would be the opposite, a tax exemption on healthy food.

#2. Children's Educational Materials.

#3. Fitness Equipment, Gym Memberships and Bicycle Equipment.

#4. Green Cars: Hybrids, Electrics, Hydrogen-powered.

#5. University Books.

Some of these used to be exempt from PST or GST, but when the HST came into effect they lost all the exemptions. You can probably come up with a list of things you'd like to see exempt from HST.

The only snag is that Ontario needs Ottawa's permission to get exemptions in...

So what if Ontario created something which is the OPPOSITE of a tax? For example an "Healthy Food Reduction" which appears on bills right before the taxes are applied. Say 10%.

In one pocket and out the other.

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