The Ontario Fair Hydro Plan And Its Novel Financing Structure

In response to political pressure due to rising electricity rates, the Ontario provincial government (the Province) announced earlier this year that it would be lowering electricity bills for residential consumers, small businesses and farms as part of a significant restructuring of how the costs of operating the electricity system are treated. Electricity rates have been rising in Ontario due in large part to the cost of fixed-price contracts entered into with clean energy generators over the last decade. These fixed-price contracts have increased the cost of electricity in Ontario as compared to other jurisdictions.

What does the Fair Hydro Plan do?

The Province's plan, known as the "Fair Hydro Plan," contemplates an immediate 25% reduction in electricity rates for eligible consumers. At the same time, it keeps the amount payable to generators of electricity (through the clean energy contracts and otherwise) unchanged.