The province’s Auditor General is calling out Kathleen Wynne’s hydro plan, saying that the decision could cost Ontarians up to $4 billion in interest costs over the next 30 years.
In a special report released on Tuesday, the Auditor General said that the government “created an unnecessary, complex financing structure to keep the true financial impact of most of its 25% electricity-rate reduction off the province’s books.”
“The accounting proposed by the government is wrong and if used would make the Province’s budgets and future consolidated financial statements unreliable,” said Auditor General Bonnie Lysyk. “This cannot be taken lightly.”
Lysyk said that they aren’t questioning the government’s policy decision to give residents discounted electricity rates, but instead, how the government is going to report the effects of their decision.
“There’s still time to fix it, and we’re encouraging the government to do so,” said Lysyk.
The Special Report, a 56-page document titled The Fair Hydro Plan: Concerns about Fiscal Transparency, Accountability and Value for Money, studies in detail the “needlessly complex” financing structure the government created to achieve the accounting result it wanted.
According to the Financial Accountability Office of Ontario, the total cost of the Fair Hydro Plan’s electricity rate reduction is estimated to be $39.4 billion over 30 years, including about $4 billion in extra interest charges.
The Office says that these charges are “extra” because Ontario doesn’t plan to borrow all the money directly. Instead, according to the report, the financial structure the government designed has other government entities, which includes the Ontario Power Generation, where borrowing comes at higher interest rates.
“Internal records show that senior government officials were aware their approach to borrowing could result in Ontarians paying significantly more than necessary,” Lysyk said.
The Auditor General report recommends the government state the true financial impact of its electricity rate reduction plan in its budgets and consolidated financial statements. It also recommends using the least costly financing structure to fund the electricity-rate reduction.