Ontario has invested C$50 million to expand low-income residents’ eligibility for rebates on their power bills, yet critics are pointing another program that subsidizes electricity for wealthier households, urging that it be refocused to deliver support where it’s genuinely needed.
“The Ontario government is keeping electricity costs down for about 100,000 additional families by expanding the eligibility for the Ontario Electricity Support Program (OESP),” the province announced in a release March 1. “New income eligibility thresholds, which have increased by up to 35%, take effect today.”
Eligible households can receive credits of $35 to $75 through the program, depending on household size. “Higher monthly credits of between $52 to $113 are available to customers who are Indigenous, living with Indigenous family members, using electric heating, or using certain electricity-intensive medical devices.”
Apart from spending $50 million to expand the OESP, the province also boosted the Ontario Electricity Rebate (OER) from 11.7% to 19.3%, “reducing a typical household’s electricity bill by a total of $26 each month—or $312 a year,” the same release states.
But the OER comes laden with problems, say critics. The OER, which accounts for roughly one-third of the province’s energy and electricity subsidy support, includes “high- and medium-income households who likely are not struggling to pay their electricity bills,” the Ontario Electrification and Energy Transition Panel (EETP) said [pdf] in a report last December.
“Indeed, on average, households with higher incomes receive much larger subsidies.”
Citing the Ontario Energy Association, the EETP adds that “the net effect of current Ontario subsidy programs is to provide larger subsidies to higher income households, and huge subsidies to very wealthy households.” A 2020 OEA report shows that “a household with an 800-square-foot apartment could expect $203 in annual tax-funded electricity subsidy. A single detached house with 1,800 square feet could expect $415, while a mansion of 10,000 square feet would receive $1,750.”
The panel adds that, “because the OER is paid for through the tax base, its current organization and delivery represents a transfer of public dollars to households with higher-than-average incomes.” According to the Financial Accountability Office, the OER will cost taxpayers $45.4 billion over the next two decades.
The program continues the trend of untargeted subsidies for electricity use in the province, following an earlier program called the Ontario Clean Energy Benefit (OECB), Zee Bhanji, stakeholder engagement and energy policy analyst at the Low-Income Energy Network (LIEN), told The Energy Mix in an email. LIEN had successfully advocated against the OECB, and following its removal, Ontario introduced the OESP.
Then, when the Doug Ford government took over, it introduced the OER, Bhanji said, even though the money used for OER “could have been better spent on increasing the funding and/or income eligibility for OESP.”
Bhanji pointed to another difference in how the two programs are likely to influence rates of electricity consumption. While the OER does not offer any incentives for households to cut electricity use, the OESP “does provide incentives for conservation in the targeted beneficiary groups because it is a capped credit.”
The Green Party of Ontario has also voiced criticism of the OER, issuing a call to “repair this broken system by reallocating that money to reduce energy poverty and invest in efficiency programs that help people save money by saving energy.”
As for the EETP, it suggested that “refocusing the OER could enable the province to deliver more help to the low-income households who need it most, and thus better and more equitably mitigate the potential cost increases associated with the energy transition.”
It also noted that applying to OESP can be a cumbersome process, and recommended that the government make that program more accessible.
“Given the potential costs associated with necessary energy transition investments, the Panel believes that rate mitigation programs will continue to be an important tool for maintaining energy affordability,” the report authors wrote. “However, the Panel concludes that these programs should be made more accessible and better targeted towards those who need support the most.”
