I will appear on CBC’s “Ontario Today” show on March 4, 2011 at 12:05 discussing the recent debate in the provincial legislature on the Debt Reduction Charge (DRC) on power bills in the province. Originally introduced in 2002 as a temporary 0.7 cents/kWh tax on electricity consumers to manage the insolvency of the former Ontario Hydro, the DRC has morphed into a slush fund to fund various government electricity initiatives.

The podcast is here.

The DRC is collected by a secretive Crown corporation called Ontario Electricity Financial Corporation. Since it was created, OEFC has never revealed any updates for its financial plans for the future.

The implications of major shifts in OEFC’s financial flows have never been properly explained. Up until 2005, financial losses on the old Ontario Hydro’s contracts with independent power producers were the responsibility of OEFC.  In 2005, the Liberal government wisely decided to move these contracts directly to ratepayers. However, the quid pro quo implications of the nearly $1 billion per year reduction in OEFC’s responsibilities were never explained.

When it was originally set up under the Conservative government, OEFC reported that it planned to get rid of the need for the DRC by 2012. Since then estimates for the date consumers will be free of the DRC have wandered further into the future.

The good news about the DRC is that the revenues all stay within the power system. The bad news is that the financial liabilities within the power system are escalating at a drastic but undisclosed pace, even as large and growing amount of electricity costs are now transferred to the provincial deficit under Premier McGuinty’s outrageous make-our-children-pay Clean Energy Benefit plan. Consumers should not expect the DRC to disappear any time soon