Sunday, September 4, 2011

Reason # 20 McGuinty must go!

Did you know that on top of the debt retirement charge you also are paying a "Special Purpose Charge" on your hydro bill?
McGuinty passed a regulation to the Ontario Energy Board Act charging all energy distributors a set charge of nearly $54 Million which then permits the distributors to charge it back to the ratepayer (that would be you!). There is a constitutional challenge against the McGuinty government that this is an indirect tax which is unconstitutional.
The controversy, with respect to the Regulation, lies not in the principal, to fund the province's green energy initiatives, but rather it arises from the fact that the Regulation permits distributors to recoup the amount of the SPC assessment from their customers – Ontario ratepayers.
The province of Ontario derives its taxation power from section 92(2) of the Constitution Act, 1867. The province does not have the constitutional jurisdiction to enact an indirect tax, unless it can properly be qualified as a regulatory charge imposed under one of the province's heads of power under the Constitution Act, 1867. If the SPC is found to have the attributes of a tax, is indirect, and is not found to be connected to any form of regulatory scheme, it is unconstitutional, and of no force or effect.
It is argued that the SPC has the attributes of a tax: (i) it is compulsory and enforceable by law; (ii) it is imposed under the authority of the legislature; (iii) it is levied by the OEB, which is a public body; (iv) it is intended for a public purpose, namely energy conservation programs in Ontario; and (v) it is unconnected to any form of regulatory scheme, as the broad and all-encompassing purposes set out in section 26.2 of the OEB Act make clear. Because the assessment is issued against the distributors but ultimately paid by ratepayers, it amounts to an indirect tax, and will be deemed unconstitutional, unless the government can discharge its burden and establish that the SPC is in fact a regulatory charge.
The implications of motion are significant: if section 26.1 of the OEB Act is found to be constitutionally valid, it is expected that the OEB will next issue an assessment against gas distributors, an assessment which could exceed $100 million. The costs of this assessment would also be recouped from ratepayers, thereby increasing the cost of energy to Ontario ratepayers by more than $150 million over a short period of time, above and beyond the increases already planned, and authorised by the OEB.
In a nutshell, if this SPC is not found unconsititutional, expect your gas rates to also jump! 
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October 6th please vote and please vote for the candidate most likely to unseat the Liberal!

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