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On June 1, 2017, the Fair Hydro Act came into effect. This was the legislative mechanism that implemented Ontario’s Fair Hydro Plan initiatives. Through this act, the province made good on commitments to reduce electricity costs by 25% for residential customers in Ontario and to tie rate increases to inflation for four years.

Provisions within this act represented a significant achievement for First Nations, particularly in eliminating delivery charges for on-reserve First Nation citizens and developing programs that reflect First Nation treaty rights and the nation-to-nation relationship between the province and First Nations. This Act included provisions for First Nation residential customers to further reduce the burden of rising electricity costs by eliminating delivery charges.

Why Electricity Costs Became a Crisis
An electricity bill in Ontario is composed of four basic items. They are:

  1. The cost of electricity itself, managed by the Ontario Energy Board (OEB),
  2. Regulatory charges, administered by the Independent Electric Systems Operator (IESO),
  3. Delivery charges, which includes transmission, local distribution, and customer service charges from local authorities, and
  4. Debt retirement charge, which repays remaining debt from the former Ontario Hydro. This charge was cancelled as of January 1, 2016.

Between 2006 and 2017, the cost of electricity in Ontario has risen at four times that of inflation. So what led to the historically unprecedented electricity cost increase? Answering this questions requires looking at all four of those charges, especially the electricity and delivery charges that constitute the bulk of electricity costs.

As helpfully outlined in this article, the prices of hydro are the result of provincial decisions made in the 2000s. The Liberal government inherited a provincial electricity grid that badly needed significant investment, so they upgraded nearly all the infrastructure that generates and distributes electricity. The province outsourced the work of building and running the new power plants in exchange for 20-year contracts that guaranteed revenue for private companies regardless of how much electricity plants produced. Green incentives and guaranteed revenue was expensive, and those costs were passed onto residential customers.

Impact on First Nations
First Nations, especially remote First Nations, are uniquely impacted by the cost of transmission charges. Put in brief, First Nations are in economically disadvantaged positions because the cost of electricity is uniquely expensive, and First Nations have been historically economically marginalized.

Chiefs of Ontario has a number of standing and historic resolutions that address the cost of electricity. Resolution 15/21 (“Investigation Into Hydro Rates and Innovative Options”) tied electricity charges to fundamental rights protected in UNDRIP, arguing specifically that the cost of electricity infringed on First Nations rights to economic and social improvement (Article 21 of UNDRIP) and to determine and develop economic priorities and strategies (Article 23 of UNDRIP). The resolution specifically said, “Energy prices are discriminatory against First Nations peoples, who have higher rates of poverty than non-Indigenous peoples and who face substantially higher energy delivery costs than non-Indigenous peoples”

Furthermore, the old electricity charges did not reflect the treaty rights or nation-to-nation relationship between First Nations and the province. In a COO report, it was made clear that “The frustration of unmanageable energy costs to First Nations customers is another reminder of the interlocking system of colonization that pushes down the spirit of the First Nations communities. The association between First Nations and energy providers is yet another paternalistic relationship with an entity that thrives by utilizing the resources of the First Nations people of Ontario. The rights of the First Nations should never be subordinated to the rights of a corporation.” (Chiefs of Ontario, “More than a Bill: The First Nations Energy Rate, p. 3)

Chiefs of Ontario Work this Year
In response, Chiefs of Ontario worked to find innovative solutions to lower electricity rates. The first task, as affirmed in Special Chiefs Assembly Resolution 13/15, was to negotiate a collective purchase of 10% stake in Hydro One when it privatized.

The second was to advocate with the province for a First Nations Energy Rate (Chiefs in Assembly Resolution 52/16). Chiefs of Ontario worked with the Ontario Energy Board (OEB) to hold five engagement sessions with First Nations and used the feedback to assemble the report “More than a Bill: The First Nations Energy Rate.” This report resolved to support the OEB recommendations for a 100% delivery rate credit, offer a seasonal fixed credit, a 50% bill reduction, and a First Nation specific rate class.

This report outlined a First Nations rate that would reflect the historical relationship between the First Nations and Ontario, as affirmed in the Political Accord. This included that First Nation treaty rights include electricity, that First Nations should not pay more for electricity than the USA because of the nation-to-nation relationship, and that revenue saving mechanisms apply to all First Nations regardless of location.

The Fair Hydro Act, 2017
The Fair Hydro Act was developed with First Nation input. It has specific provisions for First Nations that reflect the principles articulated by Chiefs of Ontario as guided by the Chiefs in Assembly. Most specifically, Section 79.4(1) of the Act enacted the delivery credit for “on-reserve consumers,” responding to the advocacy from COO on behalf of First Nations. This was done without the individual needing to apply for the credit. This was a significant achievement at COO on behalf of Ontario First Nations.

In addition, the total cost for all electricity (note – not the distribution charges or regulation charges) was reduced by 25% for all customers. The changes were implemented on July 1, and will be seen on August bills. Average savings will be in the range of $85 a month.

Next Steps:
Chiefs of Ontario continues to advocate on behalf of First Nations in the energy sector. One key element that COO continues to advocate for is the First Nation Rate for off-reserve First Nation citizens.

While the mandate for COO from the OEB was to discuss a First Nations Energy Rate, a number of other initiatives came from these discussions. These include infrastructure investments that can alleviate First Nation energy poverty for community cost-savings, updating all permits in Ontario to reflect First Nation jurisdiction and treaty rights, conservation programs that would be made available to all First Nations in Ontario, incorporation of First Nation goals and needs into the Ontario Long-Term Energy Plan, and developing a First Nations Energy Council for guidance over a First Nations Energy Strategy.

Resources:

Adrian Morrow and Tom Cardoso, “Why Does Ontario’s Electricity Cost So Much? A Reality Check.” The Globe and Mail.

Ontario’s Fair Hydro Plan Information Page

Fair Hydro Act, 2017 full text

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