You’re paying a tax you don’t even know about: the water rental fee

And, it’s going up. And up.

Sir Adam Beck generation station: take a good look--you're "renting" the water
Sir Adam Beck generation station: take a good look–you’re “renting” the water

December 21, 2016

A neighbour and good friend who farms in Prince Edward County kindly provided a copy of a recent issue of the Farmers Forum newspaper and pointed out an excellent article written by Angela Dorie, an agricultural writer and Jersey cattle farmer.  The article highlighted the “water rental fee”* hidden in the electricity line on our bills to pay for the water used to generate electricity.  Dorie only realized the fee was there when journalist Paul Bliss of CTV brought it to light during a National News broadcast.

I recently wrote article on the fuel tax, suggesting a reduction of it was a way to offer relief to climbing electricity prices, but I didn’t examine how much the “water fuel tax” has risen over the past several years, or how much it has contributed to the province’s revenue.

As it turned out, in 2015 the water fuel tax was $345 million for the generation of 30.4 terawatts (TWh) and represented a cost to ratepayers that amounted to $11.35 cents per megawatt (MWh) or 1.14 cents per kilowatt hour of electricity generated. While the current government didn’t institute the tax, they have significantly raised it over the years.  Back in 2002 the tax was $116 million for the 34.3 TWh generated or $3.38/MWh and 0.34 cents/kWh so it is now 3.3 times what it was the year before the Liberals gained power.

                                                         Water fuel tax:  $2.7 billion and climbing

According to the Ministry of Finance the “water rental charge rate is fixed at 9.5% of a station’s gross revenue from annual generation.”  Reviewing OPG’s financial statements for the past 10 years (2006 to 2015) one can see the fuel tax totaled $2.735 billion.  In 2015 the fuel tax cost the average ratepayer household approximately $70.

It appears that when Dalton McGuinty was premier, he not only burdened us with the “health tax” he also raised electricity bills via a stealth tax which many of us have only just become aware of. Premier Wynne is now suggesting transparency may come to our electricity bills by endorsing the appearance on our bills of the Global Adjustment.   In the current year the GA appears headed to a record $12 billion or about 8.8 cents per kWh based on anticipated consumption of 137 TWh.

One has to wonder how many other taxes and fees are hidden within our electricity bills that will come to light if we actually get an explanation of the GA that is truthful and fully transparent!

Excerpt from the CTV news story:

For decades, the provincial government has been charging for every litre of water flowing through its own power turbines at dams to produce electricity. The tax includes water surging through Niagara Falls.

“It’s effectively a water rental,” independent energy advisor Tom Adams told CTV’s Paul Bliss.

The government charges Ontario Power Generation for the water it uses. Those expenses are passed on from the company to taxpayers.

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9 thoughts on “You’re paying a tax you don’t even know about: the water rental fee”

  1. There are many different forms of taxes and charges on water, but they almost always involve charges for the use of the water or effluent charges nominally to pay for the cost of water cleanup. Most of them are set at levels too low to have much impact on water demand, a point about which the environmental lobby constantly complains. In this case, however, it appears that the charge is simply for the use of the water to generate power (i.e. as the water powers the turbines). There is no consumption or pollution of water, as far as I can see. In other words, it is simply a tax imposed by the government on the public for the public’s beneficial use of the province’s natural resources. Is there any evidence to contradict this?

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  2. Hopefully they’ve tucked this money away and can use it when the turbines get turned off in order to protect the innocent rural people from noise, low frequency noise modulations and infrasound radiation, so they don’t have to feel forced to leave their homes. Maybe they could use this money to pay the leaseholders and quell their anxiety about the prospect of the possibility that the ethics of having innocent people harmed by these industrial wind turbines, finally and fully realized.

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  3. How bout this folks of Ontario. …. all that money is gone…… squandered…. wasted…. finito…. adios…. disappeared ……. vanished….. MIA….
    Got it……..

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    1. The Ministry of Finance refer to it as a “water rental charge” so the government avoid calling it a tax. It is charged to OPG by the Finance Ministry, paid to them and goes into general revenue and is not earmarked for any particular ministry unlike hunting and fishing licenses.

      This from the Finance Ministry:

      “Gross Revenue Charge (GRC)

      In November 2000, legislation was introduced to encourage the development and expansion of environmentally friendly hydro-electric generating stations in Ontario. Effective January 1, 2001, the existing property taxes and water rental charges paid by hydro-electric generating station owners and water power leaseholders were replaced with taxes and charges on the gross revenues of hydro-electric generating stations. These taxes and charges on gross revenues represent separate components of what is known as the Gross Revenue Charge (GRC).”

      The original purpose behind the GRC appears to completely ignored now–its just another tax grab.

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  4. USE YOUR HEADS….. This fee was put in place in advance of the sell off of the Generation stations. In this way Ontario Would still get income from the power plants even though OPG is long gone.

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