TORONTO

A Liberal promise to slash Ontario hydro rates will cost taxpayers $25 billion in interest payments, according to government projections.

The electricity rate cut announced by Premier Kathleen Wynne Thursday morning will see rates drop by 17%. That jumps to 25% when a previously announced 8% credit for the HST is included.

But it will come with a massive cost — billions in new debt — to be paid over the next 30 years.

“We’re refinancing the mortgage and we’re setting a new term that stretches over a longer period,” explained Premier Kathleen Wynne. “Over time, it will cost a bit more. That’s true. And it will take longer to pay off. That’s also true.

“But it is fairer, because it doesn’t ask this generation of hydro customers alone to pay the freight for everyone who came before and everyone who is going to come after,” she added.

The Liberal plan will offer relief on hydro bills starting in June. The government will “refinance” contracts with electricity generators to provide the rate relief.

Instead of the costs being born by hydro customers, under this new arrangement, the province will pay for the contracts over a longer term. It will also cap any further hydro rate increases over the next four years to the rate of inflation.

The Liberals pegged the interest costs on the refinancing at $25 billion, but opposition parties estimated the fees could be as high as $42 billion.

With Wynne’s approval ratings reaching all-time lows this week, she denied that the move was about saving her political career ahead of the June 2018 election.

“This fix to a policy that wasn’t working is about helping people to deal with their electricity bills,” she said. “I don’t expect a celebration as we make these announcements today.”

Wynne said governments of all stripes have made mistakes when dealing with Ontario’s electrical system.

Progressive Conservative energy critic Todd Smith slammed the Liberal plan, saying it will take decades to pay off the hydro debt.

“This is the Liberals using public money to pay for their election campaign,” he insisted. “We saw this back in 2011 ... when they cancelled the gas plants. That cost us $1.4 billion in taxpayer money.”

NDP energy critic Peter Tabuns said the decision will please bankers but won’t actually chip away at problems facing Ontario’s electricity network.

“If the premier isn’t going to address the structural issues then she’s not going to address the fundamental issues that are driving up rates,” he said. “She’s put a very large .., very expensive Band-Aid on this problem.”

sjeffords@postmedia.com

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