The Ontario Energy Board agreed Tuesday to let utilities raise rates to recover $18 million they paid in fines and legal costs after charging consumers excessive interest on late payments.

“To deny the utilities recovery would be to impose on their shareholders, typically the municipalities in which they operate, costs which they were compelled to incur,” the energy board wrote in its decision.

“In the board’s view, no fair-minded person, cognizant of the facts of this case could come to a different conclusion.”

The energy board is also expected to rule shortly on a request from Ontario Power Generation for a 6.2 per cent increase in its electricity rates effective March 1.

The Liberal government has been under non-stop attack over rising electricity rates, especially since the HST was added to hydro bills last July. But Premier Dalton McGuinty said Tuesday he wouldn’t be directing the energy board on OPG’s rate request.

“The OPG request is the kind of thing that will have to be considered by the Ontario Energy Board,” said McGuinty.

The New Democrats are predicting increasing electricity bills will cost the Liberals seats in the Oct. 6 election, and said the OPG rate hike would have a major impact on consumers.

“It’s a huge hike and in the context of electricity prices that have already been compounded and then added to by Mr. McGuinty’s HST, it just increases the crushing burden on Ontario families,” said NDP critic Peter Kormos.

“This is crushing Ontario families and is going to be a major issue in the upcoming provincial election, and it’s something around which Mr. McGuinty has no defence for himself and the Liberals whatsoever.”

In the legislature, the Progressive Conservatives accused McGuinty of treating Ontario families “like they’re bottomless ATM machines” when it comes to electricity bills.

“Why do they keep paying more and more for your bungling on the hydro file,” asked Opposition Leader Tim Hudak.

“You just do not respect the fact that Ontario families get stuck with the bills for the expensive mess you’ve created in our hydro policy.”

Hydro One, the giant transmission utility that also acts as a local distribution company for about one million customers, is threatening to cut off power to people it knows are struggling to pay their bills.

“We recognize that some Ontario families are experiencing financial difficulties and having problems paying their utility bills,” wrote Hydro One’s manager of public affairs, Enza Cancilla, Jan. 27.

“We encourage these customers in particular to contact our customer communication centre to discuss payment arrangements and avoid potential disconnection of service.”

OPG produces two-thirds of the province’s electricity, 70 per cent of which is subject to regulated prices set by the energy board.

OPG says a 6.2 per cent increase for its regulated output from nuclear plants and large hydro stations would add about $1.86 to a typical homeowner’s monthly hydro bill.

The government-owned utility originally asked for a 9.6 per cent rate increase, but scaled that back after the Liberal government asked the huge generator and Hydro One to keep increases to a minimum.

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OPG is seeking 3.7 cents a kilowatt hour for power generated by its large hydro-electric stations, and six cents a kwh for its nuclear output. By comparison, Bruce Power was paid a reported 6.3 cents a kwh last year for output from the nuclear reactors it leases from OPG.

The province is paying some solar power generators up to 80 cents a kwh under its controversial Green Energy Act.

Ontario homeowners and small businesses pay between five and 10 cents per kilowatt hour, depending on time and amount of use.

OPG president Tom Mitchell says the utility is the lowest-cost energy provider in Ontario and intends to stay that way.

Soaring hydro bills have already prompted the Liberals to introduce 10 per cent rebates this year, but they’re still on the defensive after admitting electricity prices would rise 46 per cent over five years.

The increases are necessary to pay for badly needed repairs and upgrades to Ontario’s electricity system and to phase out all coal-fired generation by 2014, said McGuinty.

“Most Ontarians now understand that our electricity system was at risk, in a tremendous state of disrepair in our early years, with warnings about an inadequacy of supply,” he said. “We’ll let Ontarians pass judgment on a daily basis and at election time.”

Shutting down the coal plants will save lives and billions of dollars in health care costs caused by pollution, added McGuinty.

The government had to tell 1,000 farmers who invested money to get into solar generation that there’s no room for the electricity they generate on the province’s power grid.

And it recently imposed a moratorium on off-shore wind farms, the same move the Liberals made prior to the 2007 election, which they reversed after winning.

The opposition parties say those reversals and flip flops have left McGuinty and the Liberals with no credibility on the electricity file.

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