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Ontario’s Liberal government has announced plans to remove the provincial portion of the harmonized sales tax (HST) from hydro bills to offset soaring costs for ratepayers.

The Liberals say removing the eight per cent provincial share of the HST as of Jan. 1 is expected to result in savings of $130 for the average household a year. Rural ratepayers could receive additional relief resulting in $540 a year in savings.

WATCH: Wynne government to scrap provincial portion of HST from hydro bills

4:01 Wynne government to scrap harmonized sales tax from hydro bills Wynne government to scrap harmonized sales tax from hydro bills

The announcement was the focal point of the Liberals’ Throne Speech Monday intended to jumpstart Premier Kathleen Wynne’s government which has trailed the Progressive Conservatives in recent polls. The Liberals also lost a key byelection in the riding of Scarborough-Rouge River riding last week.

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“Whether in Kenora, Sudbury, Belleville, London or Barrie, your government has listened to and has heard your concerns,” said Lieutenant Governor Elizabeth Dowdeswell as she read the prepared speech.

“It recognizes that the cost of electricity is now stretching family budgets. It will therefore act on an idea it has heard from many individuals and groups,” Dowdeswell said in the Legislature.

READ MORE: Ontario won’t be able to reduce soaring hydro costs anytime soon, say experts

However, the rebate will cost taxpayers about $1 billion a year.

“I think it’s important for us to recognize that we’re doing something for our remote rural and northern customers and consumers as well,” Energy Minister Glen Thibeault told reporters. “They’re going to be saving about 20 percent on all of the bills and that’s significant for them.”

Last week, the premier called ever-increasing hydro bills an “urgent issue” for her government.

“One of the things that we heard most consistently was hydro rates. I heard about electricity rates in the north. It is not something that is isolated in one riding in Toronto. This is a concern across the province. I recognize that,” Wynne told reporters.“It’s an urgent issue for the minister of energy.”

READ MORE: Rising hydro costs only an ‘urgent issue’ for Ontario premier after byelection loss: MPPs

Global News has reported extensively on the issue of hydro affordability in Ontario particularly for rural residents.

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The Liberals have maintained the hydro rates rose because Ontario shut down its coal burning power plants and invested heavily in infrastructure to make the electricity system more reliable than a decade ago

The opposition parties and experts that have spoken with Global News say electricity rates are higher due to overly-generous, long-term contracts for wind and solar power handed out by the Liberals. The Green Party has blamed the refurbishments of nuclear generating stations for adding to Ontarians hydro bills.

WATCH: Ontario PCs claim hydro rates expected to rise despite Liberals’ ‘band-aid’ HST rebate

0:52 Ontario PCs claim hydro rates expected to rise despite Liberals’ ‘band-aid’ HST rebate Ontario PCs claim hydro rates expected to rise despite Liberals’ ‘band-aid’ HST rebate

Progressive Conservative Leader Patrick Brown called the tax cut “merely a Band-Aid solution.” He said Wynne ignored years of complaints about rising electricity rates and only took action after losing the Liberal stronghold of Scarborough-Rouge River to the Tories in a Sept. 1 byelection.

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“When this government loses a third consecutive byelection in a riding that was a Liberal fortress held for over 20 years, now (rising electricity rates) is a crisis,” he said. “The problems of everyday Ontarians are never a problem until it’s Premier (Kathleen) Wynne’s problem.”

Auditor General Bonnie Lysyk has said the electricity portion of hydro bills for homes and small businesses rose 70 per cent between 2006 and 2014.

WATCH: Liberal government says province will continue with cap and trade program

1:07 Liberal government says province will continue with cap and trade program Liberal government says province will continue with cap and trade program

Following today’s throne speech, Ontario NDP Leader Andrea Horwath called on the Wynne government to remove the HST altogether.

“The only reason that we have the HST on our hydro bills in the first place is because the Liberals put it there. Now, six years later the premier says she’ll rebate the HST. But people are going to have to wait for four months,” Horwath told reporters. “That raises a lot of questions about how long this rebate is going to last and how exactly it’s going to work. People need real relief now.”

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“My message to the premier is this — just take the HST off of hydro already. Once and for all. Just do it. Get it over with and permanently take the HST off the hydro bills.”

With files from The Canadian Press