It is only a matter of time before the reality of Smitherman’s and McGuinty’s green legerdemain becomes fully evident. While wholesale electricity costs have been going down, Ontario consumers’ electricity bills have been going up.

Ontario has a power problem.

A strategy to subsidize the province’s nascent green energy industry is starting to sting businesses and many households that find themselves paying the biggest markups on electricity pricing in the country.

Even as electricity demand — and market prices — dropped last year with the global economic downturn, electricity bills have risen steadily on the back of generous contracts signed by the province’s power planning agency. Now, the government of Premier Dalton McGuinty is preparing for a looming political backlash.

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The government is sitting on a “political time bomb,” said Toronto energy lawyer Peter Murphy. “While renewable energy is a great thing for the environment, it’s also expensive.”

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Ontario does not have the highest electricity costs on the continent, but it stands out for the gap between the market price of power and the price charged to consumers. Toronto ranked in the middle of the pack among North American cities, according to a study of consumer prices done by Hydro-Québec last April. But industry observers say prices will increase substantially in Ontario over the next two years as the cost of higher priced renewable energy flows through to consumers.

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