Taxing Hydroelectricity in Ontario

David W. Gillen and Jean-Francois Wen

Canadian Public Policy, 2000, vol. 26, issue 1, 35-49

Abstract: Using data from the financial statements of Ontario Hydro and an observed cost of importing electricity to the province, we provide an estimate of the hydroelectric rent that is potentially available in Ontario as tax revenue. Our results suggest that the existing water charges in Ontario can be raised ten-fold to capture this rent. We assess the impact that fully taxing the rent would have on the prices of electricity and manufacturing products, given that a substantial portion of the potential rent is currently used implicitly to subsidize electricity consumption. We relate our findings to the ongoing restructuring of the electricity market in Ontario.

Date: 2000
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