'Remortgaging' Ontario Hydro — a Sudbury financial expert weighs in
The short-term decision to earn political capital means others might be left holding the bill, expert says
Kathleen Wynne has compared the Liberals plan to reduce hydro rates to remortgaging a house.
A Sudbury insolvency trustee says remortgaging a house can often be a good idea when homeowners are looking at refreshing their dwelling. But Nathan Sugeng, a licenced trustee with Sudbury's Fontaine and Associates, questions if it's the right analogy to be using when it comes to describing Wynne's plan.
"Looking at improving the house, fixing the foundation, the HVAC, renewing or making it better, it would be a good use of remortgaging," Sugeng told CBC News.
"Financing an air conditioner over seven years makes sense. Those improvements will last many years."
He adds homeowners can also see an immediate benefit to monthly costs.
"By extending the lives of the contract by 10 years, it allows the monthly payment to come down," Sugeng said.
"You would see a reduction by about 25 per cent if you were to extend your mortgage over 10 years."
But the bad news is, Sugeng says, is that interest is tacked on. "And you pay more in the long run."
As for Wynne's plan? Sugeng says the mortgage analogy doesn't work.
"You're not improving anything ... You're' not getting any savings of interest and you're not addressing the key problems ... that hydro is expensive to produce."
The politics behind Wynne's plan
The Liberals have recently seen their popularity sink 14 points below the Conservatives. Political analysts say high hydro rates have been one of the reasons.
"And I'm getting mixed messages," Sugeng said. "[We were told] we've got the best energy system in North America, now it's 'oops!' So which is it?"
The short-term decision to earn political capital means others might be left holding the bill, Sugeng continues.
"What concerns me most is what we're passing down to our children. Are the assets still going to be there before the debt is paid off?"
Audience note: Greg Fontaine, president of Fontaine and Associates, is vice president of the Sudbury Liberal Riding Association.