TORONTO -- Pension plans in Ontario's electricity sector are "far from sustainable" and increase the risk of further hydro rate hikes, warns a quietly released Ontario finance ministry report.
Posted to the ministry's website Friday, the 45-page report was penned by special adviser Jim Leech and dated March 18.
Leech said the pension plans for public electricity bodies, including Hydro One and Ontario Power Generation, are "generous, expensive and inflexible" when compared to other public sector plans.
"The employers bear all risks, such as investment performance, interest rate changes and increased longevity," he wrote of the plans. "These risks increase both the amount and the volatility of pension costs, which is ultimately borne by ratepayers, customers and shareholders."
Leech, the former CEO of the Ontario Teachers' Pension Plan, wrote any shortfall in a plan will have to be covered by taxpayers. That could impact hydro prices in the province, he said.
"Pension costs represent a significant risk to prices," he said. "It is difficult to predict pension expense as market returns shift, low interest rates continue, and mortality assumptions change. This volatility represents a price risk for customers."
Leech also said that for the $585 million in contributions to the plan in 2012, employees contributed just over $100 million.
He recommends moving to 50/50 contributions, saying it will help "address public concern over the impact of the employer contributions to these generous pension plans on electricity rates."
The plans have 18,000 active members and approximately 19,000 retired or deferred members.
Tory finance critic Vic Fedeli accused the Liberal government of "suppressing" the release of the report until the eve of a long weekend.
"They talk about being open and transparent but it's anything but that," he said.