TORONTO - Ontario's cash-strapped government will not follow a recommendation from economist Don Drummond and eliminate the 10 per cent rebate on electricity bills earlier than planned, Premier Dalton McGuinty said Thursday.

The Liberal government introduced the energy rebates Jan. 1, 2011, to offset the impact of rebuilding the aging power grid and its green energy policies, which were sending hydro bills soaring.

Drummond's report on reforming government services to eliminate the $16 billion deficit recommended the government scrap the electricity rebates, which cost $1.1 billion a year, "as quickly as possible."

McGuinty had his own take on Drummond's recommendation.

"I read that particular section with interest and I think the advice as I interpret it is: 'don't end it any later than you'd originally planned. If you can end it sooner, fine,"' McGuinty told reporters.

"We don't intend to end it any sooner."

However, Drummond warned the government was on the wrong track with the 10 per cent energy rebates, which he said "distort true costs of electricity and discourages conservation.

"We foresee that the sudden end to such a generous incentive will be difficult if concluded as planned on Dec. 31, 2015, as it will create a considerable price shock to ratepayers," wrote Drummond.

The rebates will stay in place for the full five years, as originally scheduled, when the existing Debt Retirement Charge is finally eliminated from hydro bills, added McGuinty.

There's a huge cost associated with rebuilding Ontario's aging power grid and the government wants to provide some assistance, he said.

"We're rebuilding 80 per cent of our electricity system over the course of the next 20 years, thousands of megawatts of new generation, thousands of new kilometres of transmission lines," said McGuinty.

"There's a cost associated with that and we want to help families and businesses alike manage that."

McGuinty already rejected Drummond's recommendation to scrap full-day kindergarten, but so far hasn't said how the Liberals will find $1.5 billion a year to pay for it while trying to cut spending.

Drummond warned the deficit would double to more than $30 billion if all 362 of his recommendations were not implemented, and said something else would have to go for every new program introduced.