HAMILTON, Ont. - Ten per cent rebates on electricity bills that kicked in Jan. 1 should have quelled critics who were demanding the provincial portion of the HST be removed from hydro, Premier Dalton McGuinty suggested Thursday.

Instead, Niagara Falls Liberal backbencher Kim Craitor broke ranks with his government this month to say he doesn't support having the HST on hydro bills, which started last July when Ontario merged its eight per cent provincial sales tax with the five per cent GST.

"Let me say, this is Kim Craitor the person talking, I do not approve having the HST on hydro bills," he told Niagara This Week.

The 10 per cent Ontario Clean Energy Benefit is a bigger break for electricity ratepayers than removing the eight per cent portion of the HST from hydro, said McGuinty, admitting he was baffled by the criticism from Craitor.

"This is something I don't understand," McGuinty told reporters after defending the HST in a speech to the Rotary Club of Hamilton.

"The NDP were actively lobbying us to eliminate the PST portion of the taxation on electricity, and we've taken it two points further, so I don't really understand that."

The Progressive Conservatives have said all options are on the table when it comes to providing Ontario voters with some tax relief if they win this fall's election, but the Opposition hasn't made any specific promise to remove the HST from hydro.

The New Democrats recently expanded their demand to remove the eight per cent provincial portion of the HST from hydro bills to also eliminating it from home heating oil and natural gas.

Craitor may be the first to come out publicly against his government's HST policy, but he won't be the last, predicted NDP finance critic Peter Tabuns.

"I'm not surprised that Dalton McGuinty's MPPs are starting to get nervous," said Tabuns.

"McGuinty's HST on everything from home heating to haircuts is making life less affordable for families. It never made sense to slap an unfair tax on basic necessities and Liberals are finally waking up to that."

Despite Craitor's criticism of the HST, the Liberals remain united, insisted McGuinty, who said it's not unusual for a member to speak out on behalf of his constituents.

"We had all kinds of opportunities to discuss this internally in caucus," he said.

"I know we remain very strongly committed to our economic initiatives, including the HST."

Most Ontario voters understand electricity bills are going up to pay for badly needed repairs and upgrades to the system, and that the HST is making businesses more competitive, helping create more jobs, added McGuinty.

The HST was a difficult decision but it was added to only 17 per cent of goods and services previously exempt from the PST, said McGuinty.

"We weren't hired on to follow," he said. "We were hired on to lead, and to make decisions, to use our very best possible judgment and to do what we honestly believe is the right thing to do."

McGuinty's 30-minute speech on the economy in Hamilton Thursday was a virtual repeat of the same address and Al Gore-like slide show that he delivered Wednesday in Kitchener.

Get ready to hear it again and again before the Oct. 6 election, the premier warned.

"You better get ready for lots more deja vu," joked McGuinty.

"The show is coming to your community."