Hydro One Boss Says Canadians Pay Too Little for Electricity

Toronto, ON -- -

Toronto, ON -- The head of the company that distributes hydro electricity within Ontario says he believes Canadians pay too little for their energy. Speaking to reporters after a noon-hour speech to the Canadian Club, Sir Graham Day, the president of Hydro One, pointed to the $31.3 billion debt racked up by his company's predecessor, Ontario Hydro.

"There's no free lunch, that debt's got to be paid," he said, adding that the costs will be applied either to taxes or energy rates.

Household electricity bills are already expected to jump by eight per cent in the province this year and Day said he couldn't predict what will happen in the longer term.

But he personally believes most Canadians, with the exception of those in Manitoba where there is an abundance of water power, are paying too little.

"I think that's wrong because what you want is a stable source of supply," said Day. "There's nothing for nothing in this world."

The good news, he said, is that the system being created in Ontario after the break-up of Ontario Hydro will offer a fair market price, "not a manipulated price like California which ultimately sees blackouts, brownouts and bankruptcies."

Day told the Canadian Club that consumers have no reason to fear that his industry will be deregulated with the entry of independent suppliers. Critics say the move will add to energy costs and lead to the types of energy shortages seen on the U.S. west coast.

"The word deregulation does not apply to Ontario now or prospectively," said Day.

In fact, he said, the California problem was caused by energy prices that were so rigidly controlled there was no ability to contend with rapid increases in wholesale costs.

But many other states have already moved to more open energy markets similar to the one planned for Ontario and have found the switch has been beneficial for consumers, he said.

In Ontario, the energy sector is moving from one which was self-regulated by the former Ontario Hydro to one in which Hydro One is regulated by the Ontario Energy Board, said Day, and energy suppliers are watched by the Independent Market Operator (IMO), a non-profit regulator.

So when the word deregulation is used in Ontario, he said, "interpret this to mean the creation of a competitive market for electricity under a regulatory environment which has clear rules for all market participants and where adherence to those rules will be carefully monitored.

"All of this gives me a great deal of confidence to say to you, simply, that under no scenario can I conceive is the electricity situation in Ontario even remotely like that in California."