Power lobby set to challenge OPG

TORONTO, ONTARIO - A coalition of Ontario's biggest industrial groups is pushing the provincial government to break up Ontario Power Generation Inc. and forge ahead with creating a competitive electricity market.

The Stakeholders' Alliance for Electricity Competition and Customer Choice released its "sustainable electricity policy" recently.The alliance's members include The Association of Power Producers of Ontario, Association of Major Power Consumers in Ontario, Canadian Manufacturers and Exporters, Ontario Mining Association, Canadian Chemical Producers Association and the association representing local utilities.

Energy lawyer David McFadden, who chairs the group, said projections show a serious power shortage developing in Ontario over the next decade. Investors can only be lured to the province to increase the power supply if an efficient market is in place, he said.

Politicians have been reluctant to discuss markets since Ontario's brief attempt in 2002 to deregulate power prices led to consumer outrage.

"This desire not to use the word `market' is ridiculous, because that's what will work," he said.

At the top of the policy list is a market with "multiple buyers and sellers."

That's aimed at government-owned Ontario Power Generation, which dominates the market in Ontario.

"We cannot have a situation where one seller has 70 or 80 per cent of the market," McFadden said in an interview. "It's unhealthy.... We have to get one with something here."

The policy isn't specific about what should happen to OPG.

Some groups in the past have said large chunks of the company should be privatized; others have suggested it could be broken into smaller, more manageable units that could compete with each other while remaining in public hands.

The Liberal government had promised to reshape OPG by last autumn, but still hasn't acted.

McFadden acknowledged that small consumers don't like the volatile prices that markets can produce, and said they need to be able to buy power at prices that are reasonably stable.

The Ontario Energy Board has released a framework for setting consumer prices, to take effect April 1. The opening price itself hasn't been announced.

McFadden said government and industry need to educate consumers about the benefits of electricity markets.