Ontario Government creates new power authority

- The Ontario government introduced sweeping changes recently to the province's electricity sector that it says will guarantee a long-term supply of power at reasonable prices.

Energy Minister Dwight Duncan introduced legislation setting up the Ontario Power Authority, an arms-length body that will predict the province's energy needs and will have the power to sign contracts to make sure the power is delivered.

The authority will also have a conservation bureau that will work with local hydro utilities to curb electricity use.

Duncan said an over-all plan is needed because demand for power is growing and 18,000 megawatts of the province's 30,000 megawatts of generating capacity must be overhauled or replaced over the next 16 years.

Opposition critics denounced the plan.

"This policy is the policy of privatization of Mike Harris with a lot of Liberal double-speak," New Democratic Party Leader Howard Hampton said. "But for Ontario consumers it means a much higher electricity price."

Conservative Leader Ernie Eves said the Liberal government is creating whole new levels of bureaucracy to get a handle on future power needs and pricing.

"I'm sure that every government that has been in power in the province of Ontario has had a plan or policy in place for the creation of new power generation," he said. "The question is, does it work and can you keep up with the demand as time goes on.

"They (the Liberals) have put additional pressure on themselves by promising to eliminate every coal burning plant by the end of 2006. That's a pretty big challenge," he said.

Duncan said it is "crucial that private investors be allowed to enter Ontario and support the construction of thousands of megawatts of electricity that we need to build."

The new power authority, which Duncan hopes to have up and running by January, will estimate how much power the province will need for a decade or more to come.

"The authority will give clearer delineation of not only how much we're going to need, where we're going to get it, who we're going to get it from," Duncan said.

"Remember we're looking at a $30 (billion) to $40 billion investment over the next 20 years."

The new power authority could sign long-term contracts to buy set amounts of power at set prices, or other types of contracts such as those that pay generators a regular fee to be on call if needed.

That's similar to the role Ontario Hydro used to play, but Duncan said Ontario Hydro's vision was blurred because it was in the business itself of generating power and building power lines.

He said the new authority is needed because the market system that the Conservative government set up, and then quickly squelched when prices soared, didn't encourage investors to build.

"We could just leave it as it is and have no one doing this, and we could be navel-gazing a year from now, hoping the market will provide something, crossing our fingers, and at the end of the day it won't," he said.

While the power authority will do the contracting for new electricity, Duncan said the government will decide what percentage of power should be delivered by each of nuclear, hydro and gas-fired generators, and from renewable sources.

Meanwhile, the Ontario Energy Board will continue to regulate rates for consumers in the province, based in part on the prices negotiated by the power authority.

Dave Butters, president of the Association of Power Producers of Ontario, said his members need to see more details before they can assess the plans.

"I think that's the biggest question: How does it actually work?"

He said it is unclear how the Ontario Energy Board will translate the contract prices negotiated with the generators into the regulated consumer price for electricity.

Another crucial question is the future role of government-owned Ontario Power Generation, which produces two-thirds of the province's power, said Butters. Its status is under review.

Duncan said the government is eager to curb consumption wherever possible through measures such as installing "smart meters" that can charge varying prices for power.

Charlie Macaluso, who represents local hydro utilities, cautioned that replacing meters for Ontario's more than 4 million hydro customers is a huge job.

"We need to make sure we target consumers where the meter makes sense," he said. "It could be billions of dollars."

Tom Adams, of Energy Probe, an electricity-sector watchdog, said the reform plan is "an explosion of new bureaucracy" and warned it will lead to an even higher electricity debt.

"The first step to any serious solution to our electricity crisis is to start charging customers the real cost of electricity," Adams said.

Murray Elston, president and CEO of the Canadian Nuclear Association, said he was glad to see the emphasis on stabilized pricing but wants more details.