Ontario Premier To Impose Speedy Deregulation Of Electricity

MARKHAM, Ont. -- -

MARKHAM, Ont. -- Ontario will forge ahead with deregulation of the hydroelectric market despite the threat of higher rates and problems experienced in Alberta and California, Mike Harris, the Premier said.

"I've always believed monopolies are not in the best interest of taxpayers. They're expensive and they're inefficient. I believe in open, competitive markets, because they help keep costs low and they encourage innovation," said Mr. Harris.

"We need to apply the same thinking to the electricity sector," he said in a luncheon speech to a business association in a Toronto suburb.

Deregulation has led to California being crippled by rolling blackouts due to power shortages, and in Alberta consumers are being hit by skyrocketing hydro bills. But Mr. Harris said Ontario's experience will be different.

"Some of you might be wondering why I'm talking about creating a more competitive market for electricity. Reading the papers, you're left thinking it doesn't seem to be working well ... in California," the Premier said.

"But there are significant differences here in Ontario. California did not have an adequate supply of electricity before it went to an open market," he said.

California relies on natural gas for more than half of its hydro-electric power compared with 4% in Ontario. For that reason, the Golden State has suffered soaring natural gas prices.

"The situation in California is a warning to us all. We will not let [that] happen in Ontario," he said, adding a timetable for the opening up of the market in the province should be revealed within the next few weeks.

In Alberta, where there is also greater reliance on natural gas, the government has issued rebate cheques to ease the burden of higher electricity rates -- something Mr. Harris ruled out in Ontario.

"We don't have the same luxury that Alberta has in rebate cheques," he told reporters.

"What we are looking at is how we can be the most competitive in the long term."

The Premier said electricity prices are going up, whether or not there is privatization.

"The key is how can we make sure they go up by the least amount required," he said.

"Our vision for Ontario's electricity sector is based on four guiding principles: Protecting consumers and giving them more choice; ensuring a strong business climate with a reliable supply; protecting the environment, and encouraging new ways of doing business and new sources of power, " Mr. Harris said.

But critics say Mr. Harris's erratic approach to hydro deregulation, delayed for months as the Ministry of Energy continues to study the issue, has discouraged interest from the private sector.

"Ontario's current round of electricity restructuring is heading for the rocks. Electricity prices are going to rise. Electricity debt is rising. Power system reliability is becoming less secure. Private-sector investment is being scared out of the province," said Tom Adams, executive director of the lobby group Energy Probe.

"This thing is in big trouble and the Premier doesn't seem to realize it," said Mr. Adams.

The Conservatives' indecision on the issue has meant that private companies have shown little interest in investing in the massive new generation plants needed in the future, he added.

"[Mr. Harris] should tell us when he's going to open the market. This is just more delay."

Gerry Phillips, a Liberal MPP, also expressed concern at the vagueness of the scheme.

"This whole thing is quite troubling. He was supposed to unveil this thing last year. He got everybody down to look at it [at a press conference] and then decided not to unveil it," said Mr. Phillips.

"Even today, there was nothing. It was just: 'Stay tuned, I'll tell you more in the future,' " he said.

"I think people have a right to be extremely worried. There's enormous uncertainty. It's clear that they've miscalculated the risks in this."

Souce: National Post