Critics Zap New Electricity Rules

But the province says that with new generators coming on stream, the province isn't likely to face the same need for imported power that currently exists — a need that cost about $200 million to fill this summer and fall.

The province has introduced new regulations for the power market to complement legislation that has been passed.

Local utilities are currently stuck with much of the bill for the expensive imports. They charge their customers a regular fee throughout the year to pay for high-priced emergency imports, but this year the fee charged hasn't come close to covering the actual cost.

Large power users who participate directly in the wholesale market — there are about 100 in the province — also pay directly for the imports through a surcharge tacked on to the Ontario market price of power.

At times, the surcharges have exceeded the Ontario market price by four or five times.

The new rules appear to eliminate the surcharge, but the power will still have to be paid for.

"Someone else is picking up the tab," said Charlie Macaluso, chief executive of the Electricity Distributors Association. "It looks like the OEFC (Ontario Electricity Financial Corp)."

The OEFC holds the debt left by the former Ontario Hydro before it was broken up. The crucial part of the debt is the so-called "stranded debt" — currently $20.1 billion — that's not offset by assets.

The stranded debt has been rising, despite the introduction 18 months ago of a 0.7-cent per kilowatt hour debt retirement charge on customers' electricity bills.

Tom Adams, executive director of Energy Probe, says the new regime makes no financial sense. "The result of these changes is from now on the price of power will be financed by borrowing," he said. That's at odds with the user-pay principle that is supposed to guide the power market.

It also threatens to add debt to the books of the OEFC, which is backstopped by taxpayers.

Dan Miles, a spokesperson for Energy Minister John Baird, said the fears are unfounded.

He said new generators will be coming on stream in Ontario during the next year, so there will be less need for the high-priced emergency imports that were needed to keep Ontario's lights on last summer.

They include the first unit of the much-delayed Pickering A nuclear station, which is currently laid up; two laid-up units at the Bruce A nuclear station; and another gas-powered unit.

The province has been wrong predicting supply adequacy before. Former energy minister Chris Stockwell said earlier this year: "We have an adequate supply of power. What Pickering does do is give us an over-supply. With the over-supply, it will drive down the cost of energy."

In fact, Pickering still hasn't returned to service — it's not due before next June — and the province did run short of power.

Miles said this time there really will be enough power to prevent the need for buying costly emergency imports.

"We've had a good, hard look and we believe over the course of the long term, it's not going to result in a deficit situation," he said. "It's going to pay for itself."

Another wrinkle in the new regulations is a revised definition of what constitutes a small power user, which will benefit from the new price cap of 4.3 cents a kilowatt hour.

Originally, a small user was one that used less than a set amount of power — information utilities already have on hand. Now, a new definition has been added: Small users include firms with 50 employees or fewer, no matter how much power they use.

Macaluso said local utilities have no idea how many employees their customers have, nor how they can collect that information in order to start billing them appropriately as of Dec. 1.

Miles said discussions are under way to sort out the problem.