Ontario to Open Electricity Market by Next Spring

Hamilton, ON -- Despite two previous delays, Ontario's Conservative government is now confident it can open its electricity market to competition by May 2002, Premier Mike Harris said Monday. Still, even the latest schedule is contingent on four key conditions: consumer protection, business conditions favouring a reliable energy supply, environmental protections and support for alternative sources of power. "We said we won't (end the monopoly) until we're assured of a safe, reliable and affordable supply of power," he told a lunch-time meeting of the city's chamber of commerce. "We're confident that by May 2002, conditions will be very favourable for a successful market opening in the province of Ontario." The Tory government had originally promised competition would come by November 2000. That deadline was later extended to May 2001. The government appeared to hesitate earlier this year after continent-wide power shortages caused hydro rates to triple in a deregulated Alberta market as well as rolling blackouts in California. Ontario's supply problem is not as acute as in those regions, Harris said, particularly once the Pickering A nuclear station east of Toronto is brought back into use in January or February. But the premier acknowledged competition will likely bring higher prices, citing an eight per cent hike this year by Ontario Hydro. "No one can ever guarantee that prices are going to go up or going to go down, or where they're going to be," he said. "Clearly the track we're on is higher energy prices - that's global, that's North America-wide and that is certainly here in the province of Ontario." Tom Adams, executive director of the energy watchdog group Energy Probe, said he anticipates rates to rise by at least 20 per cent by the end of 2002. He added that, with only one major generator now under construction in Sarnia, in southwestern Ontario, and the province's supply hopes pinned on the re-opening of the Pickering plant, Ontario faces exactly the same supply crunch as Alberta and California. "The big contributing factor to the problems in California and Alberta has been the lack of new generation - Ontario has unfortunately repeated that mistake," he said. Adams also criticized the province for waiting so long. The delays, he said, have scared off scores of private sector competitors which could have brought down prices. "The damage has already been done," he said. "The dilly-dallying of politicians has scared new investment out of the province." So far, the only deal made with the private sector is an agreement to lease its Bruce A nuclear reactor to British Energy. Critics of a deregulated market have said an open system combined with free trade agreements such as the Free Trade Area of the Americas under negotiation last weekend could see Ontario bidding against American companies for its own power resources, driving prices even higher. Harris said his government still intends to use the publicly owned Ontario Power Generation and Hydro One to protect the province's supply from power-thirsty regions south of the border. "Most of the electricity when the market opens will still be generated and still be owned by the provincial government," he said. "There will be some of the peaking power (power sold to or from other regions during peak periods) and some of that will be available for competition, but it will be a small part while we get the supply challenges worked out." He said the province will use surcharges to pay down the nearly $20 billion in hydro debt now owing. But Adams said how prices in neighbouring jurisdictions will affect Ontario consumers in a free market remains to be seen. "Ontario borders with low-cost regions such as Manitoba and Quebec . . . at the same time they are connected to high cost regions, for example New York," he said. "The net impact on prices is different to determine at this stage." Ontario NDP Leader Howard Hampton said competition is not only a raw deal for customers but also for the quality of air, water and soil. "It's a dirty deal for consumers, for industry and for the environment." Ontario Energy Minister Jim Wilson says Ontario's electricity consumers should be better off. But some electricity-industry watchers say the further delay hints that the province lacks resolve. And the union representing Toronto Hydro workers vows to campaign against electricity competition. Wilson has said a competitive market will attract investors who will build new generators and offer consumers better choices. "The government is committed to an open market while guaranteeing a safe, affordable and reliable supply.''