Favoured Ontario plants to get deal on electricity

Martin Mittelstaedt
Globe and Mail
January 3, 2001

The Ontario government has granted some of the largest industrial electricity consumers in the province secret cut-rate prices for four years after the market opens for competition later this year, according to documents obtained by The Globe and Mail.

The cost of granting lower rates to large users will be shifted to ordinary homeowners and other consumers, who will pay higher electricity bills to make up for the industrial subsidies.

The deals were concluded after some companies threatened to shut down their Ontario operations and throw people out of work unless they were given special consideration on electricity rates.

One of the documents, a letter from Energy Minister Jim Wilson sent in June, says the government passed a special regulation last year instructing Ontario Power Generation, one of the, successors to Ontario Hydro, to sell cheap electricity to the companies. Their names, rates, and the cost of the subsidies were not revealed.

“This is a situation where it’s competition for the little guy, and protection for the politically connected,” said Tom Adams, head of Energy Probe, an environmental and consumer-advocacy group.

The letter was sent to Zenon Petriw, chairman of the Association of Major Power Consumers in Ontario.

The lobby group represents 65 of the province’s big industrial-electricity users, including Dofasco, General Motors, Imperial Oil, and Inco Ltd.

According to the letter, Mr. Wilson was being pressed by many industrial-power users to continue a program developed in the early 1990s by Ontario Hydro of selling them cheap electricity. The special sales were developed to help the companies and Ontario Hydro weather a period of power surpluses and recessionary business conditions.

Since then, the surpluses have been eliminated, and the special rates were scheduled to end when the province opens the electricity market to competition later this year. The intent was to have power prices determined by supply and demand, rather than political directives from the minister of energy.

But Mr. Wilson’s letter said the government approved a special regulation exempting the large customers from paying competitive prices for electricity. Mr. Wilson could not be reached for comment yesterday.

In granting the cheap rates, which will last for four years, the government reacted to warnings from some companies that they would flee the province without access to cheap electricity, according to a senior AMPCO official. “The reason that the government offered this was because without this, they’re going to lose businesses here. There is no question that at least two and maybe more would shut down,” said AMPCO president Arthur Dickinson. “With those companies go jobs … You’re just going to lose industry.”

Members of the association are large employers, typically using at least five megawatts of electricity, or the amount needed to meet the needs of more than 1,600 households.

 

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