Louise Elliott/Canadian Press
Toronto Star
December 18, 2001

The opening of Ontario’s hydro market to competition on May 1 will not plunge consumers into the darkness of price spikes, bankrupt utilities and rolling blackouts, Ontario Premier Mike Harris said today.

The woes seen in Alberta and California, where deregulation caused an initial doubling and even tripling of prices, will not apply in Ontario next spring, Harris said after announcing the province’s long-awaited opening of its $10 billion energy industry.

“I’m convinced that just as (deregulation) was done properly in Australia, or in the U.K. or Pennsylvania, rates will be substantially lower than they would have been had we not taken this decision,” Harris said.

“We will get the same very positive downward pressure on rates.”

But Harris stopped short of saying prices would drop after private companies wade into power generation, distribution and retailing.

“As you know, I can’t tell you in a competitive market what people will charge,” he said.

“I can tell you that having competition, that having the private sector here, having the oversight that we have, having the supply that we have here in the province of Ontario … this will be a competitive advantage for the people of this province today and into the future.”

NDP Leader Howard Hampton, long a proponent of maintaining the province’s system of publicly owned utilities and increasing its conservation, said consumers can expect a 20 per cent jump in their prices initially.

Prices will likely double once they are totally integrated with the U.S. markets, including New York state, Hampton said.

Electricity prices will likely go up 20 per cent, agreed the director of the province’s energy watchdog, but he argued something had to be done to repair the province’s deteriorating power grid.

“On the bad news side, customers should be looking at significantly higher electricity bills – we estimate around a 20 per cent increase,” said Tom Adams of Energy Probe.

“On the good news side, Ontario’s power system before we started this electricity restructuring was crippled and was in a declining condition. In the long term I’m reasonably confident that this restructuring is going to work out and restabilize our power system.”

Ontario isn’t the only province grappling with privatizing its electricity business.

An energy report released Monday in B.C. suggested electricity bills in the province could rise by 30 per cent if the Liberal government accepts its preliminary findings.

The five-member energy task force recommends B.C. Hydro undergo a sweeping restructuring that includes increasing private sector investment and setting electricity rates at market levels.

B.C. electricity rates are among the lowest in North America and are currently frozen until March 2003.

In post-deregulation Alberta, more than $1 billion in consumer rebates were issued this year alone after rates soared and some businesses were forced to operate at night when power costs were lower.

But that situation has improved: California has a glut of excess electricity and prices have been falling sharply in recent months, while in Alberta higher production and low gas prices have made power costs fall.

David McFadden, who represents several stakeholders who back deregulation in Ontario, likened consumer fears about privatization to the fears surrounding Y2K.

“I think what you’re seeing is the millennium all over again,” McFadden said. “Everybody’s going to be worried about it, when it happens they’re going to say, ‘Geez, is that all there is?'”

A delayed time frame for deregulation and close to a billion dollars spent to consider the move means the change should go smoothly, McFadden argued.

Harris said the province decided to deregulate only after the Ontario Energy Board and the Independent Electricity Market Operator – established to ease the transition to an open market – assured the government that “the market will be ready.”

Hampton said the Conservatives did not include deregulation, or the recently announced privatization of Hydro One, in their election platform of 1999.

“I believe before any government should be allowed to do something that has such massive repercussions for Ontario consumers, and for the Ontario economy, an election should be held,” he said.