Richard Brennan and John Spears
Toronto Star
March 22, 2003

The Ontario government has extended the price freeze for electricity to 7,000 mid-sized businesses, which will now pay a fixed price of 4.3 cents a kilowatt hour.

Businesses will also get rebates every three months – instead of only once a year – from a fund set up by Ontario Power Generation Inc. to offset OPG’s dominant market position, said Energy Minister John Baird.

Critics dismissed Baird’s announcement as nothing more than a pre-election handout.

“This is another pre-election goody and a fix-up of a Tory botch-up that they should have got right in the first place . . . and at the end of the day this is just heaping more uncertainty upon our electricity system,” said Liberal MPP Michael Bryant (St. Paul’s).

NDP leader Howard Hampton was equally dismissive: “This is just another attempt by a desperate government in pre-election weeks or days to try and bribe more hydro electricity consumers . . . this is clearly unsustainable.”

The government froze the price of electricity for residential consumers and small businesses using less than 150,000 kilowatt hours a year at 4.3 cents a kilowatt hour, but many power-intensive companies, including some farmers, complained they were at a competitive disadvantage.

The new price freeze will include companies that use up to 250,000 kilowatt hours of electricity a year. Businesses that would qualify for the freeze under the new rules include large convenience stores, apartment buildings with up to 25 units, and office buildings up to 10,000 square feet.

Ron Bonnett, president of the Ontario Federation of Agriculture, welcomed the extension of the freeze.

“It’s good news for farmers . . . because it meant that one farmer would be paying one rate and another farmer right down the road was paying another rate. It didn’t make a lot of sense,” Bonnett said.

“You’ve got to remember an increase in the power bills comes right out of the bottom line,” he said.

But Ian Howcroft, vice-president of the Canadian Manufacturers and Exporters, said the new dividing line is unfair to businesses that are slightly over the new limit, since they could be competing with businesses that are just under the line, and that enjoy the fixed price.

The CME wanted all businesses, regardless of size, to have the option of the 4.3 cents fixed price.

“What we wanted to do was level the playing field,” he said in an interview.

Enersource Corp., parent of Enersource Hydro Mississauga and energy retailer First Source, called the move the “right decision” because it means that at least half the power in the province will still be traded on the open market.

Chief executive Gunars Ceksters noted that utilities and businesses have invested heavily in systems allowing them to trade on the power market.

Baird said extending the price freeze will cost the government about $10 million in the first year, beyond the rebates that will already be paid by OPG, but critics disputed his figure. The province insists that the price freeze will not cost taxpayers any money over the life of the program.

The new price freeze will be effective retroactive to May 1, when the province’s electricity market opened.

Tom Adams of Energy Probe disputed Baird’s cost estimates, and said extending the price freeze to more customers will simply encourage “wanton consumption.”

With the current price freeze in effect, the province saw record power use in February, although Baird blamed the high consumption on cold weather.

But Adams said high consumption will put the province’s badly stressed power system under even more strain, leading to supply shortages, expanding the risk of blackouts and brownouts.

The current price freeze for householders and small businesses has cost $410 million so far, Adams said,

He added that extending it would increase that cost by $25 million for the May-to-February period alone.