John Partridge
Globe and Mail
August 19, 2003

Toronto: Power industry players yesterday dismissed arguments by Howard Hampton, leader of Ontario’s New Democratic Party, that last week’s massive electricity blackout means the provincial government should re-regulate the business.

"The thesis that the blackout has been caused by the Harris government’s privatization and re-regulation agenda barely warrants a response," Tom Adams, executive director of Energy Probe, an energy and environmental research group, told the opening session of an energy conference in Toronto, referring to former Ontario premier Mike Harris.

"It’s certainly not the deregulated market . . . that caused this," concurred lawyer Peter Budd, chairman of the Ontario Energy Association (OEA). "It’s remarkable that an elected person would say that."

Since the blackout last Thursday, Mr. Hampton has been trashing the Ontario government’s on-again, off-again efforts to privatize and promote competition in the electricity market. At a news conference on Friday, for example, Mr. Hampton said the blackout shows that electricity is "too essential to be put in the hands of companies that put profit before reliability."

In a dramatic reversal, current Ontario Premier Ernie Eves stepped in to freeze electricity prices last December, just seven months after deregulating the market, following a public outcry over spiking prices. Early this year, he dropped plans to sell to the public a large share of Hydro One, which runs Ontario’s electricity transmission grid.

Ed Houghton, chief executive officer of Collingwood Utility Services of Collingwood, Ont., and one of the directors of Ontario’s Independent Market Operator, told the conference that the government’s decision to freeze prices has taught the industry a number of lessons.

"The first, certainly, is that politicians will not tolerate unpredictable prices for small-volume electricity consumers," he said. "Nor will they tolerate prices that are seen as high by Ontarians, who base their perceptions on over a decade of subsidized rates that are far lower than prices elsewhere in North America."

What’s more, with an apparent reference to newly formed energy retailers that went out of business following the price freeze, Mr. Houghton also said that to avoid paying a short-term political price with their constituents, "politicians are willing to sacrifice entire sections of this industry."

As well, in response to a question by session moderator Steve Paikin, co-host of Studio Two, a TVOntario current-affairs show, Mr. Houghton said consumers will tolerate unpredictable gasoline prices but not unpredictable electricity prices because taxpayers essentially still own the supply and because electricity is "a necessity of life," while a car is not essential.

The conference took place at a downtown Toronto hotel, where, despite weekend calls for restraint made by Mr. Eves and others, meeting rooms were being kept at near refrigerator temperatures by the hotel’s air-conditioning system. Conference organizers hustled to get the temperature raised during a break between sessions.

In a separate session at the conference, OEA vice-president Adam White said the electricity industry ought to accept some of the blame for the Ontario government’s decision last December to cap prices. "I think we moved too soon, too fast to a competitive model," he said.

Mr. White warned that the business is being constrained by prices that do not reflect reality and a congested transmission system. As a result, electricity in Ontario "is not attractive for private capital and investors."

He also said that a key challenge for the industry is to develop real incentives to encourage consumers to conserve electricity.