Dana Flavelle
Toronto Star
November 15, 2005

Some of Ontario’s biggest power users say the provincial electricity utility should give back the $181 million in profit it made over the summer at their expense.

Roughly half the refund – about $90 million – would go to residential consumers, the Association of Major Power Consumers of Ontario said yesterday.

The corporate power users say soaring electricity rates are contributing to job losses and plant closings, particularly in the chemical and forestry sectors.

In addition to the refund, they want the province to fully cap Ontario Power Generation’s rates for three more years.

"There is absolutely no justification for OPG to earn such high profits," said Mike Kuriychuk, chair of the industry association, whose members include Ford of Canada, Inco Ltd. and Dofasco Inc.

"We don’t mind paying the cost of power but these profits demonstrate we’re paying more than the cost of power," said Adam White, the association’s president.

At least two electro-chemical companies, CXY Chemicals and Erco Worldwide, have moved their operations out of Ontario because of rising rates, the association said, and several forestry companies have cited hydro as one factor in job losses and plant closings in their industry.

Provincial Energy Minister Donna Cansfield defended OPG’s profits in the Legislature yesterday, saying everyone benefits because the money is used to help pay down its predecessor’s $20.9 billion debt and upgrade power facilities.

Energy Probe spokesperson Tom Adams called the industry association’s demand for a refund short-sighted. "The money does come back to consumers in the form of debt reduction."

But Adams said he shares corporate Ontario’s concerns about what will happen to electricity rates if the government goes ahead with plans to fully deregulate OPG by April.

The former Ontario Hydro still controls 65 to 70 per cent of the province’s electricity market.

"We could see a tremendous increase in prices to consumers," he warned. "We want to see OPG regulated because we’re concerned about its spending habits."

OPG spokesperson John Earl defended the utility’s profit, saying it’s the only utility in the province that is required to provide consumers with a rebate. It needs the income to invest in future expansion and its return on equity so far this year has been just 5 per cent.

"We are a commercial company and we have a responsibly to act like one."

OPG reported the unusual profit last Thursday, noting that it was the product of a long, hot summer and skyrocketing fuel prices.

This is also the first year the former monopoly has operated in a partially deregulated market.

OPG produced 4.2 per cent more power in the three months ended Sept. 30 compared with the year-earlier period. But the price it received for that power jumped 35 per cent to an average of 5.4 cents a kilowatt hour from 4 cents/kwh the previous summer. However, that price was still well below the spot market rate for electricity, which averaged 8.6 cents/kwh over the summer, OPG noted.

With files from Canadian Press