John Spears and Richard Brennan
Toronto Star
April 16, 2004

The Ontario government says it has a plan to stabilize electricity prices for small consumers, but can’t say what the price will be or offer concrete plans on how to generate much-needed energy. The province will create the Ontario Power Authority to offer consumers a stable price, Energy Minister Dwight Duncan said in a lengthy and much anticipated speech on the future of Ontario‘s electricity system at the Empire Club yesterday."It would be adjusted each year to ensure people pay the true cost of electricity over time, but the plan would remain stable over the course of a year," said Duncan, who wouldn’t hazard a guess on how much more consumers will be paying. Briefing notes prepared for Duncan when the Liberals took office, obtained by the Star, estimate that the cost of power will climb by 20 per cent when the current price ceiling is lifted. Duncan said yesterday that "it’s really a mug’s game to say prices are going to be lower or higher at this point." The energy minister also hedged on a Liberal promise to shut down all the province’s coal-fired power plants by 2007, saying the government must be totally satisfied that adequate alternatives are in place. These plants produce about 25 per cent of Ontario‘s power. The power authority will be able to sign long-term contracts with private power producers to encourage them to build more generators. But critics said encouraging private power producers will drive up the cost of power. "When you cut through all the bafflegab, this is going to be more private, profit-driven electricity and just like under the Conservatives what that means is that people’s hydro bills are going to skyrocket," NDP leader Howard Hampton said. Duncan told reporters after his speech that the best way to ensure that prices don’t jump "is by having more supply. "First of all we are returning to regulated prices and maintaining public ownership of the base load (provincially owned) assets. Those prices will stabilize electricity prices for small consumers. "Our view is that with modest changes in consumption, people can absorb the prices that they will be faced with," Duncan said, noting the authority will co-ordinate energy conservation programs. The minister said he will be introducing legislation in June. "We hope to have the power authority up and running by this time next year," he said. The key to stabilizing the cost of energy will be allowing the Ontario Energy Board to regulate the price of all power produced by Ontario Power Generation’s nuclear and hydro generating stations – close to half the province’s power. Private power producers will continue to sell power into Ontario‘s wholesale market, at varying prices. The energy board will then blend the regulated and market prices to set a consumer price. Consumers will know a year ahead what the price is likely to be, though there may be year-end adjustments. Consumers will also be free to buy power from private firms selling fixed-price contracts. Officials said pricing for electricity produced by private nuclear company Bruce Power, and by private hydro-electric companies, is still to be determined. But Tom Adams of Energy Probe said long-term purchase agreements between private power producers and the new authority won’t work. Ontario Hydro signed similar agreements with private operators a decade ago, but ended up paying far too much for the power, he said. (Briefing notes prepared for the new government indicate the province lost $150 million on the contracts last year.) "The taxpayers are at extreme risk" with the system Duncan is proposing, Adams warned. Duncan indicated that the provincial government, not the arm’s-length power authority, would maintain responsibility for deciding whether to move ahead with an aggressive new nuclear energy program.