Tom Adams

July 2, 2003

Protecting Consumers: Price caps will stay in place

• We didn’t create the hydro mess – the Harris-Eves government did. But we will inherit it in government. The last thing Ontario needs is more electricity upheaval. Families and businesses need stability to make future plans. So price caps will stay in place under an Ontario Liberal government, while we fix the Tories’ mess. We do not believe you should pay for their bungling.

Energy Probe’s commentary: Ontario’s so-called “rate freeze” is not actually a rate freeze but a rate deferral. The so-called “rate freeze” is transferring a substantial portion of your total electricity bill to consumers and taxpayers in the future. The “rate freeze” is also increasing electricity demand. Energy Probe estimates that power demand in Ontario has been inflated by at least 500 MW – 25% more than the maximum amount of emergency capacity that the government is hoping to get installed through rental of portable generators this summer.

Deregulation and Privatization are dead

• The Harris-Eves government bungled electricity policy, killing the open market, by turning off any private sector company that has ever been interested in building new generation capacity.

Energy Probe’s commentary: About 500 MW of new high efficiency gas-fired capacity was constructed by the private sector during the Tory experiment with deregulation of the electricity commodity market. In addition, 1500 MW of risky, obsolete nuclear plants are being brought back into service by Bruce Power. The expected service period for the old Bruce reactors brought back into service is expected to be about 7 years.

• Unlike the Eves government we won’t gamble our economic future on a market that doesn’t exist.

Energy Probe’s commentary: Without a market, the public sector will have to make many billions of dollars of expenditures to bolster a system that has already created a net taxpayer liability officially estimated at $20 billion as of March 2002.

Keep the Grid Public: We must not sell Ontario’s electricity highway

• We will keep the ownership of Ontario’s electricity highway where it belongs – in public hands. Selling the grid won’t benefit consumers; in fact, the only Ontarians who will benefit are Bay Street brokers and Hydro One executives. It is also important to remember that the transmission grid is the central nervous system of our economy – selling the grid means the public sector will no longer be responsible for its security.

Energy Probe’s commentary: During the last several decades, Ontario’s publicly-owned transmission system has deteriorated seriously due to lack of maintenance, a point admitted in testimony before the Ontario Energy Board by Hydro One. Continued public ownership will require significant new investment simply to keep up with aging of the existing system.

• The electricity highway took over 100 years to build and the Harris / Eves government wants to sell it off.

Energy Probe’s commentary: In March 2002, the Eves government cancelled the sale of any portion of Hydro One.

Bringing Ontario Power Generation to Heel

• Hydro will be reformed so it provides affordable, reliable public power.

• We will overhaul Ontario Power Generation, the government’s generation company, so it puts the interests of consumers ahead of its executives’ delusions of grandeur.

Energy Probe’s commentary: Neither of these statements is clear enough to comment on.

• We will provide real transparency and accountability by changing the law to ensure OPG and Hydro One are covered by the Freedom of Information Act and salary disclosure.

Energy Probe’s commentary: Energy Probe supports amending the Freedom of Information and Protection of Privacy Act so that the Crown corporations OPG and Hydro One are covered.

Clean Energy

• We will shut down polluting coal-fired generating plants by 2007, and replace that capacity with clean alternatives and conservation.

Energy Probe’s commentary: Energy Probe supports the objective of closing all coal-fired generation but the other elements of the Liberal plan do not provide a credible program for replacing the over 9,000 MW of coal capacity in Ontario. Note that Ontario’s coal plants are very important for power system reliability because they are dispatchable, meaning that they can be turned on at will and are particularly important in meeting power needs during summer and winter peaks in demand.

Creating More Supply

• We will increase supply by building new public generation capacity such as expanding Niagara Falls.

Energy Probe’s commentary: Ontario’s entitlement to the waters of the Niagara River are currently fully utilized. A relatively small volume of water could diverted from older, less efficient units to supply additional more modern generation at the Beck complex but the value added would be small relative to the cost.

• All new private generation will operate within a regulated framework.

Energy Probe’s commentary: This statement is not clear enough to comment on.

• We will get serious about conservation so homes and business can save money while helping to tackle our supply problem.

Energy Probe’s commentary: As noted above, this statement contradicts the Ontario Liberal policy favouring continuation of the so-called “rate freeze”.

• We will encourage businesses to use cogeneration by ensuring they have reliable backup electricity and fair access to sell any surplus into the system.

Energy Probe’s commentary: Energy Probe supports the intention of this policy but there is in sufficient detail to comment on the practicality of the approach.

• We will establish a real hydro lifeline with Quebec. This was bungled by the Harris-Eves Government.

Energy Probe’s commentary: It is not clear that Hydro Quebec is capable of or interested in selling more power to Ontario in the near term. Hydro Quebec experienced a record peak demand this winter of about 35,000 MW. This demand strained Hydro Quebec’s system so seriously that it was forced to import expensive, oil-fired power from New Brunswick. Ontario has tried since 1998 to expand its electrical interconnection with Quebec south of Ottawa, but, despite extensive investment and progress on the Ontario side, Quebec regulators have not yet approved the expansion on the Quebec side.

• We will establish a real hydro lifeline with Manitoba. This was cancelled by the NDP government.

Energy Probe’s commentary: Increasing Ontario’s purchases from Manitoba by not more than a few hundred megawatts and at reasonable cost might be achievable within 3-6 years. Any larger purchase would take at least 10 years to construct the necessary facilities and would probably not be cost effective. Ontario and Manitoba signed an agreement for a large sale of power in 1989, but Ontario cancelled the deal in 1991 under the NDP government, paying a penalty of $108 million to back out of the arrangement.