Ronald Zajac
Brockville Recorder Times
April 23, 2002

Last week’s court decision blocking the sale of Hydro One will not affect plans to open the electricity market to retail competition May 1, government officials insist.

"It’s full steam ahead," said Shane Pospisil, director of communications at the Ontario Ministry of Environment and Energy.

The sale of Hydro One and the deregulation of the electricity commodity market are related issues, but the one does not directly affect the other, Pospisil said.

But a frequent critic of Ontario’s electricity reforms, Energy Probe executive director Tom Adams, thinks the court decision could throw the entire restructuring process into doubt.

Justice Arthur Gans ruled Friday that the Ontario government does not have the authority to privatize Hydro One.

The decision stemmed from a legal challenge on the sale of the company launched by two unions, the Communications, Energy and Paperworkers Union of Canada and the Canadian Union of Public Employees.

Lawyers for the two unions had argued that Section 48 of the Electricity Act only allows the government to acquire and hold shares – not to sell them.

The sale was expected to raise about $5 billion for the provincial government.

Hydro One is one of five companies created when the Ontario government broke up the former Ontario Hydro in 1999.

The company operates the transmission towers and lines that carry power across the province. It also sells electricity to 1.2 million retail consumers including Brockville and the surrounding area.

The other successor firms to Ontario Hydro are: Ontario Power Generation, which deals with the generating end of the power grid; the Electrical Safety Authority, an arm’s-length provincial agency governing the security of the power system; the Independent Electricity Market Operator, another arm’s-length agency that will oversee the power market; and the Ontario Electricity Financing Corporation, a special entity formed to retire a part of the old Ontario Hydro’s $38-billion debt.

The court decision halting the Hydro One sale could have a "dramatic impact" on the whole restructuring process, as it can serve as a focal point for the larger public discontent over the reforms, Adams believes.

"There is now a lack of consensus" on electricity restructuring, in contrast to the late 1990s, when the province set out to change the system with a plan most people endorsed, he said.

"The public has a lot of legitimate concerns."

Some of these, such as the political left’s claims that electricity bills will double, that the system will be unsafe or that Ontario will lose control of its electricity system because of the North American Free Trade Agreement (NAFTA), are spurious, Adams believes.

But concerns about rising electricity rates remain legitimate, he said.

And Adams estimates as many as 900,000 Ontarians have already signed deals with electricity marketers, often under the mistaken impression their rates will go down.

"We’ve got to go forward with something, but we can’t really move forward effectively unless there’s some level of public consensus around the restructuring," he said.

"Adams’s prescription is to depoliticize" the discussion by sending the issue of electricity privatization to the Ontario Energy Board, a quasi-judicial provincial panel.

Pospisil said Monday the government is continuing to study the situation before deciding on the next step.