Editorial
Toronto Star
April 30, 2002

April 30, 2002 — Tomorrow, Ontario takes a leap into the unknown with the opening of the electricity market to competition.

Well, almost unknown. There is one certainty: Prices will rise. Depending on which report you read, the increase could be anywhere from 10 to 40 per cent.

Under market opening, consumers can sign a contract for fixed-price power with one of the new electricity retailers, or continue buying it from their current local utility — in this city, that’s Toronto Hydro. That means paying whatever the price is on the fluctuating spot market.

Ontarians were never asked whether they wanted to go down the path of restructuring the old Ontario Hydro, of which market opening is only one step. They were never given a direct vote on the issue.

The final insult was the Ontario government’s shoddy mishandling of the opening of the market. The Tories let loose door-to-door retailers, some of them ruthless, on a public that was never given proper, timely information that would have allowed them to make informed decisions before signing hydro contracts.

The advocacy group Energy Probe predicts customers of local utilities will be paying 20 per cent more under the new open market, while those who have signed fixed-price contracts will pay 30 to 35 per cent more since many contracts were signed at rates higher than those now expected.

The Tory government was aware that market opening carried price-hike risks. As Thomas Walkom reports today, confidential government documents from as late as last June noted the possibility that electricity rates would skyrocket under market-opening. The documents also refer to plans the government was developing to increase subsidies to consumers in that event.

However bad price increases are in the short term, there is a threat they could become much higher in the long term. Ontario Power Generation, one of the arms of the former Ontario Hydro which now owns 70 per cent of the province’s power generating capability, must pay rebates to electricity users if the average price of electricity climbs above 3.8 cents per kilowatt.

But the rebates will be phased out as OPG sells off generating capacity. When the rebate goes, so will the brakes that prevent prices from rising, particularly as the new private companies sell electricity to the U.S. market where prices are higher.

Not only are Ontarians faced with price hikes, they’re also facing a risk of power shortages. Energy Probe says the province may not have the supplies it had projected for this year and possibly 2003, a situation that could lead to brownouts.

Ontario consumers are getting an unbelievably raw deal. They are being asked to trade in their publicly owned power system that has served Ontario well for nearly a century, providing reliable and affordable electricity. In return, they are being offered huge risks, based on little more than a Tory government’s blind faith in the free market.

The Star is strongly opposed to the selling of public assets for the benefit of special interests.

It will fall on the province’s next government to reverse the situation, at what will be a high cost to taxpayers.