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White Paper sets out plan to restructure Ontario HydroOntario Ministry of Energy, NEWS RELEASE - November 6, 1997 TORONTO - The Ontario Government today released a White Paper that would end Ontario Hydro's 90-year monopoly in the electricity market and introduce competition aimed at job creation, increased investment, the lowest possible prices, environmental improvements and greater accountability to taxpayers. "Today, we are flipping the switch on a more competitive and responsive electricity system and creating new opportunities for the people of Ontario," said Energy, Science and Technology Minister Jim Wilson. "In response to a lengthy public consultation process and widespread demand for reform, we have produced an ambitious, balanced and fair plan that introduces the benefits of competition and restores the vitality and financial integrity of Ontario's publicly-owned electricity system," Minister Wilson said. "Under this proposal, Ontario Hydro would no longer have a monopoly on the electricity system from generation to transmission to price-setting in the province." Titled "Direction for Change -- charting a course for competitive electricity and jobs in Ontario", the paper adopts the general direction proposed by the Advisory Committee on Competition in Ontario's Electricity System, chaired by the Hon. Donald S. Macdonald, which reported to the government in June, 1996. "As recommended by the Macdonald committee, we're proposing to move away from a monopoly in generation and retail to a new era of competition. We want to introduce customer choice and establish a new system of independent regulation," said Mr. Wilson. "It is simply not acceptable that Hydro's business performance has faltered so significantly over the past decade, that power costs have increased by 30 per cent in the early 1990s, and that Hydro's debt exceeds $30 billion. Ontario's household electricity rates are the third highest among Canadian provinces -- a concern of many families," he said. The government proposes to reorganize Ontario Hydro into three separate corporations. An Independent Market Operator, a non-profit Crown corporation, would act as an impartial manager of the market system, ensuring that competition develops quickly and without abuse of market power. Two new commercial electricity companies, the Ontario Electric Power Corporation and the Ontario Electric Services Corporation, would take ownership of Hydro's generation assets and other electricity businesses respectively. Under the proposed reform, customers would be able to freely choose among electrical suppliers. This would be similar to the way telephone lines and gas pipelines became common carriers when those industries were opened to competition. "The energy industry and the reforms we are proposing are complex and can be highly technical in nature. The bottom line, however, is that these proposals would benefit every person in Ontario by restoring accountability and introducing the proven advantages of competition," said the Minister. "As consumers and taxpayers, we are all affected -- from the average household in Ontario, which spends almost $1,000 a year on electrical power, to our large industries whose costs run in the tens of millions of dollars." The White paper proposes the following nine-point plan:
The government proposes the immediate establishment of a Market Design Committee composed of industry and customer representatives to design the rules for the careful and measured transformation of the market. Restructuring Hydro and introducing competition represents phase one of an ongoing process. The next major step will be an open legislative drafting and approval process, and tackling the problem of Ontario Hydro's debt. Consultations will begin immediately with Hydro and key stakeholders on how the debt can be recovered "in a fair and transparent manner," the Minister said. For further information contact: Brian LeGrow | |
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