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Soon you can shop for hydro

Bill introduced to end Ontario's 92-year-old power monopoly

Toronto Star - June 10, 1998
By Daniel Girard - Queen's Park Bureau

Consumers will soon be shopping for electricity like they do for long-distance phone service.

"Competition is our best guarantee for the lowest possible energy prices in Ontario," Energy Minister Jim Wilson said after introducing legislation to end Ontario Hydro's 92-year monopoly on the electricity industry.

Wilson's Electricity Competition Act will see Ontario consumers and businesses able to shop for power from competing electricity companies - including Hydro - in 2000.

"We know it's (been) a recipe for lower prices in every other jurisdiction," he told a Queen's Park news conference yesterday.

Wilson acknowledged that "a very large public education campaign" will be required to get people prepared to shop for electricity within two years.

But, he added, no one will be forced into the market if they don't want to because the new market will include a "default supplier" that ensures power even if a homeowner ignores competition.

"People don't have to . . . shop around at some magic date in the year 2000 and worry about where they're going to get their electricity," he said.

The Progressive Conservative government has frozen hydro rates since winning office in 1995.

Privatization elsewhere in the world has led to price decreases ranging from 15 to 40 per cent, the government said.

But Hydro chairman Bill Farlinger told reporters earlier in the day the notion that prices will automatically fall under competition is "a leap of faith."

"Nobody really knows what the price of power is going to be when competition comes in," Farlinger said. "History will tell us price goes down but that's a leap of faith really."

The bill, which is to be subjected to province-wide public hearings in August, would:

  • Divide Hydro into three companies. One - the Ontario Electricity Generation Corp. - would retain all Hydro's generation assets, including nuclear and hydroelectric facilities, and compete against other energy sellers to capture household and business contracts. The other two - a transmission company to deliver power and an independent market operator to make sure the market is fair - would remain monopolies.

  • Beef up the regulatory powers of the Ontario Energy Board to ensure consumer protection, market fairness, a smooth transition to competition and promotion of energy efficiency.

  • License companies wishing to participate in the new electricity market as well as all marketers selling power or natural gas to residential customers.

Wilson's bill won wide support yesterday from business groups, private power producers, utilities, environmentalists, opposition parties and industry watchers. But all said they would be following closely the design of the market over the next year or so and how Hydro's more than $30 billion debt would be addressed.

Wilson said regardless of how much of that debt is considered stranded (it can't be carried forward in Hydro's new commercial companies) electricity prices will not be boosted because electricity bills already include about 30 per cent of that charge each month.

"We're closing one important chapter in our province's history," Wilson said of ending Hydro's monopoly. "It is time to write another."

Premier Mike Harris said that, after Hydro's poor performance at its nuclear plants and on the balance sheet, ``the public understands that change is required.

"The monopoly situation has not in fact produced a well-run company," Harris said. "So, I think the public ought to welcome these changes."

"This is an historic day that represents a tremendous opportunity for Ontario," said Tom Adams of Energy Probe. "We can start solving the problems of our electricity system instead of just complaining about them."

Jake Brooks of the Independent Power Producers' Society of Ontario said yesterday was "the beginning of a business for us that has been closed for a number of years."

Kevin Jardine of Greenpeace applauded the bill as an opportunity for "the significant chunk of the public that wants to buy green power" to do so, but noted "the devil will be in the detail" as the market rules are designed and regulations drawn up.

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