Tories study California electricity crisis

Deregulation plans for Ontario delayed again

Toronto Star - January 25, 2001
by Richard Brennan

Ontario is delaying its move to a competitive electricity market in the wake of blackouts in California associated with deregulation, Premier Mike Harris says.

"I think there are some steps that we are committed to do to achieve the advantages of competition . . . but our primary concern is for our consumers and industries here in Ontario," Harris said yesterday.

Both California and Alberta consumers have faced brown-outs and unexpectedly high price hikes since their electricity markets were deregulated.

"There's no artificial deadline that I can see but we are studying California, we're looking at Alberta, we're looking at what the other jurisdictions are doing," the Premier said.

Critics have said California's problems stem largely from a botched 1996 deregulation plan - the first in the U.S. - which saw the establishment of two transmission utilities, Southern California Edison and Pacific Gas and Electric, both of which are now claiming bankruptcy.

Harris said California's rolling blackouts, have been caused, in part, by a power shortage and high natural gas prices - neither of which, he said, will affect Ontario.

"We have a very low dependence on natural gas so far in Ontario although we are looking at it into the future," Harris said, noting that the Pickering nuclear plant is expected to reopen next year, giving the energy supply a boost.

Energy Minister Jim Wilson said Ontario has delayed the market opening once and is prepared to do it again.

"We're aiming for later this year but if conditions aren't right for Ontario we won't move forward until we're satisfied we can bring a market in that consumers will benefit from," Wilson said.

Ontario's market opening was scheduled for last November. No new date has been set.

The electricity crisis in California is blamed in part on the American Northwest's limited supplies of hydroelectric power and on deregulation of its electricity industry. Wholesale prices on the open market soared and rate caps imposed under the deregulation plan have prevented utilities from passing on those costs to customers.

"Given that we have the opportunity of learning from California and Alberta, and other jurisdictions, we are going to take our time," Wilson said, insisting that rate-capping is not being considered for Ontario. "We don't want to get stuck in a supply crunch like California."

But critics say the real reason behind the delay is that the Harris government realizes that any hopes of consumers getting a break in a deregulated environment have been dashed.

"I think that Ontarians' confidence in this plan has to have been shaken quite a bit because of the delays in the implementation here . . . and what we are seeing in California and to a lesser degree in Alberta," Liberal MPP Gerry Phillips (Scarborough-Agincourt) said.

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