Ontario power prices rival rates set in U.S.

Globe and Mail - September 25, 2002
by Martin Mittelstaedt and Luma Muhtadie

High electricity bills landing in many Ontario homes this month show that the province's residents are facing some of North America's priciest power.

Ontario, which had an electricity cost of 4.3 cents a kilowatt-hour before opening the market to competition on May 1, had lower prices in May and June, but has been near or above prices in most of the United States since July.

So far in September, the Ontario price has averaged 8.2 cents a kwh, according to Navigant Consulting Ltd., a Toronto energy consulting firm, well above the rate in western New York state, New England, and the Pennsylvania, New Jersey and Maryland area, high-price areas of the U.S.

Today's price forecast by the Independent Electricity Market Operator, the provincial agency that operates Ontario's wholesale power market, was expected to exceed even levels in California, where residents are bracing for high power demand because of a late-season heat wave.

Toronto residents have not faced the higher prices because Toronto Hydro has kept charges at 4.3 cents per kwh. It will make periodic adjustments, and possibly levy one-time charges if prices stay high.

In many other Ontario municipalities, residents have opened bills this month that are higher than ever before.

In Wawa, the deregulation of prices on electricity provided by Great Lakes Power Limited has put the city "on the border of crashing," Chris Wray, the city's chief administrative officer, said.

"We've got 3,600 people in this town, and a lot of them are on old-age pension or a fixed income. I just got a call from a woman whose pension comes to $1,000 a month and her hydro bill for 50 days was $500."

Wawa resident Roger Guindon got a power bill of $537 that nearly matched his $575-a-month rent.

"I'm on a disability pension," Mr. Guindon said. "What am I going to do to live, for rent? This makes no sense. The government's got to do something."

Wawa resident Rodger White, 58, said he and his wife have had to make extra efforts to limit their electricity use.

"We just sit here with one light on," Mr. White said. "We've never been extravagant, so there's really nothing more we can do."

Before deregulation, Ontario had prices that were high by Canadian standards, but generally lower than those in the U.S. The provincial Ministry of Energy even issued a study just before the market was opened predicting that competition would save consumers $3-billion to $6-billion over the next eight years.

But those savings don't seem to be on the horizon, at least not yet. Jonathan Dickman-Wilkes, a consultant with Navigant, cautioned that it is still too early to give an accurate prediction on the direction of Ontario's electricity rates and that a full year might be required to get an indication of the market price for power.

He said rates have been high this summer because of hot-weather demand for air conditioning, at a time when electricity supplies have been curtailed because a drought has lowered water levels, cutting reserves of cheap hydroelectric power.

He said delays in restarting idled nuclear reactors have also cut the amount of power available.

New Democratic Party leader Howard Hampton says high electricity rates are a lightning rod for public concern. Mr. Hampton said he attended a farm fair in Southwestern Ontario last week, where many farmers told him the rates threaten their livelihoods.

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