Protests over power sell-off

Hamilton Spectator - April 20, 2002
by Joan Walters

Brace yourself. Things just got rocky.

Ontario's move to a new world of competitive power was thrown into chaos yesterday, just days to its launch.

A judge's ruling against the province, plus mounting protests from Ontario cities and towns, put big bumps on the road to the new electricity regime.

Although the government says the new power market will open May 1 as scheduled, yesterday's developments gave more ammunition to opponents of the Tory reforms.

The Ontario Electricity Coalition, aligned with the unions that won the court case, said it now has support from 24 municipal councils and will go after school boards, hospitals and ratepayer groups next.

"I've been to 40 places and I'm getting crowds of over 300. Nobody wants this," says coalition head Paul Kahnert.

Municipalities representing five million people -- including Toronto, Windsor, Kingston, St. Catharines, Welland and Fort Erie -- have endorsed the coalition's resolution against the Tory plan.

Hamilton council received the resolution but is awaiting a staff report on whether electricity deregulation is in the best interests of the city.

"I personally feel it isn't," says Councillor Sam Merulla.

"In California, I know they felt it was the best thing since sliced bread, until the lights went out. I have serious concerns."

Ontario scheduled May 1 as the date it converts from a government-owned at-cost monopoly to a free-wheeling market run for profit by private firms.

The Conservative government says an open market will lower prices, improve reliability and fix problems that have plagued the province for years.

But even electricity restructuring supporters say no new system is perfect, and adjustments have to be made.

Parts of the system that 4.1 million Ontario customers now rely on might start to feel less secure.

"There could be major glitches," says the former Ontario deputy energy minister who advised the Tories on electricity restructuring.

"There could be some significant price disruptions, there are going to be billing mistakes, there are going to be a number of logistical mistakes of a commercial nature," says George Davies, president of Acres Management Consulting in Toronto.

And rates for power in the $10-billion market are going to fluctuate, rising and falling hourly in the frenzy of a new "spot market," with no set price.

"Part of the education people are going to be facing is that they're going to see a high level of volatility in the price of electricity," Davies warns.

"That's going to be a significant shock."

In February, former energy minister Jim Wilson said that Ontario consumers could expect to save between $3 billion and $6 billion over the next eight years.

Savings would have been double, Wilson said, except for the $38-billion debt racked up by the old Ontario Hydro while it was provincially owned.

"That's almost exactly what (Alberta Premier) Ralph Klein said just before that market opened," says Kahnert, head of the electricity coalition. "And prices tripled there."

Deregulation gone awry in Alberta cost the Klein Conservatives $4 billion in government rebates to offset soaring prices in 2000 and 2001.

Ontario says problems in Alberta, and crisis-ridden California, were short-lived and prices have since settled down.

Outside Ontario, the fervour for competitive markets is slowing. In the United States, 16 states generating a third of the nation's power give retail customers some form of power choice. But problems of some kind in virtually every jurisdiction have left other states wondering whether to proceed.

In Ontario, opponents are also focused on who will benefit from the plan.

The province has had an influx of major new companies to generate, distribute and sell power to retail, commercial and industrial customers.

Between 900,000 and one million Ontarians have already signed up for service with new suppliers.

Critics of the Tories say there will be plenty of cash generated for all big businesses -- starting with banks, brokerages and advisers who had lined up for the $5-billion sell-off of Hydro One, the corporation that owns the transmission lines that carry power.

Hydro One's sale -- which yesterday's court ruling put in jeopardy -- would be the largest public offering of shares in Canadian history.

Credit Suisse First Boston, a firm that employed Ernie Eves as its vice-chairman before he became premier, is one of 30 companies that were due to split up to $300 million in fees on the sale.

"It's not consumers, not our local businesses who gain from this," says New Democrat Dave Christopherson, MPP for Hamilton West. "It's going to be the big players in the corporate world. They're going to use their rules, and do what's best for their individual corporations, not for us."

Consumers are already fretting over complicated contracts and abuses they have not had to deal with before.

Niagara MPP Peter Kormos has called for Ontario government fraud squads to investigate reports of illegal marketing practices, including forgery and threats.

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