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Push to privatize power infrastructure

Need to attract $35 Billion to upgrade grid, Ontario says

Financial Post - May 30, 2005
by Scott Peterson


Now is the time to privatize Ontario's power infrastructure in order to attract the more than $35-billion of investment required to satisfy demand and upgrade 80% of the province's grid over the next two decades, said Ontario Energy Minister Dwight Duncanx.

Mr. Duncan will attend an "energy roundtable" tomorrow in Toronto with European and Canadian power industry officials to look at the challenges facing the province and how European technology and expertise can help.

"We have to create more supply and we have to decrease demand to keep prices down," Mr. Duncan said. "In our government's view, most of the exciting work in the energy field is going on in the private sector — on both the renewable and conservation side."

Mr. Duncan said European technology is far superior because they are accustomed to making more with less. They pay twice the amount as Ontario residents, or about 23 cents per kilowatt hour, which he says leads them to be better at conserving.

Not wanting to say if higher prices were a better way of conserving power in Ontario, Mr. Duncan said the best way to keep electricity prices low is to increase supply.

One method of doing that is to make it easier for investors to get a power purchase agreement — which is the government's commitment to buy power at a certain price, for a certain period of time. This agreement is essential in Ontario before an investor can commit the time and money to produce the power to sell. Mr. Duncan said The Ontario Power Authority was created to look at making this process easier for investors.

"Hopefully these processes will be streamlined in the future as we need to bring on more power," Mr. Duncan said. "One of our great advantages in the 20th century was our cheap energy, but over the last 30-40 years we have lost that edge and we're moving to correct it."

Investors currently think regulations are too cumbersome to apply for a power purchase agreement with the province — which is scaring away investment.

Ontario currently needs about 25,000 megawatts of power and can produce up to 30,000 at peak times. In addition, the Ontario government predicts the population will skyrocket by 4-million people by the end of 2031, which will cause an increase in electrical consumption.

To meet that demand, along with the billions of dollars needed to maintain the current output, investors from both sides of the Atlantic are knocking on Ontario's door.


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