Ontario Energy Board rules to stretch electricity rate increases

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September 29, 2000 Energy Board rules to stretch electricity rate increases over three years TORONTO (CP) -- Future electricity rate hikes in Ontario must be phased in over a three-year period, but critics say consumers will still face massive increases to their power bills.

The Ontario Energy Board, an arm's-length regulatory agency of the Ontario government, ruled Friday that electrical utilities can "earn market-based returns" but must phase increases in gradually to soften the blow.

Only in so-called special circumstances will utilities be allowed to "seek a skewed phase-in" for the rate hikes. "This is a disaster -- another blow for the electricity restructuring," said Tom Adams, executive director of Energy Probe, a national environmental and consumer watchdog group. In the middle of deregulating the electricity market, the Ontario government stepped in earlier this year and asked the energy board for rules to stop companies from imposing large rate increases. But Adams said the three-year plan will allow for "massive rate increases that are snuck into the rates so the ordinary consumer won't see it." In June, Toronto Hydro was forbidden to implement a six per cent interim rate increase. Nearby Hydro Mississauga also planned to ask for rate increases, but waited instead for the board's ruling. Ontario's approximately 250 utility companies will now have until the end of November to re-apply for rate increases. The board's ruling Friday was in response to a directive from Energy Minister Jim Wilson to "give primacy" to consumer protection with respect to electricity prices. Wilson has also tabled Bill 100, which is designed to stop municipalities from taking windfall profits out of their local electrical utilities and using these profits to justify rate hikes. In a release late Friday, Wilson said the board's decision would require a careful read to see if his proposed law was still required. "I will review the decision carefully and will consult with my cabinet and caucus colleagues about how the government should proceed with Bill 100," said the minister. New Democrat researcher Fred Gloger agreed that the ruling translates into higher power bills. "The bottom line is the consumer will pay more, just more slowly," he said. The issue of electricity rate increases has been troublesome for the Ontario government, which boldly predicted that privatization would mean lower -- not higher -- energy bills. In June, Premier Mike Harris was forced to postpone the deregulation of the electricity market, which was originally targeted for November. Wilson's office said Friday that they are now aiming for "sometime in 2001."

Mississauga has been the most vocal opponent of the government's deregulation delays. The city claims that instead of promoting privatization, the Tory government has scared away private sector interest and created a new monopoly for Hydro One -- a government-owned company which runs the province's main power grid.

"I still feel that what the government has done is totally contrary to what the original intent was," said David Gordon, Mississauga Board of Trade's managing director. "They're defeating their own purpose."


-- Martin Thompson (mthom1927@aol.com), September 29, 2000

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