Will California's power struggle come to Canada?

WebPosted Sat Jan 13 19:21:50 2001 TORONTO-- With California struggling to avoid blackouts because of a severe shortage of electricity, critics say Ontario is in danger of making the same mistake.

The problem: deregulation.

In 1996, California introduced legislation some thought would become a model for other parts of North America.

The law allowed companies to sell power on the open market – with some of them making profits in the first few years.

But with several utilities on the brink of bankruptcy, consumers are now facing the prospect of no electricity in the state.

On Saturday, federal mediators continued a fifth day of talks in Washington to try to come up with a solution.

They met with California state regulators, utility executives, and out-of-state power suppliers to discuss ways of lowering the wholesale price of electricity.

The decrease would help bail out two major power companies, which must purchase their electricity on the open market before turning around and selling it to customers.

Alberta tried deregulation a few years ago, but the government had to step in recently and impose a cap on price increases proposed by private power companies.

Ontario, which has slowly replaced one giant provincial utility with private companies that run the power plants and distribute the electricity, is about to go one step further.

Consumers are already being bombarded with ads about "retail competition" – a system that allows private companies to offer contracts to consumers who will be asked to shop around for the best deal.

Critics think the province is heading in the wrong direction.

"Ontario's joining the losing team," says Tom Adams of Energy Probe, an environmental research group. "We're in there with Alberta, with California. We're making many of the same mistakes."

But advocates of deregulation argue that Ontario's circumstances are not even close to California's. In particular, they argue that Canada's largest province has a power surplus, not a shortage, which makes blackouts unlikely.

Retail competition was supposed to be in place in Ontario last fall. Although the government delayed the move, the next phase of deregulation is expected by the end of this year.

http://cbc.ca/cgi-bin/templates/print.cgi?/news/2001/01/13/power010113

-- Martin Thompson (mthom1927@aol.com), January 13, 2001