Canoe

Tuesday, May 1, 2001

Ontario should sell power plants to U.S.: premier By CASSANDRA SZKLARSKI-- The Canadian Press

TORONTO (CP) -- Ontario should look at building new power plants to supply the steep energy demands of the United States, Premier Mike Harris said Tuesday, raising fears among some that an expanded energy market would send Canadian rates soaring.

The Tory premier said he and Prime Minister Jean Chretien discussed such a scheme after Chretien met with U.S. President George W. Bush during last month's Summit of the Americas in Quebec City.

"They felt there were great opportunities for more generation, maybe more nuclear plants, more CANDU reactors here in Canada, here in Ontario and ... perhaps building surplus power, jobs and investments here to sell to the United States," Harris said during Question Period at the Ontario legislature.

"That's something I think we should look at."

Harris insisted Ontario's power needs would have to be met before any foreign sales are made, but said sending power south would bring Canada jobs and investment opportunities.

The province's New Democrat leader said allowing private Canadian utilities to sell to a lucrative American market, where rates in some places dwarf those in Canada, would drive our prices through the roof.

"Ontario consumers, Ontario industry will either have to pay double and triple the rates for electricity or we'll watch our electricity being exported," Howard Hampton responded in the legislature.

"Premier, don't you get it? This is critical for Ontario's economy."

Harris promised his government would ensure that Ontario interests are put first.

"We've made it very clear that there would not even be any market opening until those conditions are in place."

Tom Adams, executive director of Energy Probe, called the exchange "a dialogue of morons."

"(Harris) should think of building new power plants for Ontario's own demands" since the province will soon face its own supply problems, said Adams.

"If our nuclear problems continue, we are not going to be exporting power to our neighbours, but importing power from our neighbours," said Adams, head of the non-profit energy watchdog group.

Ontario has already announced three delays in the official opening of the electricity market to competition, which now is set for May 2002.

Continent-wide power shortages have caused hydro rates to triple in a deregulated Alberta market and caused rolling blackouts in California.

Adams has said he anticipates rates to rise by at least 20 per cent by the end of 2002.

Earlier on Tuesday, the province's finance minister said he was worried about the economic impact of soaring gasoline prices, which some in the oil industry have predicted will hit $1 a litre by summer.

Jim Flaherty said the federal government should change its tax on gasoline so it doesn't increase with every price hike at the pumps, complaining Ottawa profits every time gas prices jump because of the seven per cent GST.

He said the government can afford to go to a flat tax on gas, since there is nearly a $16 billion surplus in Ottawa.

Ontario has not increased its 14.7 cent per litre flat tax on gas in six years.

Premier Mike Harris said he wasn't sure a drop in the federal tax would result in any lower prices at the pumps.

Despite thousands of layoffs in the high-tech and manufacturing sectors, plummeting share prices and corporate losses, the economic news of late has not all been bleak.

Consumer confidence remains high, interest rates have come down and overall unemployment figures have been stable.

The federal surplus for the first 11 months of 2000-01 -- the fiscal year that ended April 30 -- was a hefty $20.4 billion, according to preliminary figures from the Finance Department.

The final figure will be lower than that, once last fall's tax cuts work their way through the economy. Routine year-end expenses and other payments will also reduce the total.

But Don Drummond, a former associate deputy finance minister now in the private sector, believes Martin will still end up with a $17.5-billion surplus for 2000-01.

That would be well above the $12 billion forecast in the October mini-budget.

Beyond that, government planners have built in a safety margin of $4.3 billion in "unallocated surplus" for fiscal 2001-02 and another $2.6 billion for 2002-03.

That represents revenues the government expects to take in, but isn't yet planning to spend. The Liberals have been counting on that cushion to help fund the election promises made last year.

The party platform called for $6.7 billion in new spending over four years on everything from scientific and industrial research to adult education, job training, improved Internet access, social housing, environmental protection, culture and crime prevention.

The October mini-budget, combined with Martin's last full budget in February 2000, provided for tax cuts of $100 billion over five years and more than $20 billion in new spending on health care.

Martin contends the combination of lower taxes and increased federal spending is just the stimulus needed to help the economy recover from its current doldrums.

-- Rachel Gibson (rgibson@hotmail.com), May 01, 2001