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Ontario Votes 2003

Main > Features > Who's got the power?
Election Day: Oct. 2, 2003   

Who's got the power?
Birds on power pole
by Paddy Moore

The issue of electricity - how much we have, who makes it and who sells it - has been a thorn in the side of Ernie Eves throughout his term as leader of Ontario's Conservatives.

Along with the reins of government, Eves inherited responsibility for Ontario Hydro's crippling debt and a controversial Tory plan to partially privatize the public utility. He proceeded with the privatization solution, launching a stormy tenure as premier that was marked by unpopular decisions and, ultimately, a complete policy reversal.

Video from Canada Now

Beatrice Politi explains the main parties' positions on coal-generated electricity in the province (Sept. 17, runs 4:00)
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Politi looks at the various parties' stances on electricity (Sept. 10, runs 3:25)
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Amanda Singroy on an environmental group's efforts to lobby on the power issue (Sept. 9, runs 2:28)
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One could be forgiven for thinking that such a track record would leave the Tories vulnerable on the election trail. For their part, the New Democrats have fashioned their entire campaign around the theme of "Public Power," with an emphasis on keeping the province's electrical transmission and generating systems entirely in public hands.

But the fact is, all three of the major parties bear some responsibility for our now-faltering electrical system: the Tories, who gave the green light to the disastrous Darlington nuclear plant project; the Liberals, who ignored Darlington's massive cost overruns; the New Democrats, who froze power rates even as Ontario Hydro's debt continued to mount.

"No question, mistakes have been made in relation to this system," said Mitch Rothman, a chief economist with Ontario Hydro from 1982 to 1993. "And for those kinds of mistakes, all three parties bear some blame."

AUDIO: Ottawa Morning's Lucy van Oldenbarneveld speaks with the CBC's Karina Roman (part 1) and Karla Hilton (part 2) about the political impact of the Aug. 14 blackout:

PART ONE: (Sept. 3, runs 7:46)
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PART TWO: (Sept. 4, runs 8:14)
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Darlington was the most costly mistake, and remains one of the most problematic nuclear power stations in Ontario, said Tom Adams, executive director of Energy Probe.

"Its cost overrun fundamentally weakened Ontario Hydro's financial position and was the largest single cause of the utility's financial collapse," Adams said.

The challenge for each of the three major parties in this campaign is threefold: whoever governs will need to pay down years' worth of accumulated Hydro debt, keep electricity prices within reach for consumers, and find ways of paying for upgrades to generating capacity and transmission lines.

How will they do it? See their promises to the left.

How did they get here? Below, we pick highlights from the life of Ontario Hydro, dated from the birth of the Darlington facility:

1970: Conservative government of John Robarts acquires land near Bowmanville for creation of the Darlington nuclear plant.

1973: Engineering studies done for Darlington. The new generation of nuclear plant was designed with sophisticated computer systems that would provide significantly upgraded shutdown safety design, and would allow it to adjust its output.

1976: Tory government of Bill Davis gives Darlington project an exemption from public environmental assessment review.

1978: Cabinet approves Darlington spending. Early estimate projects that the four-unit station would be completed by 1983 at a cost of $2.5 billion.

1983: Initial deadline for completion of Darlington project comes and goes.

1985: After 42 years in power, the Tories are toppled by a coalition of Liberals and New Democrats. The new government contemplates cancelling the Darlington project, but relents when Ontario Hydro officials offer assurances that the plant is almost complete.

1987: Liberals under David Peterson win majority in general election.

1989: Darlington takes its first of four units fully online.

1990: New Democrats under Bob Rae win general election. In an attempt to deal with the "gigantic" debt amassed by Ontario Hydro, government orders cuts to maintenance costs.

1993: Construction completed at Darlington, a decade late and at a total cost of $14.4 billion. Ontario Hydro is now billions of dollars in debt; nonetheless, the NDP government imposes a rate freeze, saying the price consumers are being charged for electricity represents "power at cost."

1995: Tories return to power under Mike Harris. They leave the NDP rate freeze in place, but announce intention to solve the Ontario Hydro debt problem by breaking up the public utility's monopoly on power generation and transmission.

Oct. 30, 1998: Energy Competition Act comes into effect. It's the road map to a deregulated electricity market. For details see Deregulation Recap.

June 2000: Eyeing problems with electricity deregulation in other jurisdictions, the Harris government delays the date for deregulation indefinitely. It was originally set for Nov. 1, 2000.

December 2001: Tories announce the market will open May 1, 2002. Harris also announces that Hydro One will be sold in a share offering expected to be worth $5 billion.

March 2002: Ernie Eves succeeds Harris as Tory leader and premier.

April 2002: Ontario Superior Court rules that the government does not have the right to sell shares in Hydro One.

May 2002: Government proceeds with plan to sell off Hydro One, and to let electricity prices float at market levels. In the hot summer that follows, the province's generation capacity is not sufficient to meet demand; consumers grow alarmed at skyrocketing prices.

June 2002: Eves backs off plans to privatize Hydro One, cancelling what was expected to have been the biggest public share offering in Canadian corporate history.

July 2002: Hydro One CEO Eleanor Clitheroe is fired after details of her compensation package are made public.

November 2002: Faced with a looming consumer revolt, Eves reverses the deregulation plans and announces a rate cap of 4.3 cents per kilowatt-hour until at least 2006. The move killed business for electricity resellers, and eliminated the incentive for private companies to build generating plants.

Aug. 14, 2003: Massive power failure plunges most of the province into darkness. Province's generating stations - including Darlington - enact emergency shutdown procedures, and aren't fully up to speed again until a week later.



Energy Highlights
Liberal Energy Platform
Will not sell off the electricity transmission grid.
Will not sell any publicly owned generating stations.
Keep electricity power rates frozen at 4.3 cents/kWh until 2006.
Phase out coal-burning generating plants by 2007, and replace with cleaner energy sources. Liberals say the 6,100 MW from coal plants can be replaced by 18,002 MW using clean energy sources by 2007.
Require all electricity suppliers to get five per cent of their power from renewable sources by 2007, and 10 per cent by 2010.
NDP Energy Platform
Put power system in public hands by ending electricity market deregulation.
Create "Efficiency Ontario" office to set standards for retrofits, certify energy efficiency contractors, ascertain best practices, and educate about conservation.
Create mechanism for gas and electricity utilities to lend money for retrofits that reduce consumption. The loan would be paid off through the consumption savings, keeping the bill at the same amount as before the upgrade.
Set renewable energy source target of 10 per cent by 2010, and 20 per cent by 2020.
Phase out coal plants, converting some to gas, by 2007.
PC Energy Platform
Keep electricity rate frozen at 4.3 cents/kWh until at least 2006. Lift it only when power supply is sufficient to protect against price volatility.
Phase out coal-burning generating plants by 2015.
Cut emissions from fossil-fuel power plants by 45 per cent by 2010.
Establish guidelines for electricity bills that are easy to understand.
Give the Ontario Energy Board "sweeping new powers" to protect consumers, including greater power to levy penalties.

Deregulation Recap
The Tories were determined to stop the losses at Ontario Hydro, and they proposed private-sector involvement as the solution.
1. They broke the utility into the transmission company Hydro One (which they subsequently announced plans to sell) and the generating company Ontario Power Generation.
2. They stranded Ontario Hydro's debt of $20.9 billion, which the province's consumers are now paying off through a debt repayment charge on their electricity bills.
3. They allowed private companies to sell electricity directly to consumers.
4. They promised to remove the rate freeze in two stages, allowing the price to float for a number of months before the cost was passed on to consumers. When homeowners and businesses were paying the full market value, they assumed that it would be profitable for private companies to build generating plants.
5. They announced plans to sell off some publicly owned generating plants.
6. They put the Ontario Energy Board (OEB) in charge of regulating the open marketplace, and created the Independent Electricity Market Operator (IMO) to serve as the broker between electricity producers and distributors.

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