Ontario Hydro tightens grip despite liberalisation

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Ontario Hydro's monopoly on electricity generation has been further strengthened by the government's attempts to liberalise the market through its Energy Competition Act. The utility has formed a new company, the Ontario Electricity Generating Corp, a "genco" which will be one of three publicly owned companies to be created from the government owned monopoly this year. The genco was recently assigned a very modest amount of Ontario Hydro's huge debt and critics quickly labelled the move as a "corporate and debt" bailout for the utility, which leaves ratepayers to pay a large amount of the debt and for Hydro's $6 billion nuclear refurbishment program via a surcharge on power bills. By controlling some 90% of the provincial power market, the genco also has the basis for determining prices and for favouring its nuclear, coal and large hydro power. Renewable generators and other competitors can thus be squeezed out of the market. Some oversight by the Ontario Energy Board is in place to prevent this, but the OEB's potential effectiveness was met with scepticism by the Independent Power Producers of Ontario (IPPSO) and other participants at the CanWEA conference (Windpower Monthly, January 1999). IPPSO warns about proposed price capping as a method of controlling the utility because it could hinder development of wind power and other independent projects. Philipp Andres of Vestas American Wind Technology agreed. Such a cap "lowers artificially the price of energy and thereby increases stranded debt," he said. "It will effectively prevent any meaningful new construction of renewable energy capacity." Ontario's Market Design Committee, which is defining market rules, will issue its final report within weeks. It is hoped this will give significant support for renewable generation.

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