Ontario Hydro’s Path to Privatization
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Previous articles have focused on other aspects of the Harris PC’s role in contributing to Ontario’s status as a ‘Have Not’ province.
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On April 11, 1999 the Harris PC’s removed Ontario Hydro from the Freedom of Information Act.
Road Blocks
On April 19, 2002 the Ontario Superior Court of Justice ruled that it was illegal to sell off Ontario’s hydro grid.
Eves fought to appeal the decision On May 7, 2002 Eves told the province that privatization was back on the agenda and swiftly deregulated and removed the price caps Harris had previous implemented on Hydro rates.
At this time the electricity market had opened and Ontario bundled electricity prices into separate generation, transmission, and distribution components. In addition, in order to finance the stranded debt of Ontario Hydro (totalling about 200$ billion), a stranded debt charge of 0.7 cents per kWh had been added to the market price.
With the hot summer months ahead, electricity prices increased quite rapidly and energy consumption soared leading to a shortage of domestic generation capacity, an increasing reliance on importers, and limited import capacity.
With consumption high, Hydro rates went through the roof overnight, and the taxpayers of Ontario took the bills for it. Electricity prices spiked an average of over 30% in just seven months.
The IESO issued power warnings and advisories for consumers to conserve energy since power supplies were struggling to keep up with demand
Faced with public outrage and anger, the Ernie Eves PC’s were forced to freeze prices for residential and small business owners — an unsustainable economic policy. This was legislated under the Electricity Pricing, Conservation, and Supply Act in 2002.
Retroactive to May 2002, the Act effectively allowed for the freeze of retail prices for low volume consumers, who accounted for half of the electricity consumed in the province.
The cap just masked the underlying problem of rising cost pressures in an electricity system in need of renewal and additional supply.
Ontario had also become heavily reliant on coal-fired generation. About 25 per cent of electricity generation came from polluting coal-fired plants. In addition, Ontario imported coal power from neighbouring American states.
As a result, Ontario, a province with a historic capability to provide ample power resources, had become a net importer of power.
Timeline of Events
In 2002, the Court ruled against the privatization. A few months after this time, the Harris PC’s scrapped their plan to privatize Hydro One.
In August 2003 Ontario and the northeastern US experienced a major blackout. Deregulation of electricity had been a major cause of this crisis. Although privatization of Hydro One had stopped, deregulation of the price paid to private producers was firmly in place.
Back in 2004,
Globe and Mail documented $5.6 million in untendered contracts handed over to four top PC in Ontario by the utility in a secret program to lobby the government to sell Ontario Hydro to investors.
In 2004,
Hydro One had admitted that Mike Harris had been paid $18, 591 for advice after he left the premier’s office. Harris had received the money as part of a Hydro One contract that was granted to former Quebec premier Pierre-Marc Johnson in 2002.
Harris was never paid directly by Hydro One, but was hired instead by Johnson as part of his $115,807 contract with the publicly owned utility.
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