So much new power generation came on line through government incentives starting in 2005/2006 to generate more power (after all, there are 70 freaking companies involved in this mess), that a huge surplus in electricity entered the market.
But what usually happens with a surplus? Rates go down. But in our case, rates were locked at above market-rates (see 2006 above).
Therefore, to make it so this low-cost surplus (with rates fixed at above market prices) didn't completely ruin the province and industry, the government signed long-term locked-in deals with Manitoba, Quebec, New York, Michigan and Minnesota to sell them our surplus power at a low fixed rate.
That was fine and dandy, but then all the coal stations were closed, and 2 of our nuclear plants (60% of our power generation) will soon need to be closed for many years for upgrades.
All of a sudden our surplus is about to become a shortfall because we can't cancel the electricity contracts with Manitoba, New York, Michigan and Minnesota to supply them massive amounts of what we thought would be limitless electricity (lest we be sued for billions and billions by them for breach of contract), but in reality nobody foresaw that we're going to soon run low owing to all the coal plant shutdowns and nuclear shutdowns (We would have been fine had we not signed those damned US deals when we thought the "built more capacity" drives would give us an eternal excess supply). So now the difference in costs (between the fixed low-rate we're forced into selling to the US and the generation rate which is way more than anticipated) has cost Ontario consumers over $6 billion, passed on at billing time (rate hikes 3).
As an aside, and speaking of continued rate hikes, the privatized Hydro One still has legacy public pensions it needs to pay for (rate hikes 4), and it's own corporate debt stemming from the above events (rate hikes 5).
Ontario now needs to get electricity from somewhere, and fast. In enters the Wynn-Couillard duo, and Hydro Quebec.
