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ONTARIO PULLS PLUG ON DEREGULATION PLANS

With rolling blackouts plaguing California and energy costs soaring in Alberta, Ontario Premier Mike Harris has pulled the plug on plans to quickly follow those jurisdictions and deregulate the province's electricity market.

Though Ontario's Progressive Conservative government has passed legislation aimed at opening the electricity market to competition at home and granting full access to sales in the lucrative U.S. market, it has yet to issue a start date for deregulation to begin.

Noting the problems in other jurisdictions, Harris said the timing might not be right for Ontario to move into deregulation.

However, Energy Minister Jim Wilson said while the timing may be delayed, the government remains committed to deregulation.

"We're aiming for later this year," he said, "but if the conditions aren't right for Ontario, we won't move forward until we're satisfied that we can bring a market in that consumers will benefit from."

Already, Ontario Hydro, the provincially-owned power monopoly that once ran the entire market from production to transport and distribution, has been transformed into Ontario Power Generation Corp., which produces electricity but no longer transports or sells electricity at the retail level.

One reason Ontario is moving toward a more open system is that the U.S. Federal Energy Regulatory Commission requires reciprocal treatment for companies seeking export sales. In other words, once Ontario opens its market to competition, its power companies can sell directly to U.S. suppliers, rather than simply moving the power to a border-broker for resale, said John Earl, spokesman for Ontario Power Generation.

Ontario has been closely monitoring the situation in California where deregulation, combined with shrinking supplies, price controls on the sale of electricity and a badly organized electricity marketplace have led that state into a crisis that has caused blackouts and government intervention.

But Ontario officials insist the California problem will not happen in their province. Ontario has a surplus of electricity, Wilson said, and by next year the Pickering nuclear power plant, which had been shut for repairs and upgrading, is expected to reopen. Additionally, Ontario is not considering any form of rate cap in the new market, he said.

Last month, Alberta became the first province to experience deregulation. Since then, electricity costs have jumped by 280 percent, and natural gas costs have jumped by 50 percent even though Alberta is Canada's biggest producer of natural gas. As a result, the provincial government has been forced to issue subsidy checks of more than $500 (U.S.) to each taxpayer.

By contrast, the government-owned utility British Columbia Hydro, has been selling its surplus power to California, and there are no plans to deregulate the market in B.C.

While California and the U.S. Southwest face a growing energy crisis as a result of deregulation, most Canadian provinces remain powered by government-regulated monopolies like B.C. Hydro.

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