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Ontario Ponders Electricity Reform: Still Optomistic Despite Setbacks, Bad Press

Fortnightly Magazine - July 1 1998

the year 2000 to open up both the wholesale and retail aspects of the market; right now we're just putting together a draft of the legislation which we hope to present in the House in mid-June. We just got the White Paper out in November of last year, and we're a government that does what it says we're going to do. There's a lot of people out there who don't think we can meet these time lines, so we hope to draft legislation in June that will really be broad-based legislation - it won't have a lot of details in terms of market design - [to hold] public hearings in July and August, which is part of our legislative process, and then [be] back in the House for a third reading before Christmas, which means that on Jan. 1, 1999, Ontario Hydro will establish the new companies. They will have 1999, then, to put in place the regulations for the actual design of the market.

The only problem we've really had with deregulation in the gas industry over the last 10 years and which has surfaced in the last few years in this province - and it's not unique to us - is some unscrupulous activity that has occurred among a small group [of gas marketers]. We will, in this legislation, also set in place the licensing scheme for gas marketers and for electricity marketers, agents, or brokers, which I expect in the future may be one and the same, due to convergence of services.

We're just now at the drafting stage [for the legislation], we're still receiving input from people, and frankly, we're trying to spend a great deal of our time looking at what everyone else is doing, in California, New Zealand, Australia, Quebec, Alberta, [and] of course the other various U.S. states.

Which restructuring efforts have provided the best examples?

It's been a combination. One of the things we've seen in the U.K., for example, is that there's not a lot of liquidity in their pool in terms of what I would call a healthy environ-ment. In fact, I read in an article recently that they're calling it an "old boys club," in terms of who's actually trading electricity in the market, so we're heading over there for three weeks to visit, to see what to do and what not to do.

We want a healthy market. We had a good sign [in early April] when the Toronto Stock Exchange, unprompted by government, came forward and indicated that they would probably list a contract in '99. We're running an interim market pool right now, and fortunately, from the Ontario Hydro point of view, demand's been very low this year, because of El Niño. We didn't have the cold winter so there hasn't been much activity in this interim market. We started that about three months ago and I think it's only had a couple of contracts exchanged.

How did the January ice storm affect you?

Well, we were very much affected in that 1.6 million people were without power,