ELECTRICITY DEREGULATION IN ONTARIO

Ontario's Competitive Electricity Market Opens

With these proclamations:

• transmitters and distributors will be required to provide non-discriminatory access to their systems;
• use of the IMO-controlled grid must comply with market rules;
• customers who do not choose an alternative supplier, will continue to receive electricity from their current distributor at market-based rates;
• the Market Surveillance Panel, Independent Electricity Market Operator and the Ontario Energy Board (OEB) are authorized to investigate and address issues related to the abuse, or potential abuse, of market power;
• users will be required to pay a debt retirement charge, in the manner and method prescribed.

• exempt certain owner/operators of transmission and distribution assets from the requirement to provide open access;
• exempt Ontario Electricity Financial Corporation (OEFC) from requirements to be licensed;
• exempt small generators engaged in 'net metering' from the requirement to be licensed;
• exempt certain commercial contracts from cancellation on open access.

In a special bulletin, Chris Stockwell, Ontario's Minister of Envi-ronment and Energy, spoke on this new development on energy competition in Ontario. He remarked:

"Ontario made history at 1 a.m. on May 1st when our electricity market opened to competition.

This could not have happened without all the advice, hard work and unwavering commitment on the part of many individuals, groups and organizations who have worked tirelessly to ensure our competitive electricity market is a success. We had to make the move to a competitive market because our old system was no longer working. Although Ontario Hydro had served us well in the early years, price increases through the 1980s and 1990s contributed to the third highest electricity prices in Canada. And solutions, such as freezing electricity prices for eight years, only added to the old monopoly's $38 billion debt and liabilities.

A competitive electricity market allows us to address the problems of the past while we step confidently into the future. Competition, within a strengthened regulatory framework will impose sufficient market discipline and ensure that Ontario's electricity customers are protected and continue to enjoy a safe and reliable supply of power at the lowest possible cost. In fact, prices, over time, will be considerably lower than what they would have been under the old monopoly.

We couldn't have done it without the help of all our stakeholders. A new market will benefit all customers and help secure Ontario's future growth and prosperity. My sincere thanks for a job well done."

IMO Comments
After years of planning, testing and retesting, the Independent Electricity Market Operator, or IMO, took over its new responsibility as operators of Ontario's wholesale electricity market.

"It's a job we take very seriously and we are more than ready to make sure the new market operates fairly and provides the province with all of the benefits of a competitive system," said Dave Goulding, IMO President and CEO.

Goulding said the IMO, while not owning any generating stations or power lines, will be a hub of the new electricity system. "We do everything from forecasting demand and supply and directing the flow of electricity through the grid to operating the market that matches power buyers with power sellers. It's a complex business, but our people are experienced and we're ready to meet the challenge."

Surveillance Panel Ready
With the opening of the market the body responsible for overseeing wholesale competition is ready and able to help ensure competition works well.

"We will be alert for behaviour that we feel impedes effective competition, and we will be vigilant in pursuing market participants who are gaming the system or abusing their market power," said Fred Gorbet, Chair of the Market Surveillance Panel (MSP).

"But it's important to note that the watchful eye of the Market Surveillance Panel will go beyond behaviour of the participants to the rules and structures of the marketplace," he added.

The Panel's specific responsibilities include monitoring behaviour in the marketplace and investigating and recommending on:

• the behaviour of specific market participants
• the design of the rules and operating procedures of the marketplace
• the structure of the marketplace, and
• reporting on the results of its monitoring and investigations.