Apr. 26, 2002. 01:00 AM Ontario warned to expect power mayhem
Madhavi Acharya-Tom Yew
Business Reporter
Ontario should brace itself for a California-style debacle if it proceeds with current plans to deregulate the electricity industry, the head of the state's power authority says.
"We were mesmerized with the idea that almost by magic we were going to restructure the electricity industry and reduce prices at the same time," said David Freeman, chair of the California Power Authority. "We were all naïve, hoodwinked, mesmerized by the idea that competition was so much more attractive than monopoly. How wrong we were."
Freeman spoke yesterday at a panel in Toronto on the perils of deregulation, presented by the International Brotherhood of Electrical Workers (IBEW), one of many unions and community groups opposed to the Ontario government's plans to open the electricity market to competition.
Power shortages, rolling blackouts and massive price spikes in parts of California made headlines last year amid an energy crisis largely blamed on botched deregulation.
"Anyone who tries to explain away California — it's not different from Ontario," Freeman said.
The promise of lower prices failed to materialize, he said. On average, electricity bills are now 40 per cent higher for California residents and 70 per cent higher for industry. As well, private utilities spend little on maintenance, which in turn contributes to power outages and supply troubles and leads to higher prices.
"Fourteen thousand megawatts took sick leave at the same time in California," Freeman said.
The provincial government has suggested that, unlike California, Ontario will have a surplus of electricity on its hands. That will make little difference, Freeman said.
"We, too, had a surplus when deregulation was enacted. Power plants were not built because the price was very low because there was competition," he said. "The loads grew in 1997, 1998 and 1999 and no power plants were completed. Demand went through the roof and the lights started blinking."
The California Power Authority was created by the state in the wake of the crisis to help regulate the industry.
Deregulation in southern Australia in 1999 has led to similar problems, said John Ingram, of the Communications, Electrical and Plumbers Union in Australia.
"We were certainly promised price decreases," he said, adding prices rose by 26 per cent.
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