McGuinty government unveils bold plan to restructure electricity system

Archived Release

McGuinty government unveils bold plan to restructure electricity system

Ministry of Energy

New Legislation Would Address Growing Gap Between Power Supply And Demand TORONTO, June 15 - The McGuinty government introduced legislation today that would reorganize Ontario's electricity sector to address the growing gap between supply and demand. "After more than a decade of mismanagement in Ontario's electricity sector, our ability to keep the lights on has been compromised," Duncan said. "It is absolutely critical that we move forward quickly to boost new supply, increase conservation and maintain price stability for consumers so that we can ensure continued prosperity in the province." Ontario needs to refurbish, rebuild, replace or conserve 25,000 megawatts of generating capacity by the year 2020 to meet growing demand while replacing its polluting coal-fired generating plants. That represents 80 per cent of Ontario's current generating capacity and would require an investment of $25 to $40 billion. To tackle these challenges, the Electricity Restructuring Act proposes: - A new Ontario Power Authority (OPA), that would ensure an adequate, long-term supply of electricity, a mandate that no existing institution in the sector carries; - A new Conservation Bureau led by the province's first Chief Energy Conservation Officer; - Provisions that the Ministry of Energy set targets for conservation, renewable energy, and the overall supply mix of electricity in the province; - A redefinition of the role played by the Independent Electricity Market Operator (IMO), as defined in its new name -- the Independent Electricity System Operator. Some of the current responsibilities of the IMO would be moved to the Ontario Energy Board and the proposed Ontario Power Authority; - Incentives for more private sector investment in new generation to help meet growing demand; and - Regulated prices in parts of the electricity sector that would be adjusted and approved periodically by the Ontario Energy Board to ensure price stability for consumers. "Our plan includes a strong public leadership role, clear accountabilities and a coordinated planning approach to address the growing gap between electricity supply and demand in order to keep the lights on now, and for our children and our grandchildren," said Minister Duncan. The proposed legislation, as well as a number of technical regulations identified in the bill, will be subject to extensive consultation and input over the summer months. "By creating a conservation culture and ensuring a reliable and diverse supply of power at stable, competitive prices, we are building a bright, more prosperous future for our children and our grandchildren," Duncan said. Disponible en français. www.energy.gov.on.ca Backgrounder ------------------------------------------------------------------------- ONTARIO ELECTRICITY RESTRUCTURING ACT, 2004 The McGuinty government has introduced legislation that proposes a reorganization of Ontario's electricity system to more effectively address the critical need for new supply, increased conservation and price stability for consumers across Ontario. The proposed legislation, as well as a number of technical regulations not included in the bill, will be subject to extensive consultation over the summer months. Subject to passage of the legislation, implementation of the new structure is targeted for early 2005. If passed, the legislation would: - Reorganize the institutional structure to ensure efficient and effective management of the electricity sector over the long-term; - Ensure sufficient electricity supply; - Encourage electricity conservation and renewable energy; - Facilitate electricity demand management; - Regulate prices in parts of the electricity sector and ensure competitive prices for Ontario's electricity consumers. Highlights of the legislation include the following: - A new Ontario Power Authority (OPA) would be established to ensure long-term adequacy in Ontario. The OPA would: - Assess adequacy and reliability of electricity resources; - Forecast future demand and the potential for conservation and renewable energy; - Prepare an integrated system plan for generation, transmission and conservation; - Procure new supply, transmission and demand management either by competition or by contract, when necessary; - Assist the government in achieving its goals for alternative and renewable energy; - Establish a Conservation Bureau, headed by a Chief Energy Conservation Officer, to provide leadership in planning and coordination of electricity conservation and demand management; - Be self-financing, with fees approved by the Ontario Energy Board. - The Independent Electricity Market Operator (IMO) would be renamed the Independent Electricity System Operator (IESO), and continue to operate the wholesale market and be responsible for the operation and reliability of the power system. - Responsibility for the Market Surveillance Panel would be transferred from the IMO to the Ontario Energy Board (OEB). The OEB would have the authority to review and approve amendments to market rules for the IESO-administered markets. - The government would set targets for conservation and renewable energy and set guidelines for diversity of supply. The McGuinty government has already stated its medium-term goals: five per cent of Ontario's capacity should come from new renewable sources by 2007, 10 per cent by 2010; and electricity demand should be reduced by five per cent by 2007 through conservation. The Ontario Power Authority would be charged with achieving the targets set by the government. - The OEB would approve an annual rate plan for residential and other low-volume and other consumers based on regulated, contract and expected market prices, and guarantee public input and fairness. Consumers and small businesses that do not wish to participate in the regulated rate plan could purchase their electricity from energy retailers. - Electricity costs for medium and large businesses would reflect a combination of regulated, contract and competitive market prices for electricity. These businesses could also opt to use energy retailers or financial hedging instruments to manage energy costs. Disponible en français. www.energy.gov.on.caFor further information: Contacts: Angie Robson, Minister's Office, (416) 327-6747; Ted Gruetzner, Communications Branch, (416) 327-4334