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How to Escape Ontario’s Power Sector Morass: C.D. Howe Institute

September 18, 2013

TORONTO, Sept. 18, 2013 /CNW/ – Ontario’s power sector needs an overhaul
to address a long list of inefficiencies, and rising consumer prices,
according to a new report from the C.D. Howe Institute. In “A New
Blueprint for Ontario’s Electricity Market,” author A.J. Goulding
presents a blueprint for an electricity market that would be responsive
to price signals, reform the role of the Ontario Power Authority (OPA),
and would operate free from ministerial meddling.

“An electricity market with independent institutions and long-term price
signals will allow Ontario to best meet both its electricity needs and
environmental objectives,” said the author.

“The Ontario power sector today has oversupply, a mismatch of generator
capabilities and needs, rising prices to final consumers, a lack of
transparency in prices, and volatile and contradictory policies,” said
Goulding. Consequently, private-sector actors are unable to justify
investment without some form of government-backed contract. As well,
the government’s failure to rely on either sound planning or market
principles has meant that the province has not procured generation
capacity at low cost, on terms deliverable over the long run.

“The province’s current electricity surplus provides a window for
thoughtful policy review,” said Goulding. “The government should
establish a market that sends transparent and effective price signals
of the need for new electricity generation capacity, and is
technologically neutral, allowing it to take better advantage of
low-cost sources.”

Goulding recommends the province:

        --  Insulate implementation agencies from policymakers, meaning
            that the government should not use ministerial directives to
            interfere with the day-to-day operation of key power sector
            institutions.

        --  Create a properly designed market for forward generation
            capacity to enable Ontario to increase reliance on market
            signals for new investment.

        --  Replace the Ontario Power Authority's principal buyer role with
            newly created regional intermediaries, often referred to as
            "load serving entities", that are closer to the customer.

The C. D. Howe Institute is an independent not-for-profit research
institute whose mission is to raise living standards by fostering
economically sound public policies. It is Canada’s trusted source of
essential policy intelligence, distinguished by research that is
nonpartisan, evidence-based, and subject to definitive expert review.
It is considered by many to be Canada’s most influential think tank.

For the report go to: http://www.cdhowe.org/a-new-blueprint-for-ontarios-electricity-market/22828

SOURCE C.D. Howe Institute


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