Deregulation
The Canadian company Ontario Hydro, established in 1906, has been split into five separate companies as the province moves towards a more competitive electricity market.
The two major successor companies formed are Ontario Power Generation Inc, which will control the province’s 80 power stations, and Ontario Hydro Services Co which will operate the 29 000 km transmission network and distribute power to around one million customers, mainly in rural Ontario.
The three other daughter companies include a new clearing house where power generation companies and electricity customers will conduct transactions in the new electricity market, an electrical inspection company and a company that will hold a share of Ontario Hydro’s debt. The portion of the debt transferred to the new company, to be shouldered by taxpayers, represent stranded costs.
At its dissolution, Ontario Hydro held an 85 per cent share of the electricity market in Ontario. This is to be reduced to 35 per cent over the next 10 years.
Another effect of the provincial restructuring of the electricity sector has been to enable towns in the state to sell their municipal electricity companies. Some took this route last October. Others examined the possibility but rejected it.
Ottawa, which owns Ottawa Hydro, established a task force to examine its options. The task force, which reported recently, advised the City not to sell but to restructure instead, setting up a private company to take over Ottawa Hydro’s activities. The company could raise money to pay off much of the city’s debt. This option is currently being considered by the city authorities.