Energy Competition Act of 1998

Ontario Legislature Building
As noted in the History of Ontario Hydro, by the mid-1990's, Ontario Hydro was collapsing under its own weight due to its monopoly status, massive debt and conflicting goals.
Upon his election in 1995, Premier Mike Harris appointed an "Advisory Committee on Competition in Ontario's Electricity System". Soon thereafter, the task force recommended that moving to a competitive power market and ending Ontario Hydro's 90 year-old monopoly would likely lead to lower prices and more choice for provincial power users.
In 1998, the Ontario government legally committed to electricity market deregulation by passing Bill 35, the Energy Competition Act.
This legislation created several new acts, most importantly, the Electricity Act and the OEB Act.

The Electricity Act

As a result of this Act, the former Ontario Hydro was split into five new entities, each focusing on a different task:
In addition, the Electricity Act guaranteed:
  • an open wholesale electricity market
  • retail choice at the consumer level offered by retailers such as Canada Energy Wholesalers Ltd.
  • access to the power transmission grid for new competitors in generation
...which led to the creation of Bruce Power, which leased the Bruce nuclear facilities from OPG in 2001. Bruce Power is responsible for approximately 16% of Ontario's electricity generation.

The OEB Act

The OEB Act proclaimed the Ontario Energy Board (OEB) as the regulator of the new market.
The OEB's responsibilities include:
  • regulating prices in the non-competitive sections of the market (transmission & distribution)
  • overseeing the wholesale and retail markets to protect the public from uncompetitive practices

Dealing With The Debt

In 1999, the OEFC became responsible for Ontario Hydro's $38.1 billion of debt. OPG, Hydro One, IESO, and ESA, along with local municipalities are ultimately responsible for repaying $30.3 billion of this debt to the OEFC, leaving a $7.8 billion stranded debt not supported by any revenue stream. Consumers are ultimately responsible for paying this debt, and in 2001, the government set the debt retirement charge at 0.7 cents per kWh of electricity consumed.

Preparation for the Market

Although Bill 35 received Royal Assent in 1998, most of its sections were not proclaimed into force at that time. This allowed time for the industry to prepare for the official opening of the new electricity market in May of 2002.
The opening of the market did not go smoothly, and led to the implementation of The Electricity Pricing, Conservation & Supply Act of 2002.