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economist suntribune business thursday oct 24 2002 perfect storm wallops hydro market from page 1 ating hydro prices mr brown thinks in the long run hell save money it will pay itself off mr brown said welcome to ontario in the waning days of 2002 six months after the introduction of a deregulated hydro market consumers may recall deregulation was pitched as a plan that would provide a consistent dependable source of affordable hydro what the new system has deliv ered largely is outrage as hydro bills doubled virtually overnight during the summer there were pleas for consumers to scale back hydro use to prevent supply short ages ontario was forced to buy power from cosdy american gener ators in times of crisis this wasnt the way it was sup posed to happen and it was large ly a case of poor riming oak ridges mpp frank klees called it a perfect storm a conver gence of circumstances that wal loped the market and shot prices skyward leaving consumers bat tered first there was the hottest sum mer on record which had air con ditioners in homes and offices humming nonstop well into september that placed an unprecedented strain on the provinces supply of power and pushed up prices then there was the failure to bring nuclear reactors in pickering and at the bruce power station on line which in mr klees estima tion withdrew as much as a quar ter of ontarios generation poten tial from the provincial grid third was what mr klees said amounts to profittaking by utili ties which passed along to con sumers the full cost of market fluc tuations rather than deferring charges to soften the blow this perfect storm wasnt anticipated mr klees said as outrage among consumers grows government and utilities are being pressed to take measures to quell the anger mr klees said hes hopeful queens park can take- action such as giving hydro users a break from the debt retirement portion of bills customers find so irksome mr klees would also like to see utilities adopt equal billing schemes to help avoid startling bills when prices spike theres also an annual rebate planned for the next three or four years as new players become involved in power generation staff photojeff mitchell georgina farmer murray brown figures he has no choice but to seek alternative sources of electricity as hydro charges spiral upward in the newly deregulated market ontario power generation the infrastructure component of the old ontario hydro must pay back to consumers a percentage of the money they spend over the old hydro benchmark of 38 cents per kilowatt hour that rebate which will probably come in the form of credits to consumers will amount to about 150 for the average household analysts say mr klees expects action from queens park on the issue our government is not going to sit passively by and watch people go into hardship as a result of their electricity bills he said utilities are keenly aware of the anger among con sumers certainly the response isnt good said albert singh director of finance with vaughan hydro distribution inc what were hearing from peo ple is i didnt expect this i didnt expect my bill to double consumers have reason to grumble mr singh admitted after the market opened may 1 there was relative calm prices even dipped below 3 cents a kilowatt hour at times and the average price hovered at 37 cents in june then came the summer heat wave and the accompanying spikes in hydro usage and prices the average price for hydro in july was 67 cents per kilowatt hour in august the last month for which figures were available the price rose to an average of 69 cents if you compare that to when the market first opened it has doubled and even tripled at times mr singh said the government pitched stable prices and a steady supply as the benefits of a deregulated market he recalled that may still happen over the long term mr singh said but right now customers arent seeing it and theyre not buying it mr singh is hopeful initiatives such as the provincial rebate plan and vaughan hydros recentiy introduced equal billing schedule will provide some relief we dont like this any more than our customers he said lynn applebaum a thornhill resident has seen her home hydro bill rise sharply since deregu lation ifs 200percent higher said ms applebaum who believes hydro suppliers and utilities are taking advantage of the open market to reap skyhigh profits i just dont think its fair of them to increase our cost this much ms applebaum said i feel theyre tak ing an unfair financial advantage at a time when we dont have any choices rose kunkin a thornhill retiree who has watched as hydro bills eat up a larger chunk of her pension is also worried last september the hydro bill for her 2400squarefoot home was 217 this year she was charged 358 for the month ms kunkin acknowledged her air conditioning was on more than usual but she finds it unnerving jolts in the hydro market can upset her monthly budget to such a degree im not a rich person she said i have other priorities in my life than paying hydro bills ms kunkin feels she and other homeowners are caught by market forces that dictate higher and higher prices for an essential commodity experts say one thing is indis putable hydro rates will continue to rise ted gruetzner is a spokesper son for the independent electricity market operator imo the agency which oversees the wholesale elec tricity market while the imo doesnt forecast prices mr gruetzner said supply shortages and spikes in demand will continue to raise prices you have to look at prices over the long term mr gruetzner said the price will go up it wont go down ruir info box winit free concert tickets for our lady peace best buy is celebrating the grand opening of seven stores tomorrow across the gta includ ing markham and woodbridge with an exclusive our lady peace concert at the air canada centre nov 1 york region newsaper group readers have a chance to win tickets to the concert its the only way you can attend and a prize package 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