The Ontario Government funded a study in 1998 to examine the electricity market and make recommendations on how to improve electrical services to Ontario customers. It was felt that the monopoly held by Ontario Hydro was not addressing the needs of consumers adequately. The study concluded that a deregulated electricity market offered a variety of benefits including: a choice of hydro supplier, price competition, better services, and continued technological improvement.1 So in 1998, the Tories broke up Ontario Hydro, creating Ontario Power Generation .
and Hydro One. The first step toward deregulation.2.
Despite warnings from energy consultants and other deregulated market places such as Alberta and California, the Provincial Government continued its quest to deregulate the electrical industry. They believed that deregulation would succeed in Ontario and that it had to be done. Back in 1995, Ontario Hydro had racked up an enormous $38 billion debt after decades of inefficiency and cost overruns.3 It was later revealed that Hydro One's CEO, Eleanor Clitheroe, was receiving a multi-million dollar salary, and on top of that salary, enjoying hundreds of thousands of dollars a year in extra benefits, like cars, limousine services, and club memberships.4 Also the government felt that requirements to expand the current electricity generation capacity to accommodate future expansion would best be met in the private sector.5.
The plan was to put the industry into private hands, alleviating the problem of how to pay for the new required generation and putting a stop to the increasing debt that the province was accumulating through Ontario Hydro. All the government then had to do was put a surcharge on electricity (the debt repayment charge) and the problem would go away. In theory nice, but things proved more involved than that. The markets were officially opened to wholesale and retail access on May 1, 2002.