6 Almost immediately electricity prices rose.
The deregulation of electricity in Ontario was an idea that looked wonderful on paper but proved to be a failure. Poor market conditions, political problems, and design flaws came together to create Ontario's failed effort at electricity deregulation.
A major problem with the deregulation project was the poor timing. After the market opened on May 1, it was hit with a "perfect storm" of bad weather conditions. David Goulding, chief executive officer of the province's Independent Electricity Market Operator(IMO), said Ontario was hit with unusually hot weather that lingered well into September, creating record demand for electricity and forcing the province to turn to high-priced imports.7 Energy consumption increased by 30% due to the hot summer weather and the prices reflected this high demand.8 In effect the electricity prices doubled, but taking into account consumption increased by 30% due to the weather and the result was electricity bills that were up to four times the usual amounts.9 The summer was also humid and smoggy, and some power plants had to curtail production because they were contributing to high pollution levels.10 Further, the summer was also extremely dry with almost no rain, reducing the output of hydroelectric generating stations.
During periods of peak demand, such as the hottest days of the summer, prices rose to an extremely high rate. In the middle of August, the average weekly price was in excess of 10 cents per kilowatt-hour.11 Every time you picked up a newspaper there would be stories of workers evicted from their homes after being unable to pay rent in the face of skyrocketing electricity prices. The timing of the privatization project created a reason for consumers to blame deregulation for high prices.
Bad market conditions were not the only factor that affected Ontario's regulation attempt. The province unveiled its deregulation model in 1997.