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Electricity Restructuring in Ontario

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  • Michael J. Trebilcock
  • Roy Hrab

Abstract

This paper examines the short-lived electricity sector restructuring initiative of the province of Ontario, CanadaÕs largest province. In May 2002, following years of planning and consultation Ontario opened its retail and wholesale electricity markets to competition. The summer of 2002 saw retail prices reach levels that consumers had never previously encountered. By December 2002, the provincial government froze retail electricity prices, covering approximately half of OntarioÕs electricity consumption. While the weather played a significant role in driving prices higher during the summer of 2002, other factors also played a major role. The other factors reviewed in this paper fall into two categories. The first category consists of market design problems, such as market rules (e.g., trading arrangements) and market structure (e.g., the degree of competition in the generation sector). The second category covers political economy problems, in particular the lack of political will to allow retail prices to reflect wholesale prices and to address effectively structural problems in the sector. Finally, this paper examines some of the new restructuring initiatives being pursued by the recently elected provincial government of Ontario as the province continues to struggle to bring order to its electricity sector.

Suggested Citation

  • Michael J. Trebilcock & Roy Hrab, 2005. "Electricity Restructuring in Ontario," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 123-146.
  • Handle: RePEc:aen:journl:2005v26-01-a06
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    Cited by:

    1. Hoicka, Christina E. & MacArthur, Julie L., 2018. "From tip to toes: Mapping community energy models in Canada and New Zealand," Energy Policy, Elsevier, vol. 121(C), pages 162-174.
    2. Pablo David Necoechea-Porras & Asunción López & Juan Carlos Salazar-Elena, 2021. "Deregulation in the Energy Sector and Its Economic Effects on the Power Sector: A Literature Review," Sustainability, MDPI, vol. 13(6), pages 1-23, March.
    3. Ferguson-Martin, Christopher J. & Hill, Stephen D., 2011. "Accounting for variation in wind deployment between Canadian provinces," Energy Policy, Elsevier, vol. 39(3), pages 1647-1658, March.
    4. Genc, Talat S. & Sen, Suvrajeet, 2008. "An analysis of capacity and price trajectories for the Ontario electricity market using dynamic Nash equilibrium under uncertainty," Energy Economics, Elsevier, vol. 30(1), pages 173-191, January.
    5. Das, Runa R. & Martiskainen, Mari & Bertrand, Lindsey M. & MacArthur, Julie L., 2022. "A review and analysis of initiatives addressing energy poverty and vulnerability in Ontario, Canada," Renewable and Sustainable Energy Reviews, Elsevier, vol. 165(C).
    6. Mirnezami, Seyed Reza, 2014. "Electricity inequality in Canada: Should pricing reforms eliminate subsidies to encourage efficient usage?," Utilities Policy, Elsevier, vol. 31(C), pages 36-43.
    7. Fremeth, Adam R. & Holburn, Guy L.F., 2020. "The impact of political directors on corporate strategy for government-owned utilities: Evidence from Ontario's electricity distribution sector," Energy Policy, Elsevier, vol. 143(C).
    8. Wai Choi & Anindya Sen & Adam White, 2011. "Response of industrial customers to hourly pricing in Ontario’s deregulated electricity market," Journal of Regulatory Economics, Springer, vol. 40(3), pages 303-323, December.
    9. Woo, C.K. & Zarnikau, J. & Moore, J. & Horowitz, I., 2011. "Wind generation and zonal-market price divergence: Evidence from Texas," Energy Policy, Elsevier, vol. 39(7), pages 3928-3938, July.
    10. Holburn, Guy L.F., 2012. "Assessing and managing regulatory risk in renewable energy: Contrasts between Canada and the United States," Energy Policy, Elsevier, vol. 45(C), pages 654-665.
    11. Donald N. Dewees, 2006. "Electricity Restructuring and Regulation in the Provinces: Ontario and Beyond," Working Papers tecipa-205, University of Toronto, Department of Economics.
    12. Liu, Shuangquan & Yang, Qiang & Cai, Huaxiang & Yan, Minghui & Zhang, Maolin & Wu, Dianning & Xie, Mengfei, 2019. "Market reform of Yunnan electricity in southwestern China: Practice, challenges and implications," Renewable and Sustainable Energy Reviews, Elsevier, vol. 113(C), pages 1-1.

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    JEL classification:

    • F0 - International Economics - - General

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