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Eves pulls plug on soaring power rates Add to ...

Ontario Premier Ernie Eves moved Monday to ground Ontario residents recently jolted by soaring electricity bills.

The Premier, along with Energy Minister John Baird, promised legislation to cap prices paid by Ontario's electricity consumers and is promising to refund some of the money they have already spent in the province's chaotic energy market.

"It is unacceptable that families are being hit with hydro bills they can't afford. Businesses are facing cost increases significantly larger than they have budgeted for," Mr. Eves said Monday at a press conference in Mississauga. "The problem requires immediate action and we are taking it.

The action plan will lower residential and small business hydro rates to 4.3 cents a kilowatt hour, effective December 1st, and freeze the rates there.

People who signed fixed-term contracts for their hydro will also pay 4.3 cents a kilowatt hour.

The government will also refund every penny paid by consumers above the 4.3-cent price, retroactive to May 1st, when Ontario's electricity market was opened to competition.

The first rebates are expected before the end of the year. The remainder will be credited on future bills.

Measures from the action plan be in place until at least 2006.

"I expect all MPPs to do the right thing and give our plan speedy approval when it is presented to them, so we can help families and businesses as soon as possible," Mr. Eves said. "...We will continue to work towards a long-term solution that keeps prices down, and ensures a stable supply of electricity in Ontario."

Liberal Leader Dalton McGuinty said the true cost of the Conservative government's hydro bungling will add billions of dollars to the debt.

"Now that families and businesses have been scared to death, now that new investment in supply has been scared off, now that everyone knows hydro has been completely mismanaged, Ernie Eves is going back to square one," Mr. McGuinty said in a news release on Monday.

"The government should have had its act together before the market opened. And the bill for its failure to do that hasn't been cancelled - it's just been put off."

Mr. McGuinty said the Ontario Liberals have been calling for action for months, but the Eves government has not acted until now to freeze electricity prices and increase supply.

The Liberal Leader said his real concern is what Ontarians will have to pay over the long term.

Mr. Eves said the money for the rebate will come from a pool of $700-million known as the consumer protection fund.

The province's publicly owned utility, Ontario Power Generation, has been setting the funds aside from money it collects from consumers in anticipation of paying rebates.

New Democrat Leader Howard Hampton said the fund won't be enough. He predicted taxpayers will end up paying what amounts to a $500-million annual subsidy to private electricity producers.

"People won't be paying on their hydro bill any more, but they'll be paying on their taxes," said Mr. Hampton, who called the measures a "coverup."

"I'd expect an election within three or four months."

The Energy Minister is scheduled to announce further details of the government's action plan for new electricity supply Tuesday.

"While we are acting to protect consumers, we also need to do whatever it takes to encourage investment in new, clean generation," Mr. Baird said. "There are a number of wind and gas generation projects being developed throughout the province, but more must be done to ensure we have the generating capacity we need."

Mr. Eves also announced that Scarborough East MPP Steve Gilchrist will be appointed as Commissioner of Alternative Energy, with a mandate to spearhead the introduction of alternative sources of power.

The Premier also said he would launch an independent review of how other charges on electricity bills are calculated will and create a standard provincewide electricity bill that is easy to read and understand.

Mr. Eves and his advisers drew up the final details of the price caps and rebates over the weekend, after spending the past week looking at a variety of options in a bid to quell the growing outcry about high electricity bills.

Under the government's six-month-old revamping of the electricity industry, competitive forces were supposed to set the price for electricity paid by consumers. This price was supposed to be held down because there was to be vigorous competition among suppliers. Instead, prices have soared over the past four months.

Since May 1, the basic wholesale price for electricity has averaged 5.17 cents a kilowatt-hour, according to the Independent Electricity Market Operator, which is responsible for ensuring the province has enough power to meet demands. When the market was being set up, the price was supposed to average 4.3 cents.

At times the prices have hit six cents and seven cents, and even exceeded eight cents.

While critics said the government's measures spelled the end of market deregulation in the province, Mr. Eves denied deregulation was dead. He noted that the actual price of power will still fluctuate according to supply and demand, although consumers will be protected from those bumps.

The Ontario Electricity Coalition was quick to criticize Monday's move saying it has consistently warned the Eves government that the sell-off of public power would mean soaring rates, brownouts and unreliable supply.

"At public forums held across the province last spring, Ontarians told us they want an end to electricity deregulation and privatization and solid long-term hydro policies delivered under a fully public system. What they don't want is hush money aimed at buying time and votes for Eves' government until the next election," Paul Kahnert, a member of the Ontario Electricity Coalition said in a news release on Monday.

Charlie Macaluso, chief executive officer of the Electricity Distributors Association, said that while he believes the government's measure will bring some calm to the instability consumers have been feeling in recent months, he worries where the money for the rebates will come from.

"The financial plan is somewhat unclear," Mr. Macaluso told globeandmail.com., adding his concerns are that the government might expect distributors to come up with the money.

Mr. Macaluso said he eagerly awaits further details of the government's action plan for electricity supply on Tuesday.

With reports from Allison Lawlor and Canadian Press

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