Ontario subsidies could cost billions


Last year, when the province of Ontario in Canada halted its deregulation plans, it capped electricity prices at 4.3 Canadian cents per kWh for customers and small businesses until May 2006. The government has said it will make up the difference between the capped price and the market rate charged by generators during this period. Customers were also granted rebates for the higher prices they were charged before the price cap came into effect.

Now the government is considering extending the subsidies to large power users too, which could add an extra C$1 billion a year to the cost of subsiding power. Some C$640 million has been spent to date, but the hope is that the 3,000 MW of new generation expected to come on line before the Canadian summer will help ease supply shortages and lower prices, thus reducing the need for subsidies.