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Hydro_Deregualtion

Feature Article February 6

Feature Article February 6, 2002

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It might be too soon to buy electricityby David BrisonSales representatives for electricity retailers were in the area on Saturday, offering five-year contracts for electricity at 5.95 a kilowatt hour.

This rate will kick in on May 1, 2002 when hydro is deregulated.

This evidently sounded like a good deal to a lot of people. They think they are paying far more than 5.95 right now, and suspect that the cost of electricity might go up when it is deregulated.

The problem is that the 5.95 per kilowatt hour does not include the cost of transmitting power to your home. That cost is included in what you currently pay per hour for your electricity.

The actual cost of the electricity you are receiving right now is just over 4 per kilowatt hour. That is what you pay when you subtract the cost of transmission. That figure comes from a joint submission that Floyd Laughren, chair of the Ontario Energy Board, and Dave Goulding, chief executive of the Independent Electricity Operators.

When the transmission costs are added in on May 1, you could end up paying far more than you are right now for electricity.

However, on May 1 the price paid for electricity will start at around 4 a kilowatt hour, but will then begin to fluctuate. If it rises above 5.95 an hour, those who signed contracts at that rate will be sitting pretty. If it stays below 5.95, then those with contracts will be paying far more than market rates and that is precisely what happened to many people when natural gas was deregulated.

The alternative to signing contracts now is to sit tight until the situation is clarified. Hydro One will continue to provide electricity after May 1 at market rates. The difference between signing now and signing later is that you will be able to make a more informed decision. By May 1, electricity retailers (those are the guys that are out selling electricity door-to-door) will be required to show you what you actually pay for electricity, and they will have to break it down. Hydro One will have to do so too right now you cant look at your bill and tell exactly how much you are paying for the generation of electricity.

If you have already signed a contract and now think you have made a mistake, you have up to ten days to cancel those contracts.

Further information can be obtained at: www.energyprobe.org and at the Ontario Energy Board Web site; www.oeb.gov.on.ca .

The News will present a more complete analysis of the deregulation of electricity in the near future.

With the participation of the Government of Canada