Power Exchange won't be Hydro reincarnated
The Toronto Star; September 4, 1998; Dewees, Don
Re the Aug. 26 Opinion page article by Robert Blohm, Province's Power Exchange is a wolf in sheep's clothing. The Independent Electricity Market Operator (IMO) will be a new crown corporation, completely separate from Ontario Hydro.
   It will have its own board of directors, many of whom will be nominated by electricity market participants. Great care is being taken to ensure that the corporation will be run professionally and accountably, and independent from Ontario Hydro.
   The IMO and the rules for the competitive electricity market are being designed through a stakeholder process - the Market Design Committee - that ensures all views and ideas are considered. The committee is supported by a team of international experts, and is carefully studying the structures and rules that are in use in other jurisdictions.
   The committee has also solicited, and benefited from, contributions from the general public. The restructuring process being followed in Ontario is, in my opinion, an example of public policy making at its best, a far cry from the process Blohm describes.
   Blohm asserts that "the government plan would force as much as possible of the bulk buying and selling of electricity through the Power Exchange." In fact, the Market Design Committee has recommended that the spot market be set up as a voluntary pool.
   Wholesale market participants will be able to buy and sell in the spot market, or enter bilaterial physical contracts outside the pool if they wish. The recommended market design is based on the principle of maximum commercial flexibility to participants, subject only to fair sharing of system costs. The primary function of the IMO is to match supply and demand in the market, and then arrange for efficient dispatch of generation.
   The IMO will administer the power market but it will not buy and sell power; it will not own generators; it will not own or manage the transmission system. In short, the IMO is not Ontario Hydro reincarnated.
   Finally, Blohm claims that "too much trading on the power exchange will mean eventual shortages both of generating plants and of transmission lines." Secure and reliable supplies of electricity are a critical goal in the current restructuring, along with more efficiency and customer choice, and measures have been recommended as part of the market design to ensure adequate future capacity.
   The Market Design Committee is not aware of any evidence supporting Blohm's assertion that a competitive, bid-based market would lead to shortages.
Don Dewees
Market Design Committee