The Conservative government of Premier Mike Harris in Ontario has decided to privatize Hydro-One, the province’s huge publicly-owned electrical transmission company.

At the same time, Harris announced plans to open Ontario’s $10 billion electricity market to competition by the spring of this year.

The Harris government has a long record of tearing up regulations designed to protect Ontarians and privatizing government services – but this is the biggest privatization and the most costly deregulation in the province’s history.

The groundwork for the privatization of electricity in Ontario was laid several years ago when the Harris Tories split the monolithic crown corporation Ontario Hydro into two companies – Hydro One, dealing with the transmission of electricity, and Ontario Power Generation Corp, dealing with the production of electrical power.

As it stands right now, the government plans to maintain ownership of Ontario Power Generation. But Hydro One, along with the billions of dollars in transmission lines and equipment that it owns, will be sold to the highest bidder.

The Harris government had initially promised deregulation by November 2000, but got cold feet after deregulation schemes in Alberta and California led to disastrous results.

In both jurisdictions, prices for residential and industrial power shot through the roof after the market was opened to competition.

In California, the state government was forced to place a price cap on the sale of electricity – a move that drove several large utilities into bankruptcy. And in Alberta, the government used billions of dollars in oil royalties to pay for consumer subsidies that masked the effect of rapidly rising power prices.

Despite these experiences – and despite the fact that Hydro One generates billions of dollars in public revenue each year – the Ontario government has decided to push ahead with its plans.

Unions and other community groups have opposed the sale, saying it will cost jobs and lead to much higher rates for consumers.

Somewhat surprisingly, significant elements within Ontario’s business community are also raising concerns.

Major wholesale energy users such as auto makers and steel plants say deregulation with increase the costs of doing business in Ontario and undermine the province’s competitiveness.

"With a competitive steel market, we can’t pass those prices on, so we’ll have to find other means of cost reduction just to offset (rising power rates)," says John Mayberry, president of steel giant Dofasco, hinting that deregulation may force his company to lay-off workers.