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Essay / Research Paper Abstract
This 4 page paper sets out to determine a new energy policy for Ontario's electricity market. Prior to 2002 this market was a government monopoly with regulated prices. In May 2002 the province introduced a competitive wholesale energy market
and contrary to the province's expectations the price of electricity soared so much that the government had to intervene and cap the price. The failure of the initial plan is examined in order to develop a new plan to decrease upward pressure on prices. The bibliography cites 4 sources.
Page Count:
4 pages (~225 words per page)
File: TS14_TEontarele.rtf
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Unformatted sample text from the term paper:
to a model most often associated with increased choice for consumers and the development of increased competitive forces bringing down costs as well as driving up service standard and levels
of innovation as long as it is a market where there is high demand (Nellis and Parker, 2000). It was generally expected that there may be an increase in prices
I the short term, but that this would also increase efficiency in the market. However, in Ontario this was not the pattern, after competition was increase process started to increase
dramatically, so much so that government intervened and capped process, effectively preventing market forces taking hold. In order to determine a future strategy for the market we need to look
at who and why the former strategy failed. Examining the reasons behind this apparent contradiction of economic theory the situation is not as clear as may be assumed. The
change in 2002 was not a true deregulation, but a change in the market structure to introduce market forces. Deregulation is the removal of regulations and the allowance of market
forces to take their toll to find a point, or points, of equilibrium. In Ontario, this was not what occurred, the regulations merely changed in order to introduce more market
forces and combat the inefficient operations of the monopoly structured industry (Alexander and Kalevar, 2002). For the electricity industry to gain increased efficiently there is little doubt that a situation
can be sustained where there is the adoption of debt or the subsidising of prices. For increased efficiency there investment is required. In the past this would have meant new
and large generating stations, but there are many increased economically efficient options today, including smaller gas turbine plants which may be attractive to investors (Alexander and Kalevar, 2002). The move
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