Reviewing electric distribution restructuring in Ontario: policy without substance or commitment

Electric distribution utilities have undergone significant regulatory reforms over the past decade including changes in: governance and ownership, regulatory oversight, horizontal and vertical integration, and retail market competition. Yet, we question if the costs associated with these restructurings are yielding sufficient benefits? In Ontario, decision makers embarked upon new policies in an information void, relying upon anecdotal or ideological beliefs. Critical empirical research was either ignored or never undertaken. Almost immediately, political implications of “unforseen” consequences (e.g. distribution rates would rise as municipals were privatized) drove politicians to shift positions: even the “independent” status of the regulator would not forestall overt interference. Government policy and regulatory missteps, inconsistencies, and contradictions have left the distribution sector worse than before restructuring, burdened with sizeable and largely unnecessary costs, but without correcting the one notable deficiency among some distributors, excessive allocative inefficiency.