The Canadian province of Ontario is to open its electricity sector to competition on 1 May 2002, the government promised. Deregulation was due to take place in November of last year but the deregulation debacle in California led to a postponement and speculation that the government was less keen to continue.

The western Canadian province of Alberta also saw rising electricity rates as a result of its own deregulation. Massive customer rebates last year finally started to pull prices down, helped by falling gas prices and an increase in generating capacity in the province. However the Ontario government prefers to cite the UK, Australia and the US state of Pennsylvania as its models.

Under the deregulation plan in Ontario, the transmission group Hydro One is to be privatised through a public share offer in the spring. Proceeds from the sale will be used to pay off the debts of Ontario Hydro the provincial electricity utility from which Hydro One and two other entities, Ontario Power Generation and the independent Electricity Market Operator have been created.

Political parties are divided over the potential effects of deregulation with the ruling Conservatives expecting rates to fall while the opposition New Democratic party predicting that rates will rise. Industrial groups tried to persuade the government to turn Hydro One into a non-profit trust because they fear that electricity may become more expensive.