I think the best way to approach the problem is from a demand and not a supply point-of-view. Over the last 20 years, Ontario Hydro planned a massive increase in the amount of power they could generate, largely through additional nuclear stations. These stations proved to be much more expensive than anticipated, and demand grew slower than foreseen. Of course taxpayers and hydro users are now paying a debt reduction levy on hydro bills and through subsidizing the price in Ontario, now that the government has privatized much of the hydro system. Of course, the private sector does not necessarily plan for capacity over the long term, just maximizing profit over the short term.
I think the government should instead try to encourage a reduction in consumption. A carrot and stick approach could be effective and self-financing if you surcharge inefficient appliances, homes, etc. and offered rebates to consumers that lessen their usage through newer appliances or home improvements or greener generators of power such as windmill farms. This should result in a reduction in the overall power consumption levels.
