Unlike its power companies, Ontario’s gas is sold by pencil-pushers who keep their nose to the grindstone and avoid controversy.
This article, by Lawrence Solomon, first appeared in the National Post
Electricity is a heated issue in Ontario, judged by many to be the #1 political issue and a major factor in the collapse in support of the governing Liberal party. Natural gas, in contrast, is dull, dull, dull. Unlike electricity, which is in the news daily — Thursday’s revelation of secret cabinet documents showing massive rate hikes to come being just the latest example — gas gets almost no media attention.
Yet both forms of energy are used throughout the province by industry and householders alike. Both are delivered to customers by major monopolies. Both are regulated by the same Ontario Energy Board.
Why does electricity get all the attention? Different ownership. The gas companies are run by plodding private corporations whose pencil-pushers get their satisfaction by focusing on their bottom line. They keep their nose to the grindstone and avoid controversy. The electricity companies are run by promise-them-anything governments whose political leaders are focused on getting re-elected. Those promissory notes have historically been provided by the electricity sector, always at the risk of the taxpayer’s and ratepayer’s pocketbook, never the politician’s.
This has been the story of Ontario’s public power since the early 1900s, when politicians first saw the potential in exploiting “power at cost.” Decades of scandal under public ownership followed, culminating in a gargantuan nuclear program that promised electricity “too-cheap to meter” and, by the 1990s, resulted in a bankrupt Ontario Hydro and the loss of Ontario’s Triple-A credit rating.
This decade’s politicians promise to make Ontario a global leader in combatting global warming, financed through what they call a “global adjustment” on Ontarians’ power bills. Their global-warming policies and their global adjustment have tripled Ontarians’ power bills, making the province one of the highest-priced power jurisdictions in North America. Hardship among householders is widespread — fuel poverty is becoming a common term — as is an exodus of business to the United States, where power rates are low because Americans commonly have what Ontario doesn’t: a private electricity marketplace.
There should be no surprise that government ownership led to the shambles that Ontario power has become. Only a government would voluntary dismantle one of the continent’s finest fleets of coal plants, as Ontario’s Liberal government did, to fulfill a boast of becoming a green leader. Only a government would pay producers as much as 20 times the market rate just so it could boast about generating renewable energy. Only a government could gut provincial planning and environmental laws to push through a single-minded agenda organized around the sole purpose of furthering its prospects for remaining in power.
Ontario’s electricity system doesn’t need to remain ruinous. To turn the system around, so that today’s ever-increasing rates instead drop year after year, Ontario needs only to break up and privatize the power sector. Rates would drop dramatically, as they did in the U.K. after Margaret Thatcher privatized the British power sector in 1989. Ontario almost did privatize its power sector shortly afterward — Mike Harris’s Progressive Conservatives were elected on a “Common Sense Revolution” platform that promised to privatize the power sector and bring rates down through competition, as was occurring in the U.K. Harris failed to seize the day, though, and by the time the planners and consultants worked out the mechanics of privatizing the power sector, Ontario had a timid new premier in Ernie Eves, who pulled the plug on privatization in panic when a summer heat wave caused power prices to spike.
Today, Ontarians don’t face temporary spikes; they face unrelentingly high rates destined to go higher because none of the major parties in Ontario today understands the root cause of the electricity-sector mess. The power industry’s problems do not stem merely from the poor choices made in the generating technologies ordered, or in the managers at the helm. Fundamentally, the problems come from government ownership, which necessarily politicizes anything large and important enough to attract a politician’s attention.
The times ahead won’t be dull as the electricity sector continues its slow collapse. But what Ontarians need is dull — the dullness that comes of a private-sector industry that stodgily does the job of keeping the lights on without impoverishing its customers or bankrupting itself.
Lawrence Solomon is executive director of Energy Probe. Email: LarrySolomon@nextcity.com.