Privatizing Ontario’s Hydro One: Liberal, Tory, same old story

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1297545507790_ORIGINALBy Paul Kahnert

If you’re driving your car and the steering wheel comes off in your hands, do you step on the gas or step on the brakes? Hydro rates are out of control in Ontario and with the proposed sale of Hydro One, Kathleen Wynne is stepping on the gas.

On April 1, 1999 Ontario Hydro was broken up into five companies. Ontario Hydro and all municipal Hydro’s were changed from non-profit commissions into for–profit corporations. Since that time, despite promises to the contrary, hydro rates have increased over 320 percent, ten times the rate of inflation. Ontarians pay double what people pay in Manitoba and Quebec.

Given the dismal record of privatization both here and around the world, and given all the hand wringing about inequality, it’s astonishing that Kathleen Wynne wants to privatize any public asset. How does it help Ontarians to be transferring more public wealth to the private few?

Where is the demand coming from? There are no public demonstrations outside Queen’s Park demanding that Hydro One be sold. Wynne is looking for a quick fix for Ontario’s deficit and the demand to privatize hydro is coming from Bay Street and the investment community.

There is no such thing as free money. There are permanent consequences from privatization.

Giving up forever, all future revenue, (roughly $1 billion a year) for a onetime cash payment for Hydro One is not a very wise thing to do.

Wynne is promising that all money from the sale will go towards transportation infrastructure. Infrastructure lasts 40-50 years and then needs to be rebuilt again. The problem with selling public assets is that you can only sell them once. said 14 years ago, we in the union movement said that it’s like burning your furniture to heat your home. What do you burn next?

Wynne is also promising that, “rates for private owners will be kept down by regulation.” This is easily refuted. Private companies are political powerhouses. According to TURN, The Utility Reform Network in the U.S., private companies spend millions of dollars a year, pressuring and lobbying governments to whittle down labour, environmental and rate regimes in order to maximize profits.

Look at the partial privatization of Ontario Power Generation. Rates have skyrocketed under so called regulation. Ontario doesn’t really have regulation. It has the appearance of regulation. It’s more accurate to say that electricity rates are regulated for six months at a time. Harris’ Tories opened an electricity market that was designed by the now bankrupt and disgraced energy firm ENRON and their friends. McGuinty broke his promise to close it. That deregulated electricity market is the Independent Electricity System Operator known as the IESO.

Electricity markets are notoriously easy to manipulate as was shown during the California electricity crisis in 2000 and 2001. The IESO market price spikes during the coldest days in winter and hottest days in summer. The electricity market is hidden from the people of Ontario by the fact that the Ontario Energy Board , the OEB “true’s up” electricity rates every six months and it always goes up. Private power in Nova Scotia and PEI is why those provinces and Ontario have the highest electricity rates in Canada.

The private sector does a fabulous job of manufacturing transformers, insulators, wire, relays, switches, connectors and all the materials we need to build our electrical system but they do a poor job of running hydro in the public interest. They can’t. Their fiduciary duty legally requires them to maximize profits for their shareholder. Now, more than $1 billion a year now goes out of the province in private power profits. That money used to go out to businesses and citizens in the form of low and stable rates.

Ed Clark, Wynne’s privatization guru wasn’t on the ballot during the last election and has spent his whole life maximizing profits for the banks. What experience does he have in Hydro or the public interest?

Politicians did not sell Ontario Hydro during the depths of the Great Depression nor during the height of the Second World War. Those economic times were far worse than what we face now. Those politicians wisely kept hydro to create jobs and to help the economy recover from those lean times.

The world’s climate is in trouble. Now, more than ever, it is critical that governments have the levers of public ownership to curb global warming and institute real conservation programs.

The Hydro privatization experiment has failed in Ontario. In fact, there is not one jurisdiction anywhere in the world where privatization hasn’t resulted in big rate hikes. The promise of deregulation was lower rates. The promise of Smart Meters was that they would save customers money. Both promises turned out to be completely false.

Kathleen Wynne needs to scrap the idea of selling Hydro One and put the brakes on hydro deregulation and privatization. It’s in the public interest, both for the economy and environment.

It’s important to note that during the Provincial election, on Sept. 5, 2003 McGuinty, low in the polls, took the main campaign plank from the NDP and promised public power. Closing the phony IESO electricity market and regulating rates would be a good start on that promise.

Let’s remember that Sir Adam Beck, a Tory, backed by business, after a ten year campaign and 18 municipal referendums, brought Public Power to Ontario in 1905. For 95 years, Ontario grew and prospered under public power. On his deathbed Sir Adam Beck said, “I wish I could have lived long enough to build a band of iron around Hydro, to keep it safe from the politicians.” He might have added, “and safe from the profiteers.”

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