November 26, 2002
Power blackouts in Ontario are likely this winter or next summer. Last summer, we had barely enough power to scrape by, relying on emergency imports of power to make it through. The next time harsh weather drives up our need for power, the power system will be even weaker than it was in the summer.
The cause of our power problems is straightforward. Instead of promoting conservation and private sector investment in clean and inexpensive power plants, the government is betting our future on subsidized prices, expensive and risky nuclear power, and polluting coal power.
The worst threat to the reliability of our power supply is the four-reactor Pickering A station. These aging reactors became so dilapidated and dangerous that Ontario Hydro shut them down five years ago. Mike Harris then undid this sensible decision and we have been paying for it ever since. The Crown-owned Ontario Power Generation – successor to the old Ontario Hydro – initially promised that Pickering A’s overhaul would be completed by summer 2002. The overhaul is now four years late and 200 per cent over budget. Harris’s Pickering folly has created a shortage of power and driven up electricity costs.
Pickering has directly undermined our supply, but its indirect effects have been even worse. Unwilling to compete against taxpayer-subsidized nuclear reactors, almost no private power plants are being built anywhere in the province. Thousands of megawatts of private power plants – almost all environmentally responsible and small-scale – have been shelved.
As a result, electricity bills are up, and many people think deregulation is to blame.
There is a way out of this mess, but we need to act quickly.
First, we must stop throwing taxpayer money at refurbishing dangerously old nuclear dinosaurs. Nothing threatens Ontario more than being overwhelmingly reliant on this obsolete technology, which could shut down the entire province if a serious common fault emerges that requires us to shut down most or all of the reactors.
Second, we must restore the confidence of investors interested in generating power, not by offering incentives to a few token generators – the approach the government has adopted – but by genuinely letting them compete on a level playing field against coal and nuclear plants.
In electricity, real competition works. Thirteen years ago, the United Kingdom had a power system very much like the old Ontario Hydro – a bloated, debt-ridden monopoly enamoured of coal and nuclear power.
In 1989, it broke up the monopoly, privatized all but a rump of nuclear assets, and introduced competition. The result: A flood of new investment, mostly in gas-fired generation drove down prices, forced most coal and oil generation off the market, and dramatically cut overall emissions. Consumers now enjoy rates down 30 per cent from the old monopoly days. The quality of service has improved, particularly for the poor.
Nuclear power was exposed as grossly uneconomic. The privatized nuclear company called British Energy has been crushed by the market and is now being renationalized.
Ernie Eves is driving us back to the old Hydro by killing competition and reneging on promises to privatize. The result will be redoubled environmental and economic ruin, which was the legacy of the old Hydro. With news last week of Hydro One’s writedowns, it is clear that Ontario’s taxpayer-backed electricity debt is soaring again already. Our children are again being set up to pay our power bills.
The solution for Ontario is to switch to a system with a proven track record. The U.K. proves that, if politicians have the discipline to follow tried and true regulatory and economic principles, competition and privatization in electricity benefits the public interest.