November 16, 2002
On Saturday, Nov. 16, Energy Probe‘s Tom Adams joined Guy Giorno, former Chief of Staff and counsel to Mike Harris, to take a closer look at recent events in Ontario’s tumultuous energy market on Global-TV’s Focus Ontario program.
The following is a transcript of this discussion.
VOICEOVER: From Global News, this is Focus Ontario with Graham Richardson.
GRAHAM RICHARDSON: Good evening and welcome to Focus Ontario. Has the Premier sent the province hurtling down into a California death spiral? Or did he fix the problem for consumers he simply couldn’t ignore. Electricity dominated again this week and we begin with the government’s step back in time. How much will the rate cap cost? The Premier says don’t worry, it will take care of itself. He seems to be alone in that assessment. And where’s the power? It’s a bold move, but are companies being chased south? And let’s leave the lights on; who cares about conserving when the government’s picking up the tab anyway.
(Video clips)
PREMIER ERNIE EVES: Next week we will introduce an action plan to lower your hydro bill.
PETER BUDD (POWERBUDD): They have essentially shut down the retail market in Ontario.
PREMIER EVES: Nobody will receive less than $75.
HOWARD HAMPTON: Private energy companies are going to get a half-billion dollar a year subsidy to cover up the pain.
PREMIER EVES:It’s not a gift to power companies at all.
DALTON MCGUINTY: Ernie’s trying to buy himself the next election. This is going to cost us billions of dollars.
GRAHAM RICHARDSON: We begin with a man whom the government labels a power fear-mongerer. And one of the big brains behind Mike Harris, Guy Giorno, defends price caps and the destruction of his former boss’s legacy.
Plus a cheque-book eating lizard pops in on our Play of the Week. Stay with us; Focus is up after the break.
GRAHAM RICHARDSON: Welcome back to Focus Ontario. (Video clip) Here we are in Mississauga with the Premier on Monday, sitting down at the kitchen table, fixing regular Ontario’s bills along with the tele-prompter there, getting his message out. There’s the Premier. Let’s hear some fallout from these decisions:
(Video clips)
MEENA HARDETT: For us I know for sure we were second-guessing whether we would actually bother putting our Christmas lights up, because we were just planning to put it on a few hours for the night. This will make a big difference.
TOM ADAMS, Energy Probe: Ontario’s electricity restructuring just died in the room in there. The Premier has signed a death warrant on this thing. That means Ontario’s electricity supply is in a lot of danger. We just barely had enough electricity to make it through last summer.
DALTON MCGUINTY: We’re talking about billions and billions of dollars is either going to be added to the Hydro debt or to the provincial debt.
MARILYN CHURLEY: What’s happened to the Tories, they’ve turned into socialists over night, except that this is corporate welfare.
GRAHAM RICHARDSON: Maybe not socialists, but anyway here is some editorial comment I guess. This is from the [Toronto] Star cartoon, "Hydro For Dummies." There’s the other famous Ernie. And also the [Toronto] Sun weighed in with a different front page – "Power to the People," and that’s Ernie Eves’ face in the lightbulb, and I’m sure one person joining us tonight enjoyed the Sun cartoon – Guy Giorno, Fasken Martineau, also adviser to Ernie Eves now. Thanks for being here. And from Energy Probe – Tom Adams, a harsh critic of what happened this week.
And maybe we’ll start with Guy. What has happened to the Tories? We’re talking price caps, we’re talking rebates, it doesn’t sound anything like the party we knew. Is this the word, all of this was Mr Harris?
GUY GIORNO: Actually there has been very little change. The plan that was announced by the government several years go remains essentially the same. It was a plan to ensure that Ontario had a sufficient supply of electricity away into the future to meet our needs, at a price that was affordable. And also a plan to pay down the massive debt that was accumulated by years of mismanagement and inefficiency in the old Ontario Hydro.
GRAHAM RICHARDSON: A debt price for four years isn’t different from an open free market, is absolutely the opposite?
GUY GIORNO: The plan and those two fundamental objectives remain the same. What needed to take place in the short term was corrective action to deal with the price today. It’s their problem of prices that I think the vast majority of people in Ontairo believe was unsustainable.
GRAHAM RICHARDSON: Tom Adams, what’s this about, from your perspective? Are you a fearmonger?
TOM ADAMS: If you want it to be sustainable, that’s not what we’ve got. We’ve got a wholesale market for power which will reflect scarcity, and that we’re going to have a fixed frozen artificial price for consumption, which is just reflecting the Premier’s view of how he’s doing in the polls this week or whatever. And that will result in a situation where we won’t get the conservation we need to get through the short spots on our electricity supply, and so we’re facing a very significant risk of blackouts in the future.
GRAHAM RICHARDSON: So if bills don’t go up people don’t conserve – period?
TOM ADAMS: And that’s the point. The second point is that to pay for all of this the Hydro debt that was bad before, is just getting started. We’re going to see the Hydro debt go wild.
GRAHAM RICHARDSON: You can’t say the Conservatives didn’t . . . conservation.
TOM ADAMS: Of frozen prices.
GUY GIORNO: Well, I think we have to have some faith in consumers and the people of Ontario. For most of the last hundred years the price of power has, from the consumer’s point of view, been relatively constant, and we never, never as a result of that factor had blackouts or brownouts due to consumer behaviour. So I don’t see why we have any less faith in the people of Ontario today than we did in the last hundred years.
GRAHAM RICHARDSON: In July and September we were this close to blackouts. We had warnings, we had no supply.
GUY GIORNO: As to whether the price is the right price, I invite us to go out to the streets and ask the people of Ontario whether they think a price much larger than 4.3 cents a kilowatt hour is the right price, and I think that Ernie Eves made the right decision by lowering the price and freezing it there at a rate that the average person can afford.
GRAHAM RICHARDSON: I will grant you that he had to do something, that’s fair. We sat on this program for weeks and said he’s got to do something, you’ve got to fix it. But what I don’t understand is – first of all let me ask you both, and we’ll come back to Tom, and Tom you can jump in too because I know you will – how are you going to pay for this? A fixed price for several years. The only person saying maybe they’ll cancel each other out, cancel it out and don’t worry about any more taxpayers –
TOM ADAMS: The rebates pay for themselves.
GUY GIORNO: Well, I believe that as well, and I’ll explain to you and the viewers at home how it happens. The price of power under this model will continue to fluctuate up and down as before. All that happens is the consumers are insulated. They are going to pay a constant price all along. The government’s quite simply going to set up a fund. When the price of power is lower than what consumers pay, money will go into the fund; when the price of power is higher than what people are paying, money will come out of the fund. It will pay for itself.
GRAHAM RICHARDSON: It was higher 16 weeks in a row, it almost doubles in summer.
TOM ADAMS: It’s the tooth fairy fund.
GRAHAM RICHARDSON: It’s the tooth fairy fund, okay.
TOM ADAMS: What we’re going to do here is when the price of power goes up, the taxpayers are ultimately going to have to pick up the tab for this. We’ve moved to a situation where the electricity bill is a fiction. We’re going to send out an inaccurate price signal, we’re going to discourage conservation, it’s going to harm us and all of our environmental priorities, like meeting Kyoto. Then the real bill is going to come down the pipe and it’s going to come back in a couple of ways. We may see direct expenditure from the province; we may see deferred impact of rates through higher borrowing. We might even see some liquidation of assets to use the proceeds of those liquidations for the purpose of paying down electricity debt.
GRAHAM RICHARDSON: Guy, we are seeing warnings from Bay Street about rate increases, that costs money, right?
GUY GIORNO: The one reality though with electricity is that there are so many different opinions and they reflect so many people, so many businesses, and so many different interests.
GRAHAM RICHARDSON: But the only people I hear saying this is good are you people, everybody else is saying this is just the worst thing to do.
GUY GIORNO: Ernie Eves makes no apologies for taking the side of consumers. It’s the tradition?
GRAHAM RICHARDSON: Isn’t it more complicated than that though. I appreciate the politics of it; is this about the election?
TOM ADAMS: Short term win.
GUY GIORNO: No, it’s actually about doing what’s right for consumers while maintaining true to the overall plan which is to ensure we have a stable supply of electricity into the future at a price that people can afford.
GRAHAM RICHARDSON: And you say it’s about the election?
GUY GIORNO: Now we’re going to continue to pay down the old Hydro debt.
TOM ADAMS: It’s about the election.
GRAHAM RICHARDSON: It’s magic; it’s magic.
TOM ADAMS: It’s about the election, except that Ernie Eves thinks that he’s running for premier of California. What I really want to know is when the province initiated the electricity restructuring back in 1997, it set out a whole bunch of principles, like the supply/demand were going to balance the price; we were going to attract private sector investment; we were going to have independent regulatory institutions. We’ve trashed all of those principles. Whose idea was it to throw all the principles over Niagara Falls?
GRAHAM RICHARDSON: How many people, that’s a good point.
GUY GIORNO: Those principles still remain intact. There’s a fully functioning wholesale market. We have incentives to raise the return for local distribution companies to become more efficient. We’re actually making them more accountable to the municipal ratepayers and municipal councils. We have respected private sector contracts and we’ve actually created-
GRAHAM RICHARDSON: No, you haven’t.
GUY GIORNO: Private sector contracts are safe.
GRAHAM RICHARDSON: Private sector contracts are null and void.
GUY GIORNO: They’re not null and void, they’re being respected.
GRAHAM RICHARDSON: Well, but at 4.3 cents, the marketers are out of business.
TOM ADAMS: Let me in on that point.
GUY GIORNO: Sorry Tom – if your point is that people who’ve gone door to door selling electricity to individual consumers in Ontario have business trouble, I have no hesitation in saying that Ernie Eves was right to take the side of consumers over people who sell hydro door-to-door.
TOM ADAMS: Okay, but door to door salesmen –
GUY GIORNO: And I bet you that most people in Ontario would agree with that.
GRAHAM RICHARDSON: Okay but Guy, let me just ask on this point. You can’t say that you’ve respected those contracts, because those contracts were signed for more than 4.3 cents, so the government’s got to pay – someone’s got to pay the contractor and someone’s got to pay the customer. That’s not very good business, is it?
GUY GIORNO: Well, sure there was a choice of saying that individuals, individual consumers who signed those fixed-price contracts would be excluded from the refund; that was the wrong way to go, they shouldn’t be penalized just for having signed those contracts. So his decision, which was the right decision, was to hold those individuals in, and treat every consumer in Ontario fairly.
GRAHAM RICHARDSON: Last point – I’m sorry, twenty seconds – Tom Adams, why is this bad?
TOM ADAMS: Look, Ontario’s electricity is a terrible mess. We’ve lost all sense of principle. Power decisions are too complicated to operate without a plan. This government is just winging it.
GRAHAM RICHARDSON: Tom Adams from Energy Probe. Fasken Martineau’s Guy Giorno and adviser to Ernie Eves – kind of on a hot seat tonight – I appreciate your being here. Thanks so much.
GUY GIORNO: Thank you.
GRAHAM RICHARDSON: Focus Ontario returns after the break. Stay with us.
GRAHAM RICHARDSON: Welcome back to Focus Ontario. Our cartoons continue, this is in the National Post. "I’m hear to replace that burnt-out bulb" – the one that is over the Premier’s head. "Ouch!"
And some written comments. First from Andrew Coyne in the Evening Post: "Voters have no reason to trust a word the Eves government says. The Ontario Conservative government has reached the end of its useful life, it should be removed – no hurled – from office, and the sooner the better." Andrew Coyne.
And Linda Leatherdale – a little kinder: "The Grinch who stole Christmas, a.k.a. Premier Ernie Eves, may have saved his political butt by capping skyrocketing electricity bills, and promising our power won’t be shut off, but sadly experts from both sides of the deregulation issue are still warning the worst is yet to come."
And on our journalists’ panel, joining us now is Robert Benzie, regular contributor from the National Post; and from the Sun we have Christina Blizzard; and from the Globe we have Murray Campbell. Thanks to you all for being here on a very busy week. Let’s just open it up. Anybody surprised by what happened in the government?
ROBERT BENZIE: I was stunned on Monday when they completely capped prices. I couldn’t believe they did it.
GRAHAM RICHARDSON: Chris wants to say something.
CHRISTINA BLIZZARD: I was completely stunned. I had no idea that they would do something like this. Obviously they had to do something, but if you were going to cap prices why wouldn’t he put a time limit on, until say the Pickering ‘A’ plant came back up, something like that until you’ve got more supply. More of a Band-Aid just to bridge them across this supply shortage.
GRAHAM RICHARDSON: And Murray you wrote that Mississauga looked like panic. Now why, why did you say that?
MURRAY CAMPBELL: Well, because I think they looked at the numbers. They were listening to their backbenchers, they were listening to Brad Clark, you know cabinet ministers saying we’ve got to do something – we’ve got to do something. But like Chris, I’m a little surprised at the extent to which they moved up on the recent bit of tinkering, the sinister Band-Aid to get them through to maybe Christmas, maybe the next election.
GRAHAM RICHARDSON: And they didn’t have time, Robert. I wonder what Mike Harris is thinking. I was going to ask Guy Giorno that, but this is a complete repudiation of what he did. This was a mantlepiece of legislation for him, to deregulate, to privatize them, plugging in of the thing and it’s gone. They blew it up this week, I don’t care what anybody says.
ROBERT BENZIE: This is just another flip-flop by Premier Eves, it’s a belly-flop I think by Premier Eves. I mean this is a catastrophically bad policy. It’s bad public policy, it’s irresponsible. Although I have to give Mr Eves credit. He has done something – Murray and I talked about this earlier today – he has done something totally improbable. He has managed to unite neo-conservatives, socialists, environmentalists and Bay Street, all on the same side, saying this thing is moronic and saying you’re crazy.
GRAHAM RICHARDSON: And Guy Giorno points out, and the other politicians point out, the constituencies are quiet and maybe we’re hearing less in the newsroom about this. So the question I think has to be, have they bought their way out of this trouble, even if it’s medium term? Has it worked?
CHRISTINA BLIZZARD: I think yes. I think that he has. I think basically all people really cared about was can I afford my next hydro bill. I think there was incredible angst out there. From people they were hearing outrage, from small businesses, from consumers, from householders, from all kinds of people who were really genuinely worried. I think they’ve sort of shut down – you know, the story of the day about someone whose business is going to go belly-up because they can’t afford their electricity, they’ve shut that down. I think that as soon as people heard that he capped prices, that was all they cared about. The rest of it is dealing with the private sector.
GRAHAM RICHARDSON: Okay, go ahead, Murray.
MURRAY CAMPBELL: But I think something has changed. I think the voter can be bribed with their own money, that’s the history of politics –
GRAHAM RICHARDSON: Sure.
MURRAY CAMPBELL: . . . in this country. But I think Mike Harris in fact did change something in this country, in this province. He reduced the sense of entitlement that we feel. And I think voters are far more sophisticated than they were a decade ago. They now understand what the Tories meant when they said there is only one taxpayer, there is no free lunch; you get a gift here, you pay for it there.
GRAHAM RICHARDSON: And the government’s own staff could come and fight them on this issue.
MURRAY CAMPBELL: I think voters understand that there are no free rides.
ROBERT BENZIE: Graham, this is the party of highway tolls, this is the party of user fees. This is the party that said, you know what, you just learned that you pay as you go. You have to be individually responsible. I don’t think that that’s necessarily a very bad thing. So why should I, living in a small house in downtown Toronto, be subsidizing some mansion in Mississauga so they can have cheap power. I mean it’s ridiculous; it’s absurd.
GRAHAM RICHARDSON: They were big homes. One bill two doors down had gone from ninety dollars to nine hundred dollars, and they had a hot tub. So what! Lots of people have hot tubs. That’s extraordinary. Okay, so why is this policy, why is this fixed, what’s the worst part about it? Is it the fact that it relies on absolute idiocy?
ROBERT BENZIE: It’s malice.
GRAHAM RICHARDSON: That’ the worst part of it.
ROBERT BENZIE: It’s malice.
GRAHAM RICHARDSON: Okay, why is it malice?
ROBERT BENZIE: Because it turns economics on its head. I mean people should pay with something – if water costs a certain amount of money, that’s what people should pay for. They shouldn’t pay at an artificially low price just so that a government can get re-elected. That’s immoral.
GRAHAM RICHARDSON: That sounds like Toronto Sun policy to me too, Christina, isn’t it?
CHRISTINA BLIZZARD: No.
GRAHAM RICHARDSON: That’s what your newspaper was championing.
CHRISTINA BLIZZARD: Absolutely and that’s the argument that I’ve been making in our editorials that they’re making, absolutely. I think that there was a temporary difficulty. I mean they opened the market at the wrong time, that was the problem. You have to wonder why no one from OPG picked up the phone to Mike Harris and said, can you put this off for a year until we’ve got more supply back on line; Pickering’s down, give us a break here.
GRAHAM RICHARDSON: I don’t accept either that people in government didn’t know Pickering was a big problem. I mean you can’t do a project like that without lots of people knowing where it’s at. It’s not just OPG, is it?
CHRISTINA BLIZZARD: It was a simple question of supply and demand. Didn’t anyone look at the supply and figure out what the price was going to be. I mean we’ve heard about the perfect storm, that this was supposed to be the hottest summer on record, all those kinds of things. Well, yes it was hot, but you know summers in this province do tend to be hot, factor that in. I find it really absolutely unacceptable and irresponsible no one looked at that.
GRAHAM RICHARDSON: What about the other measures, Murray? If you want to make a point on the other stuff, that’s fine too, but what about the other measures? Should we take any solace in the tax breaks for green power? Won’t that attract lots of new supply?
MURRAY CAMPBELL: No, well it took John Baird who arrived in a car that’s powered by, you know, recycled bacon fat. I’m not entirely sure the connection, it was electricity.
GRAHAM RICHARDSON: It was a little loose.
MURRAY CAMPBELL: But I mean there’s nothing wrong with the principle of at-cost power. But that principle is what, you know, underwrote some of Ontario’s prosperity for the last 75, 80,and 90 years. But I would agree, we have to figure out what ‘at cost’ is, and I don’t think anyone around would say 4.3 cents, it’s tax dollars.
GRAHAM RICHARDSON: Incredibly, even I hear Liberals talking about we have to ease ourselves up to more expensive power. They’re saying 4.3 cents is unrealistic; they’re not in favour of caps.
MURRAY CAMPBELL: But Howard Hampton won’t guarantee 4.3 cents. They say we have to have stable prices, I believe.
ROBERT BENZIE: Yes, the NDP, the party of the working man, the lunch-bucket party, saying no, this isn’t right. This is the thing that’s so absurd, it’s the free market party, the allegedly capitalist party, the Conservative Party, they’re the one that’s doing this interventionist policy. It could be very, very destructive down the road. How about that $38 billion? (It could be) $138 billion down the road.
CHRISTINA BLIZZARD: But show me a politician who is going to run on a platform that they’re going to raise electricity rates, and I’ll show you someone who is not going to win the next election. That’s not going to happen. And the other thing is what generation are you going to get on line; you can’t generate gas-fired for less than six cents a kilowatt hour.
GRAHAM RICHARDSON: That’s right.
CHRISTINA BLIZZARD: Five industries just withdrew from those two plants in Toronto for that very reason. You’re not going to encourage any more ecologically sound generation at 4.3 cents a kilowatt hour.
ROBERT BENZIE: We’re not going to be putting solar panels on the roof.
GRAHAM RICHARDSON: It didn’t work with Green Peace.
ROBERT BENZIE: Jimmy Carter or something on the roof.
GRAHAM RICHARDSON: Very quickly Murray, last word. Is it going to work politically, forget everything else. Politically did they win?
MURRAY CAMPBELL: There is a good chance yes, if the wheels don’t fall off this winter. Tom Adams says the wheels will fall off. If they can scrape together enough capacity, enough supply, they might be able to squeak through.
GRAHAM RICHARDSON: Murray Campbell, Christina Blizzard – on our panel – thanks so much. Robert and I are back after the break. Focus Ontario returns; stay with us.
GRAHAM RICHARDSON: Welcome back to Focus Ontario. On our Play of the Week – what else, the left-wing lizard:
(Video clips from Mississauga and Niagara Falls)
"I want more money, I want more money, power."
There’s Hydrozilla, the NDP’s new mascot, eating wallets and chequebooks. Deregulation isn’t dead, he’s just crawled out of the sewer or the swamp, Robert. There he is at Niagara Falls.
ROBERT BENZIE: Refused entry at the Falls for John Baird’s photo op there.
A protester dubbed "Hydrozilla" parades outside a Mississauga residence where Ontario Premier Ernie Eves announced the province’s hydro rates will be capped and rebates will be issued. Credit: Frank Gunn, Toronto Star
GRAHAM RICHARDSON: Yes, he got bounced apparently. And here perhaps was the biggest coup. (Video clip from Oakville) This is John Baird arriving in Oakville in the Mexican-made car –
ROBERT BENZIE: Fuelled by bacon fat.
GRAHAM RICHARDSON: . . . and then there was this. You see this was extraordinary as far as I was concerned, because he showed up halfway through the press conference, he surprised them, and then he had to continue. Like you can hear them there, we’re asking questions. He’s trying to keep a straight face and Hydrozilla is stealing the photo op, and there’s –
ROBERT BENZIE: The Premier’s staff very happy with the turn of events!
GRAHAM RICHARDSON: . . . friends from the Premier’s Office, colleagues of Mr. Baird, not very happy. And this was the photo op gone bad. You can see Mr. Baird looking back at Hydrozilla eating wallets. This was a photo op gone bad.
ROBERT BENZIE: Yes, if you watched this item on the news with the sound turned off, you’d swear that the lizard was part of the Tory roll-out plans.
GRAHAM RICHARDSON: He had no choice but to continue; they couldn’t bounce the lizard. Election? Sooner or later, because of what’s happened this week?
ROBERT BENZIE: Well, the big debate in the Press Gallery at the Park about this, as you know. I mean you and I both seem to think that it’s going to be sooner rather than later. I think this is a quick fix and that Murray Campbell’s right, it may in fact help Mr Eves in the short run, though I wouldn’t be at all surprised to see an election before June. Other people are saying maybe next fall.
GRAHAM RICHARDSON: A huge quick fix and an extraordinary one.
Anyway, thanks Robert. That is all the time we have for this week. And if you’d like to write us, please do, at 81 Barber Greene Road, Toronto, Ontario, M3C 2A2. You can e-mail us at focusontario@globaltv.ca. And you can also call Neal Kelly, our producer, at (416) 446-5570.
And check the National Post this Monday. It returns – Queen’s Park Notebook.
ROBERT BENZIE: Queen’s Park Notebook – after a short vacation.
GRAHAM RICHARDSON: After our short vacation. Lots of political coverage, including Hydrozilla probably, and other things. But a fun week and an extraordinary week. Anyway, that is all the time we have for this week. Thanks to regular contributor, Robert Benzie of the National Post; and Christina Blizzard of the Toronto Sun; and Murray Campbell of the Globe and Mail. Earlier tonight Guy Giorno, lawyer, and current adviser to Premier Ernie Eves; and Tom Adams of Energy Probe.
And thank you for watching. Focus Ontario returns next Saturday. Global News is next at eleven with Robin Gill. I’m Graham Richardson; good night and have a great weekend!
Energy Probe 