Tom Adams

November 21, 2001

Letters Editor
The Globe and Mail

Re: "Not-for profit Hydro One best path for power giant," November 20, 2001.

Andrew Willis’ column on the options for the future of Ontario’s power grid, called Hydro One, overlooks our most attractive option. Both options he discusses – privatizing our power grid through a public share offering or creating a glorified co-op controlled by government and a handful of smokestack industries – suffer from the common flaw of allowing existing management to become entrenched. The dilapidated condition of much of Hydro One’s transmission system, its slow response to new generators seeking grid connections, and the fact that it doesn’t have reliable downtime statistics for its rural distribution network demonstrates why sweeping change is needed.

Adopting the co-op model for our power grid eliminates the possibility of effective regulation. As the Ontario Hydro experience demonstrates, government regulators overseeing government industrial operations are conflicted. On the other hand, Ontario’s regulatory experience with the natural gas distribution sector shows that having shareholders to whack when mistakes are made encourages responsive management.

Letting a few power guzzlers directly influence how much of their transmission costs the rest of us pay will lead to predictable results.

Happily, Ontario has a better option. Existing businesses within Hydro One – mostly high-voltage bulk transmission and low-voltage regional distribution – should be separated and the parts auctioned. The public could be guaranteed fair value, the private sector would have the opportunity to reassemble more efficient businesses, and the new owners would be able to get management in place that can build value. Independent regulation would ensure that these benefits are ultimately shared with consumers.

Sincerely,
Tom Adams
Executive Director