Margaret Wente
Globe and Mail
July 25, 2002

Eleanor Clitheroe’s limousine bills are scandalous, no doubt about it. But in the vast train wreck that is Hydro, they matter about as much as a broken light bulb in the caboose.

Sure, $330,000 is a lot of dough. But so is $22-billion. Which is more or less what public ownership of Hydro has cost the people of Ontario.

Capitalists may be rapacious villains. But governments are worse. The political mismanagement of Hydro stretches back a generation, and has been ruinously costly, and shows no sign of ending.

"Power and politics don’t mix," says Tom Adams, the executive director of the watchdog group Energy Probe. In his view, the overwhelming reason for privatizing the utility is one you’ll never hear from Queen’s Park. It’s to get it out of the reach of politicians. So long as the government owns it, they’ll always screw it up.

"The power system is prone to instability when it’s politically controlled," Mr. Adams says. "The role of the public sector ought to be regulatory – for price protection, and to regulate the quality of service. But when the public sector invests in the power system, it acquires a conflicted interest."

For politicians, Hydro is a vast pork barrel of potential goodies. Maybe their riding could use a nice transmission tower. Or their favourite companies could use a rate break. (Former energy minister Jim Wilson dished out plenty to his corporate buddies, then grandfathered them.) And rate freezes are always a big hit with voters. We had one for most of the ’90s, while Hydro’s debt grew and grew. Everyone conveniently forgot that what you don’t pay now, you’ll have to pay back later – with interest, presumably when some other party is in power.

But the worst thing about political control is that the politicians aren’t really in charge at all. The Hydro people are. They can empire-build to their hearts’ content. Politicians don’t know much about the finer points of generating capacity. It’s easy to bamboozle them with bafflegab, and it’s delightful to be bankrolled by the deep pockets of the state.

Andrew Roman, a seasoned lawyer who specializes in energy, knows how the game is played.

"They used to say to a succession of ministers, ‘Madam minister, do you want to be responsible for blackouts and brownouts?’ "The answer was always no, and the solution was always the same: Spend billions, build big. Hydro was a bloated bureaucracy, and Hydro managers were notorious meglomaniacs. That’s what happens in a state monopoly.

"There’s a widespread misconception that where you have public ownership, you have public control," says Mr. Roman. The truth is that the public has no control. No one is accountable, and no one ever pays for their mistakes. "In the private sector, you fall on your sword. But in the public sector, as long as you’ve got buddies at Queen’s Park, nobody will fire you."

The waste of money was colossal. Take a nuclear megaproject called Darlington. It was supposed to cost $2.5-billion, and came in at $11-billion. After it was built, it kept breaking down. Nobody was ever fired. Then came Pickering A, a notorious safety, management and technical debacle. Then, in 1997, Hydro hit the wall. It could no longer pay its bills, and the government was forced to act. It carved Hydro into pieces. The wires piece, headed by the hapless Ms. Clitheroe, prepared to privatize.

But Hydro One didn’t act like a private-sector player (except for the pay and perks of its executives). It kept spending big. So did Ontario Power Generation, the new Crown corporation that was assigned to fix up the mess at Pickering. The fix-up was supposed to cost $800-million and be done by now. The current estimate is $2-billion, and it may be done by 2005.

"These are unjustifiable projects," says Mr. Adams. "This dog would have died a long time ago without the care and feeding of the taxpayers."

Ron Osborne, the head of OPG, also has a compensation package of Clitheronian dimensions.

The big-spending habits of OPG and Hydro One scared off the potential competition. Who’d bother to compete against people who don’t need to pay attention to the laws of economics? And who’d invest in Ontario now, when it’s obvious the government changes the rules any time it wants to?

The main argument against privatization is that consumers will have to pay for the profits of the greedy capitalists who run the system. But Mr. Roman invites you to consider the alternative. "Capitalist profit is costly, but not as costly as political waste."

Fortunately for all three of our political parties, they’ve got Ms. Clitheroe and her country clubs and limos to kick around. They’re hoping we’ll get so mad over stratospheric salaries and corporate greed that we’ll forget all about that little item on our hydro bill called "stranded debt." It’s $22-billion, and counting.

Andrew Roman is a member of Energy Probe Research Foundation’s Board of Directors.