(June 29, 2018) Doug Ford’s hydro reforms can make winners of everyone, except the looters who have gamed the system.
This article, by Lawrence Solomon, was first published by the National Post
Part One of a series
Ontario was once known as the engine of Canada’s economy. Today that engine is sputtering after a decade and a half of anemic growth. The province faces a deteriorating credit rating and its runaway $325-billion debt, the highest of any subnational jurisdiction in the Western world, will balloon to $400 billion in six years.
Ontario’s power plants were once called the province’s crown jewels, lauded as the single biggest symbols of the province’s success. Today, the power sector is the single biggest reason for the province’s fall, the victim of a politically correct Green Energy Act that scrapped high-performing plants in favour of renewable-energy losers that forced Ontarians to pay some of the continent’s highest electricity rates, leading to an exodus of some 300,000 manufacturing jobs and to suffering in much of the provincial economy outside the Greater Toronto Area.
A restoration of Ontario’s economy — the reason Doug Ford was elected premier — must start with a dramatic reduction of the provincial debt and a regeneration of its power system. The challenge is less daunting than might be imagined if Ford takes his mandate for sweeping reform seriously. The electricity blueprint is in place, as are the precedents.
The blueprint comes from former Ontario premier Mike Harris’s 1994 Common Sense Revolution, begun but not completed, which called for the breakup and privatization of Ontario Hydro along the lines of Margaret Thatcher’s wildly successful U.K. privatization, which dramatically slashed power rates for large and small customers alike while restoring the public purse.
A full privatization of Ontario’s power system could easily yield $50 to $100 billion. To maximize the value for the provincial treasury and minimize electricity rates, the Ford administration needs to take the following steps.Repeal the Green Energy Act, which stripped local communities of their planning powers to undemocratically impose on them renewable power developments that were neither environmental nor economic. An efficient, low-cost, market-based power system cannot operate under this act’s subsidy-ridden strictures.
- Extinguish the renewable energy contracts that previous Liberal governments parcelled out to their cronies, knowing full well they were overpaying by billions. These contracts have no moral justification and can legally be cancelled without paying compensation in the same way previous governments extricated themselves from odious obligations. As Queen’s University law professor Bruce Pardy explains, if “the Ontario legislature passed a statue that explicitly denied the right to compensation, then no compensation would be payable.”
- Unlock the $20 billion now set aside for the disposal of nuclear waste in the Used Fuel Segregated Fund and the Decommissioning Segregated Fund, together known as the “Nuclear Funds.” These vast sums were established in accordance with a scientific theory known as the “linear no-threshold” (LNT) hypothesis of radiation damage, which holds that any amount of radiation is harmful, even small amounts, and thus demands that low-level waste be disposed of at great expense. Hundreds of studies have now invalidated that hypothesis, yet because of bureaucratic inertia, the LNT hypothesis remains in force.
- To determine the validity of the LNT hypothesis and educate the public as to real and not imagined risks, the Ford government should launch a Royal commission into the health and environmental effects of radioactive waste, drawing on the world’s leading experts to determine how best to manage the various types of radioactive materials. If the Royal commission agrees with the scientific view that humans are only threatened by high-level waste — less than one per cent by volume of the total radioactive waste — most of the $20-billion Nuclear Funds can be freed for productive purposes.
- Frack, frack, frack. The shale oil and gas revolution in the U.S. created an estimated one million jobs while slashing energy prices and convincing Canadian and European industries to relocate there. Pennsylvania, one of the biggest beneficiaries of the shale boon, lies atop two major shale formations: Marcellus Shale and Utica Shale. Both extend into Ontario, which is also blessed with other formations. Ford should lift the ban on shale development to make the province a major energy producer, able to bring back industry while lowering everyone’s energy bills.
- In privatizing the power sector, Ford should restore the Ontario Energy Board’s independence, an exemplary regulator before the Liberals neutered it to impose renewables on the province. To maximize competition — the best way to lower rates — the privatization should extend to the municipal utilities, which should be freed to become generators of power. The privatizations would not only replenish government treasuries through the asset sales, they would create an ongoing stream of corporate tax revenue from the newly privatized and revitalized industry.
Ford’s sweeping victory gave him a majority government, and the ability to act unilaterally and decisively in enacting needed reforms. But he shouldn’t run roughshod over opposition, or be greedy in grabbing the lucre available for government coffers. Carefully constructed policies can turn opponents into converts.
In the U.K.’s reforms of the 1980s, Thatcher overcame resistance to her privatizations by making power workers and the general public shareholders in the privatized electricity companies. Two years ago, U.K. Prime Minister Theresa May overcame fears over risks associated with fracking by sharing the immense royalties to be had with local residents — households in communities where shale gas will be extracted will receive cash sums of as much as 65,000 pounds, or $112,000, each.
Ford’s reforms should make winners of everyone, except the looters and the special interests who have gamed the system in their past plundering of the province. There’s more than enough to go around for everyone under a judicious, methodical, and determined righting of the Ontario economy.
Lawrence Solomon executive director of Toronto-based Energy Probe. LawrenceSolomon@nextcity.com.
This is the first in a two-part series.
Part Two: Doug Ford will make Ontario great again by following Trump’s lead with radical deregulation
i would privatize all generation but not the infrastructure that ties it all together. quite simply – who ever owns the transmision lines has a near monopoly because they are very difficult to replace – as such the government should own those. It should be done through a non profit corporation who’s metrics and targets are based on comparison to other publicly owned utilities – they would be expected to be in the top 25% of the utilities they are measured against.
Pingback: Lawrence Solomon: Doug Ford will make Ontario great again by following Trump’s lead with radical deregulation | Energy Probe