I can understand the urge
for many people to privatize government agencies, assets and services. The
government can be inefficient and clumsy. Some services are better provided by
the private sector. However, there appears to be a category of services that
seem roughly to be a draw between public and private provision. The Northwest
Territories has dealt with substantial problems regarding power generation and
distribution. There are various systematic problems dogging the system. In
public meetings on the topic it is not unusual for people to say "We
should privatize the power corp," or "It's the government's fault,
they need to get out of it." This suggestion, often rooted in frustration,
is understandable but entirely inappropriate.
In the particular case of
the Northwest Territories the problem is multifaceted. The territory's power
grid is complicated. Most of the communities are isolated from one another and
must have its own independent power generation, especially in the smaller and
more northern areas. That means diesel generators burning expensive fuel in the
scattered communities. The problem became more severe in Yellowknife this year
when low water levels meant that the hydro system was rendered ineffective and
had to switch to its diesel generators at enormous cost. The cost to extend
power to Yellowknife from the South Slave or connect the South Slave to the
national grid stands in the billions and therefore out of the government's
reach.
Privatizing the Northwest
Territories Power Corporation would do nothing to address this problems. If
anything the additional costs to anticipate this risk would simply be put on
the consumer pushing the prices ever higher.
In the province of Ontario
Premier Kathleen Wynne (OLP - Don Valley West) has announced her government's
intention to sell 60% of Hydro One. Martin Regg Cohn laid out the government's case in his most recent piece.
Basically there is no better time to borrow money. The continuing sluggishness
of the world economy has resulted in very low interest rates. Capital markets
are seeking somewhere to invest their money to make it work and therefore the
cost of borrowing money is much lower than usual. This is why you are hearing
people suggest that this is a good time to use deficit spending to improve the
economy. The plan is to use the capital from the sale of existing power
transmission lines to construct new transmission lines and, from what I read
elsewhere, pay for other infrastructure.
The government of Ontario
has convinced several key people that the sale is for the better. The simple
fact is that the provision of power is not a service like retail, it is a
utility and unlike other utilities (internet and cable) it is fundamental to
the health and well-being of citizens. Virtually every home is connected to the
grid. Aside from remote homes/cabins pretty much everyone has access and I do
not think anyone in good conscience would deprive people of electricity. That
being the case it is not a market good that can conform to the flexibility of
prices. It would be better then to treat power utilities like they are - a
public good. Complete ownership by the state allows for greater control and
management and no waste or poor maintenance for the sake of profit.
While Ontario might be in
a favourable position to sell hydro assets today the market will inevitably
change. What happens when the province wants to buy back these assets? How
inflated will the costs be then? How will this impact changes needed to the dismal electricity situation in Ontario? For the betterment of society as a
whole I think we would be better off understanding that electricity is
expensive, complicated and infrastructure heavy while also being essential to deliver.
This makes it a perfect candidate for public ownership and any tinkering with
that may only result in more difficult challenges in the future.
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