Five compelling reasons why NSP should be publicly owned again

This week’s CBC Nova Scotia report on the dismal performance of Emera and the Nova Scotia Power Corporation comes as no surprise to people across the province.

For at least two decades, the power company’s performance has been distinctly sub-par. And a CBC comparative analysis, showing fewer outages in New Brunswick where winter weather is much more severe, only highlights the need for major changes in Nova Scotia’s laissez-faire policy which granted this monopoly in the first place.

NSP’S weak response to the results of this preliminary study of power outages amounted largely to some bogus excuse about high winds, and a refusal to grant the public broadcaster an interview. NSP and its parent firm, Emera, had good reason to deny CBC an interview on their terrible record of power outages over the last several years. Simply put, something is rotten in the state of Emera.

The source of this rot lies in the original, dubious decision by the provincial Progressive Conservative government of the day to privatize what had been a remarkably reliable provincial Crown corporation. At the time, there were rumours that government members of the legislature and other insiders were given privileged access to the original NSP shares at below-market prices. Whether these rumours are true or not, Emera and NSP have been coddled and protected from their poor public service record ever since by a servile provincial Utility and Review Board (URB).

Take the recent cost overruns from Muskrat Falls as an example: while passing on higher rates to all Nova Scotians, NSP received a gentle slap on the wrist from the URB in the form of a “request” to reduce their share payout by $1.5 million, an amount hardly noticeable against the company’s operating revenues. (In the nine months ending Sept. 30, 2020 Emera’s operating revenue was $3.969 billion.) This was a request, it should be noted, that NSP refused. What kind of utility regulation is this? Regulators do not “request.” They require.

And speaking of these profits, isn’t it odd that a reliable moneymaker should have been given away to the private sector so the privileged shareholders could pocket operating profits that, by right, belong to all the people of the province? It would be most interesting to have a student-led public interest research group (PIRG) translate these lost revenues into how many schools, fire stations and hospitals could have been built in Nova Scotia over the years since NSP was privatized. To say nothing of the extra jobs that could have been created.

So if the NSP’S monopoly profits are not going into provincial funds for schools, hospitals, fire, police and other public services, where are they going?

We might take a look at Emera’s corporate history to find out. The creation of Emera as a holding company for NSP was a classic corporate dodge to cover the export of profits out-of-province and to buy power distribution companies in other locations, including low-income locations in the Caribbean. There, the public has even fewer protections against profit-gouging, and the company can operate in environments with weaker environmental and anti-monopoly regulations. Meanwhile, NSP is not even paying its fair share of taxes on its capital assets in the province, offering local municipalities grants instead.

In short, it is time for the Nova Scotia legislature to buck up and end this travesty. The first steps should include the striking of an expert and impartial commission of inquiry to carry out a thorough, systemic review of NSP’S record of performance (please, no members from “the accessories to the crime” gang at the URB). This review should include statistically valid comparisons with provincial power utilities in New Brunswick and P.E.I., which can provide a comparative perspective on just how badly NSP has been serving Nova Scotians.

In addition to a basic failure to reliably provide the electricity needed to heat homes, prevent illness, allow remote work to continue in all areas of the province, and provide electricity needed for emergency communications shown to be so critical in the Portapique shootings tragedy, there are several public policy reasons why NSP must be returned to the ownership of the people of Nova Scotia as a Crown corporation.

• First, it is morally wrong that a profitable monopoly required to provide a basic and essential commodity should operate chiefly for the benefit of its shareholders here in Nova Scotia.

This is not, thank God, the United States, where even right-wing ideologues like Francis Fukuyama agree basic utilities should be publicly owned. In his recently published memoir, A Promised Land, former U.S. President Barack Obama relates how American insurance companies tried to stop his health-care reforms by arguing they could not compete against public insurance organizations that did not face the extra cost of making a profit for shareholders!

Following the current logic of NSP’S privileged position, why not sell off the NSLC liquor monopoly, for example? Perhaps it, too, could become a division of Emera! Why should its considerable profits go to help provide basic needed services to the citizens of Nova Scotia, when its profits could also be tucked away in the comfortable pockets of Emera shareholders and be protected by the URB?

• Second, Crown corporations, while they are an arm’s-length creature of representative government, are still much more accountable to elected representatives and to the citizens they serve than a privately held monopoly corporation. Consider the essentially “no recourse” situation facing people in locations across Nova Scotia like Meagher’s Grant who are without reliable electricity.

• Third, Nova Scotia is severely cash-strapped and faces a very steep recovery curve, both from recent industrial shutdowns like Northern Pulp, and more broadly from the enormous economic costs of the COVID pandemic. Why, in heaven’s name, should we Nova Scotians be throwing away a reliable source of badly needed earnings by allowing NSP to continue paying fat dividends when provincial finances are so severely strained? Of note, NSP’S rate of profit is almost exactly twice the average dividend rate of the lucrative Canadian banks.

• Fourth, it ill behooves any Canadian corporation these days to risk possible future legal liabilities by taking advantage of its powerful position through its operations in developing, low-income countries. Canadian courts are finally beginning to hold Canadian corporations accountable for environmental, labour and human rights violations committed abroad. Our provincial electric utility should focus its profits and its energies at home where affordable and reliable electricity is needed.

• Fifth, Crown corporations are, as the American health insurers tacitly admitted, in a much better position to provide reliable public service than private corporations because they do not face the added cost of making and distributing privately held profits. Not to mention the problem of bloated executive salaries at privately owned corporations: the total compensation of the prime minister of Canada is $357,800, but the previous president of Nova Scotia Power, Karen Hutt, was paid $694,568! So it is not surprising that a comparison of North American railroad companies done at Harvard University, for example, found that publicly owned rail companies were the most reliable and the most efficient.

The contrast case is provided by the long gradual decay of electrical distribution in Nova Scotia since NSP was privatized. For several decades since its privatization, the provincial electric grid was starved of the necessary preventative maintenance so company profits could be fattened. As a result, power outages now occur across the province, even in mild weather, at a rate unheard of in our parents’ time.

In short, there are no good reasons for continuing the current electrical monopoly in Nova Scotia. But there are many reasons — moral, financial and operational — for restoring electricity production and distribution back to the hands of rate-paying citizens of the province. Nova Scotia Power and its parent company Emera have, with the help of highly paid accomplices at the URB, been getting away with blue murder to the detriment of all Nova Scotians.

It is high time our elected representatives acted to correct the situation.

Nova Scotia Power linemen making repairs: “A CBC comparative analysis, showing fewer outages in New Brunswick where winter weather is much more severe, only highlights the need for major changes in Nova Scotia’s laissez-faire policy which granted this monopoly in the first place,” writes Brian Joseph.