The Hamilton Spectator

We lost accountabi­lity, vision with Ontario Hydro’s demise

- SAMUEL BUCKSTEIN SAMUEL BUCKSTEIN IS A ENERGY SYSTEMS ENGINEER, SOLAR PROJECT DEVELOPER AND LECTURER ON ENERGY POLICY AT THE UNIVERSITY OF TORONTO.

Twenty-five years ago, on March 31, 1999, Ontario Hydro ceased to exist. The behemoth public utility died an inglorious and protracted death, but its ghost continues to haunt us in countless ways.

Ontario Hydro died because of engineerin­g hubris, a fatal loss of public confidence and a lack of political imaginatio­n. Throughout much of the 20th century, the utility enjoyed a string of success as the engine of Ontario’s industrial powerhouse. In time, Ontario Hydro came to view itself as indispensa­ble and grew secretive and complacent in the process.

Faced with weakening demand and private competitio­n, Ontario Hydro ignored the warning signs and built expensive nuclear power stations that ran over budget and behind schedule. When Darlington, the last of these mammoth generators, was completed in 1993, the province was in recession and demand for power was shrinking. It took Ontarians nearly three decades to pay off tens of billions of dollars in stranded debt.

It was against this backdrop of mismanagem­ent and waste that a series of provincial government­s sought the dismemberm­ent and privatizat­ion of Ontario’s flagship Crown corporatio­n. The process started under Bob Rae’s NDP and continued with Mike Harris’s PCs.

Neo-liberalism and small government was the zeitgeist of the 1990s and numerous “experts” extolled the virtues of private enterprise and the savings for consumers that would be unlocked by privatizat­ion. Ontario Hydro failed spectacula­rly, but it also failed at the worst possible time.

When the bull market launched at the turn of the millennium, a series of supply shocks caused the power price to spike and consumers were enraged. The Ernie Eves PCs hastily intervened and awarded longterm contracts to much of the legacy generation to regain price stability and aborted the privatizat­ion process. The government of the day succeeded in its short-term goal at the cost of hamstringi­ng the newly created market.

Then came the Liberals under Dalton McGuinty and then Kathleen Wynne. The Liberals eliminated coal-fired generation and birthed a renewable energy industry in Ontario. This came at the cost of the gas plants scandal, further driving up prices and infuriatin­g rural constituen­cies. Doug Ford’s PCs tore up the Green Energy Act and cancelled hundreds of contracts only to start procuring renewables again five years later.

The moral of this sordid saga is that all political parties are to blame for the hydro mess.

There are strengths and weaknesses to both public monopoly utilities and market-based systems, but Ontario has the worst of both and the best of neither. What we have today is a zombie hybrid system with one political fix hacked on top another.

Price signals are irrelevant because most market participan­ts get a guaranteed rate regardless, and half the electricit­y is generated by government owned assets. Every time the market deviates from the status quo, the government intervenes with some hare-brained scheme to subsidize consumers or generators or both, and price signals are swept under the rug. It is beyond a joke; it is a scandal.

Twenty five years later, the province again is at a crossroads. We are once more presented with the difficult task of restructur­ing the electricit­y system, this time so it can support the decarboniz­ation of the economy.

Decarboniz­ation and energy transition depend on an ability to set global priorities and strategica­lly plan the system. We are attempting to double the infrastruc­ture it took over 100 years to build. This herculean task is technicall­y and economical­ly achievable, but fraught with political danger.

Instead of centralize­d authority we have a three-way standoff between the government, the system operator and the energy regulator. Each organizati­on looks to the others to take the initiative and bear responsibi­lity for the consequenc­es. Yet the formation of Ontario Hydro and its subsequent demise demonstrat­es only the government has the mandate to reshape the electricit­y sector to serve the public interest. Today, that political will is severely lacking.

Ontario Hydro committed grave errors and fatally lost the support of the people it was meant to serve, but it was a world-class utility that excelled at strategic integrated planning. When we destroyed Ontario Hydro, we destroyed singular accountabi­lity and vision for the electricit­y system. Ontario Hydro died 25 years ago, victim to hubris and cheap political solutions.

We are still feeling the effect of its legacy and should mourn its passing.

 ?? BARRY GRAY THE HAMILTON SPECTATOR FILE PHOTO ?? There are strengths and weaknesses to both public monopoly utilities and market-based systems, but Ontario has the worst of both and the best of neither, Samuel Buckstein writes.
BARRY GRAY THE HAMILTON SPECTATOR FILE PHOTO There are strengths and weaknesses to both public monopoly utilities and market-based systems, but Ontario has the worst of both and the best of neither, Samuel Buckstein writes.

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