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The Provincial
Government was asked to name one jurisdiction in North America where electricity
deregulation had resulted in lower prices and a more stable supply.
They couldn't answer.
Below are 11
questions and some of the answers favoring a real, publicly owned electricity
system.
Questions
& Answers About Electricity Deregulation
Frequently
Asked Questions
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Why
were electrical utilities made public in the first place?
In the first thirty years of electricity, utilities were privately owned.
Prices were sky high, infrastructure was not built, service was terrible
and one in two linemen were killed on the job. When it wasn’t profitable
to sell power, they simply shut it off. When utilities were made public,
virtually everyone ended up with reasonably priced, reliable power and
a high level of service and safety. Everyone profited including big business.
Proponents of privatization
say were not going back to the ` 70’s and `80’s of the monolithic
monster of Ont. Hydro. What they really want to do is to take us back
100 years when profits were staggering with no public accountability and
responsibility.
We as a society seem
to be suffering from some kind of group amnesia and have forgotten how
we got all our public services including Hydro. All the same arguments
using all the same language is being used again to promote privatization.
Even in those days statements were made saying that the private sector
could do things more efficiently than the public sector.
It’s important
to note that Adam Beck, the main player in making electricity go under
public ownership and control, was a Tory and an industrialist.
[top]
How were publicly owned electrical utilities taken out
of the public’s hands?
One of the Provincial Governments first Bills was Bill 26 the Omnibus
Bill. Hidden away in that massive piece of legislation was the elimination
of the regulation requiring that any time public assets such as utilities
were to be sold, that a vote, a public referendum must be held. Two Star
polls recently showed that 91% and 94% of the people completely reject
competition and privatization. These polls were unscientific. How about
a real public vote?
With the elimination
of public, democratic power, it is now much easier to transfer public
wealth and assets to the private few. That regulation was put there long
ago to protect us from the profiteers. With the stroke of a pen, it very
quietly disappeared. This elimination of public input and democracy is
evident in every provincial government's Bill since 1995.
[top]
Where are the demands for electricity competition coming
from? Who will profit the most?
There are no residential or small business ratepayer’s demonstrations
at Queens Park demanding electricity competition. There are no petitions
or phone campaigns from the vast majority of electricity customers. The
demand is coming from big business and big corporations.
[top]
If electrical utilities are such losers in business,
why are investors lining up to buy them?
Everyone won with public power, even big business. Now some of these large
corporations aren’t happy. They want more! The winners, under privatization
will be private generators, banks and investment houses, lawyers and consultants
who will make huge commissions on deals worth billions.
The six corporations
who bought power plants in California saw their profit go from 37% to
221%. The losers will be residential and small business ratepayers and
hydro workers. Earlier this year, a California judge ordered utilities
not to lay off any more workers because they were necessary to keep the
power on. Under public power, profits stayed in the community. Under private
power, profits will go out of the country into the hands of huge transnational
corporations. Why not keep those profits here to pay for things like education
and healthcare?
It is interesting
to note that some of the big losers are friends of the provincial Government.
Owners of companies that are electricity intensive such as mining, pulp
and paper, steel and aluminum, car manufacturing and manufacturers of
every kind will be very hard hit if the market opens. Many Businesses’
will close because of higher prices and price volatility or they will
move to a jurisdiction that has stable, reliable power.
[top]
How will “for profit” electricity be cheaper
than “at cost, non-profit”, electricity?
It is fundamentally impossible. A Company that is in business to make
profit will do what it takes to maximize that profit. That means that
prices will rise sharply, service and jobs will be slashed and safety
and the environment will have a low priority.
For more than 90 years
that we had “at cost, non-profit” public power, profit was returned
to the shareholder in the form of lower and stable rates, a high level
of service and a high level of reliability. Prices did not go up during
the coldest winter nights or the hottest summer days. (Unlike California
or Alberta) How would a “for profit” electrical utility deal
with an ice storm?
Even with the problems
at Ont. Hydro prices were 30% lower than any neighboring U.S. state. Wasn’t
that competitive for our business’ here?
The main reasons why
Ontario became the economic powerhouse of Canada is because of our reliable,
stable, low priced electricity, our well funded public education and public
health systems and all our public services. Now these systems are being
cannibalized to increase quarterly profits for the few.
[top]
Is The Privatization of our Electrical system good
for the Environment?
This question is really the number 1 question. We all remember last summer
with its record number of smog alert days. We can’t ignore the environment
anymore. And the answer is absolutely not. When profit becomes the main
goal, environmental concerns will go up in smoke. Producers of electricity
will not be interested in reducing consumption. They will do everything
they can to increase demand so they can increase profits.
Proponents of private
power are hiding behind green power with the worst kind of tokenism with
wind mills and solar houses. Environmentalists were originally happy with
deregulation because they fought for so long and so hard against Ont.
Hydro. Now they are starting to see that privatization is going to be
much worse.
Our Coalition is not
saying to go back to the Ont. Hydro model and we don’t want to go
back 100 years to private power. We want to go ahead with a new publicly
owned electrical system. One that will concentrate on conservation, harm
reduction and harm elimination in electricity production. That certainly
won’t happen under private power.
[top]
Has Competition protected consumers against huge price
increases in rent, natural gas, gasoline, cable tv, car insurance etc?
Bill 35 was introduced with the promise of “lower electricity rates”.
Now the Provincial Government is
admitting that prices will rise but they will manage it. The question
at the Bill 35 hearings was “when you add in profit, new taxes, stranded
debt payments and commissions to commodities brokers, how will power be
cheaper? The standard answer was “increased efficiencies”. No
specific details were forthcoming.
In the last 10 years,
competition in the U.S. electricity market has not resulted in the building
of generation and transmission infrastructure and supply is very tight.
Electricity cannot be stored or stockpiled so supply has to be immediately
available.
The privateers have
heavily criticized the public monopoly. But what happens in competition
is, you end up with a private monopoly with profits going to the few.
In a public system, profits were returned to everyone in the form of low
and stable rates. The 306 municipal utilities were mostly debt free, that
number is now down to about 92 because of amalgamations and is projected
to be 15.
[top]
Are we going to end up like Alberta and California?
We will be exactly like them; it’s a “for profit” system!
Will producers of electricity stop producing until the market price rises?
Will service, maintenance and new construction be cut? Will jobs and wages
be slashed? Will the environment be improved and protected? The Provincial
Government is claiming that we are not like California because our supply
of electricity is much greater than theirs. Ontario Power Generation,
under the regulations must sell 65% of its generating capacity in the
next ten years. OPG claims they can do it in 5 years. What are the supply
implications under NAFTA? Once generators of electricity sign contracts
with the energy hungry U.S., what will happen to supply here in Ontario?
What will happen to the price? Alberta used to have one of the very lowest
prices in North America, now they have the second highest next to Hawaii
and is now more than triple ours. Electricity is like water. Once the
market is open, electricity will be subject to the rules of NAFTA and
our sovereignty and control over our own electricity will be gone forever.
The provincial Government refuses to answer questions about the implications
of NAFTA and the consequences under chapter 11. ( If we wanted to buy
back our generating plants under NAFTA we would have to pay for all future
profits.)
Supply problems caused
by NAFTA will greatly increase our chances of blackouts, just like California.
Prices in New York rose this year by 43% for residential users and 46%
for commercial users. What will the business friends of the Gov’t
say, if that happens to them?
People in Ont. will
be forced to bid against electricity prices in neighboring US states,
which are 2 to 3 times higher. What will happen to prices and supply here?
[top]
What about Ontario Hydro’s debt?
We can’t afford public power any more is the claim.
Ontario Hydro’s debt is like a mortgage on your house, once it’s
paid you have an asset that serves you well. The debt was going to be
to be paid off in 12 to 15 years. Wouldn’t most people like to have
a 15-year mortgage?
The situation were
in, is like buying a house, building up some equity over time, being forced
to sell your home far below market value, being forced to rent an apartment
and still having to pay the mortgage on your house. Does it make any sense
to be paying the debt on assets we no longer own? Normally when businesses
are sold the debt and liabilities go to the new owners. Why is Ontario
Hydro’s debt not going to the corporations who will make billions?
The debt is going
to land squarely on the shoulders of small business and residential ratepayers
in the form of new hydro taxes for the stranded debt. These new taxes
will likely not end even when the debt is paid off. Big business will
not be paying their fair share of the debt. Maybe what Ontario Hydro needed
was better managers instead of breaking it up and selling it off.
If you can’t
afford public power, you certainly can’t afford private power; it’s
way more expensive!
[top]
What about “risks” to ratepayers in building
new electricity infrastructure?
Proponents of private power are saying that investors will take all the
risks in building new generating plants. The exact opposite is happening
right now. Nuclear power plants are being leased to the private sector
and when their lease is up, the public is on the hook for the decommissioning
costs. The private sector corporations are also legally liable for only
$ 75 million in the case of an accident. The joke is that that amount
wouldn’t even cover the lawyer’s fees!
They are in effect
privatizing profits and making public the risks and the debt! Investors
like to invest in sure things. Electricity is a necessity; you can’t
live without it. Therefore there is no risk in building electrical infrastructure,
everybody needs power to survive and everyone is going to buy it. Investors
have a captive market. Why not cover the costs on a non profit basis.
There really needs
to be a public inquiry into this dirty deal!
[top]
What about Inflation?
If the market opens the price for electricity will rise sharply, In turn
raising the price for every good and service that is produced. What will
happen to people on fixed incomes? What will happen to cash strapped hospitals,
schools and universities? Tenants and renters? The list goes on and on.
Working people will see another decline in their standard of living.
What will downloaded
municipalities do with their utilities once the market opens? Many will
sell them as quickly as they can.
In conclusion Bill
35 was supposed to “lower electricity prices” and “create
jobs”. It is doing the exact opposite. Never mind all the double
speak about “increased efficiencies” and “choice”.
This is about greed. It is the transfer of public wealth and power to
the private few. It makes public the risks and the debt, while privatizing
the profits.
People don’t
want the delivery of “vision and imagination” that is currently
being promised by Hydro One, they want reliable, stable, clean, low priced
electricity. Can we afford the big risk to the already shaky economy that
electricity deregulation and privatization would bring?
The purpose of the
Ontario Electricity coalition is to establish an effective opposition
to the deregulation and privatization of electricity in the province of
Ontario and our three main goals are:
- To stop the opening
of the electricity market and privatization of our electrical systems.
- To gain real public
ownership and control of these systems.
- To ensure that
the generation of electricity be focused on harm reduction and elimination
to the environment through conservation and the use and development
of green power.
Ontario
Electricity Coalition
890 Yonge St. Suite 502
Toronto, ON M4W 3P4
Telephone:
Toll-Free: 1-866-391-2733
Fax: (416) 968-6836
Email: oec@electricitycoalition.org
© 2001 www.electricitycoalition.org
(editor's note: One change
was made to the above document... changed number of questions from 10
questions to 11.)
Urgent Message from
EOC
An
urgent message from the Ontario Electricity Coalition
It’s
not too late to stop electricity deregulation!
Dear friend of public power,
The Provincial Government
is planning to deregulate Ontario's electricity in May 2002. If we act
quickly and effectively we can stop deregulation. It’s not too late
to stop deregulation:
- the Provincial
Government has already postponed de-regulation twice and is in no way
obligated to proceed with it
- deregulation disasters
in Cali-fornia and Alberta have shaken he credibility of de-regulation
advocates
- the vast majority
of individual and corporate supporters of the Progressive Conservative
Party would be adversely af-fected by deregulation - many can be won
to speak out against it
- there is growing
concern about economic instability - electricity deregulation would
seriously harm an already shaky economy
At last there is an
organized op-position to deregulation of electricity in Ontario - the
Ontario Electricity Coalition If you are concerned about the impact of
soaring electricity rates, about the environment, about privatization,
about Canadian sovereignty - join the On-tario Electricity Coalition!
Campaign goal:
To successfully pressure the Provincial Government to aban- don its plans
to deregulate and privatize electricity in Ontario.
What’s at
stake
Campaign strategy
Our Primary Targets are members of the Provincial Government. They have
the power to give us what we want: a halt to privatization and deregulation
of electricity. When planning the campaign, Coalition members asked themselves
who the Provincial Government would listen to on this issue. We have concluded
that pressure from traditional Government supporters is most likely to
persuade it to change course. Therefore, the campaign is focusing on reaching
Secondary Targets - people who have influence with the Provincial Government:
industrialists, business people, senior civil servants and politicians
at all levels.
We must convince them that:
1. deregulation threatens their interests, and
2. they should take action to stop it.
Of course we want people throughout our communities of natural supporters
to speak out against deregulation. But our main organizing challenge is
to persuade our allies to approach the Secondary Targets who have influence
with the Government. Campaign materials are ready for you to use.
The Ontario Electricity
Coalition has prepared a step-by-step Campaign Organizer’s Guide.
- Campaign materials
are ready for you to distribute.
- Organizing materials
such as draft media releases and campaign letters have been prepared
to help you build the campaign. A Lobby Guide and lobby materials have
been prepared to assist you in approaching influential Secondary Targets
in your com-munity.
Please endorse the
campaign.
Please fax or email statements of support from individuals and from organizations.
Please make a contribution to the campaign fund.
Please contact a campaign or-ganizer by phone or email to dis-cuss how
you can help visit our website:
www.electricitycoalition.org
Help turn the tide, together we can save public power.
Thank you,
Ontario Electricity Coalition
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