The Struggle Over Power in Ontario

By

Espoir Manirambona

Presented to Professor James Meadowcroft

In the course PADM 5615

Carleton University

December 14th, 2012

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Introduction

Electricity is a critical service that all Ontarians depend on. It is necessary to use our appliances, to light

our homes and office spaces, to light our businesses and to use our electronics. It is therefore

understandable that such an important good has been the subject of intense political battles for more

than a century in Ontario. Debates over electricity in Ontario have mainly centered around who should

produce and distribute it? How much should it cost? And more recently, how should it be produced?

This paper will explore such questions and analyse what are the various interests, political and

economic, at play with regards to electricity production in Ontario.

Through the examination of the arguments and empirical evidence, this paper will argue that a largely

publicly­owned and controlled electricity system in Ontario is more desirable than a market­based

electricity system due to issues regarding affordability and reliability. This paper will start with presenting

the current state of Ontario’s electricity system, the rise and fall of Ontario Hydro, the arguments for and

against privatization and public ownership and finally the link between clean energy production and

ownership. Let us begin by looking at the current electricity system in Ontario to get a good

understanding of where we are at.

Ontario’s current electricity system

Energy resources

The province of Ontario is blessed with an abundance of various sources of electricity. Ontario’s

electricity resources consist of both non­renewable and renewable sources. As a result of the Green

Energy Act, the province is moving away from non­renewable sources but is still dependent for the time

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being on natural gas (Center for Energy, 2012). The oil and gas industry is largely located in

southwestern Ontario between Lake Erie and Lake Huron (Center for Energy, 2012). Ontario has

traditionally been a large producer of natural gas; the large natural gas reserves in southwestern Ontario

were at the heart of Canadian natural gas production till the early 1900s (Center for Energy, 2012).

Since 2011, Ontario’s natural gas production has averaged about 21.7 million cubic feet per day, but

Ontario still imports most of the natural gas it consumes from Western Canada (Center for Energy,

2012). Natural gas currently meets about 14% of Ontario’s electricity demands (Center for Energy,

2012). In addition, coal has historically been a major source of Ontario’s electricity. In 2003, coal

represented close to 7,500 megawatts of capacity; more than 25% of Ontario’s electricity capacity

(Center for Energy, 2012). That year Premier McGuinty pledged to phase out coal entirely by 2007,

replacing it with renewables like nuclear, wind and solar (Purchase, 2006). McGuinty has been unable

to deliver this promise, but has shut down 11 of Ontario’s 19 power plants and reduced the province’s

dependence on coal by 90% (Ministry of Energy, 2012). Currently, Ontario relies on coal for close to

9% of its electricity needs (Center for Energy, 2012).

Due to the fact that burning fossil fuels is the leading source of GHG emissions and the main cause of

global warming, Ontarians have pressured the Government of Ontario to phase out fossil fuels and bring

more renewables into the system. In order to achieve this, the province has focused on producing more

hydro, nuclear, wind, geothermal and solar electricity. Thanks to many water pathways, Ontario already

generates a great deal of hydroelectricity. The province has a long history of producing hydropower; the

first hydro generating station in Ontario was completed in 1881. Ontario now has 200 hydro electricity

generating stations, producing approximately 8,000 megawatts; 20% of Ontario’s current electricity

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capacity (Center for Energy, 2012).

Ontario also produces wind power, but to a lesser extent than hydro and nuclear. As of June 2012,

Ontario had 41 wind farms with a total capacity of 1,636.4 megawatts; about 37% of Canada’s total

wind power generation (Center for Energy, 2012). However, wind power represents less than 3% of

the electricity consumed in Ontario. Due to the low production of wind and solar power, Ontario relies

heavily on nuclear power and is in fact a world leader in the production of nuclear energy (Center for

Energy, 2012). Ontario currently has 14 operating nuclear reactors capable of producing 11,382

megawatts of electricity (Center for Energy, 2012). The nuclear reactors are concentrated in three

facilities; Bruce Power, Darlington and Pickering. Ontario has a long history of producing nuclear power

and operated the first nuclear reactor in Canada: Pickering A. Currently, Ontario gets 46% of its energy

from nuclear sources. Let us now move on and examine the key players which make up Ontario’s

electricity regulatory regime.

Stakeholders

Whereas Ontario Hydro was owned and operated by the provincial government, the electricity system

is now owned and governed by both public and private entities. The Ontario Electricity Act of 1998

broke up Ontario Hydro into 5 separate entities; Ontario Power Generation, Hydro One, Independent

Electricity System Operator, Electricity Safety Authority and Ontario Electricity Financial Corporation

(Enersource, 2012). The Ontario Power Generation (OPG) is provincially owned and generates about

70% of Ontario’s electricity (Enersource, 2012). It operates the publicly­owned nuclear facilities,

hydroelectric stations and fossil fuel stations (Enersource, 2012). Private companies like Bruce Power

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provide the rest of Ontario’s electricity needs. More recently, thanks to the feed­in­tariff, a number of

small producers of renewable energy are able to sell their power to the OPG as well. Hydro One is also

provincially owned and operates most of the provinces transmission lines (Enersource, 2012). A

number of municipalities have their own electricity utilities (like Hydro Ottawa) that deliver the service to

residents, but Hydro One does deliver electricity to some rural areas that lack their own electricity utility

(Enersource, 2012).

The Independent Electricity System Operator (IESO) is a not­for­profit agency created by the

Government of Ontario to ensure that electricity prices are fair and competitive (Enersource, 2012). The

IESO connects electricity sellers to buyers and monitors rates and supplies to ensure that supply always

meets demand (Independent Electricity System Operator , 2012). Another big player is the Ontario

Energy Board; the board licenses all entities within the province’s electricity system and monitors

electricity rates (Enersource, 2012). The OEB is also responsible for approving the IESO’s budget, fee

schedule and hearing appeals to that organizations orders (Enersource, 2012). The OEB also reports

back to the Ministry of Energy on how the market is doing; efficiency, fairness, transparency and

competitiveness (Enersource, 2012).

The final major player in the electricity system is the Government of Ontario, specifically the Ministry of

Energy. The ministry is responsible for overseeing the entire electricity system and representing the

interests of Ontario citizens; the consumers (Enersource, 2012). Thus, the Ministry creates energy

policies like the Green Energy Act and ensures that the system is effective, fair, environmentally

sustainable, safe and reliable., The Ministry sets the policies and the OEB is responsible for

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implementing them (Enersource, 2012). The Ministry, through the OEB, also regulates the various

private electricity retailers such as Direct Energy and Bullfrog Power (Enersource, 2012). As we can

see, the current electricity system has various players, both private and public, that together govern the

system, although some entities like the Ministry clearly have more influence than others. The system is

essentially decentralized unlike other electricity systems; Manitoba Hydro for example is responsible for

generating, transmitting and distributing electricity across the province of Manitoba. Ontario too did

have a similar public utility company, Ontario Hydro, but for various reasons that entity was dismantled.

The following section will examine what was Ontario Hydro and what happened to it.

A brief history of Ontario Hydro

The Rise

Howard Hampton (2003) argues that the creation of Ontario Hydro, the world’s first long distance

electricity system, was the result of a tireless, grassroots movement that transcended class and social

differences. The movement, composed of Ontarians of many different backgrounds, was united by the

common goal of shifting the power over Ontario’s electricity system from private individuals to the

people as a whole (Hampton, 2003). By the late 19th century, it had become clear that electricity was

going to be key to the province’s economic development (Hampton, 2003). Electricity was high in

demand but the supply was not catching up (Hampton, 2003). This was due to the lack of private

investment that had been made on generation and distribution. Also, because there was little regulation

on pricing, electricity producers were able to charge high prices, especially due to electricity demand

being inelastic (Hampton, 2003).

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In 1905, Premier James Witney upon taking office made a speech in which he stated that electricity

should not be subject to market forces but should be a public asset managed by the people’s

representatives, the government (Hampton, 2003). Premier Witney appointed another strong advocate

for public power, Adam Beck, to a ministerial position without portfolio (Hampton, 2003). In 1902,

Beck had been Mayor of London before becoming the Conservative member from the London riding

(Hampton, 2003). He was in the business of horse trading and breeding and had become a wealthy

men. Beck had been a longtime critic of the privatized power system, arguing that “the gifts of nature are

for the public” (Hampton, 2003), and resenting how electricity producers were price gouging consumers

and businesses. Beck convinced the Premier to create an enquiry into the matter (Hampton, 2003). The

panel recommended that the government create a municipally owned power corporation to run the

hydroelectric system (Hampton, 2003). In 1906, the Witney government introduced and passed the

Power Commission Act to create the Hydro­Electric Power Commission (Hampton, 2003).

The HEPC was tasked with building a province wide transmission grid by acquiring various private

entities and incorporating all the municipally owned systems (Hampton, 2003). Adam Beck was

appointed as the first chairman and worked towards promoting publicly owned power across the

province (Hampton, 2003). Beck needed allies in municipal government and so partnered with

councillors like William Peyton Hubbard, Toronto councillor, the son of an African­American slave and

strong advocate for public ownership of electricity (Hampton, 2003). In 1910, the HEPC began

providing power to all of southwestern Ontario and by the 1950s, the electricity system i in the province

was fully integrated (Hampton, 2003).

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After WWII, demand for electricity began to rise sharply and the HEPC needed to greatly expand its

generating capacity to keep up with demand (Hampton, 2003). The HEPC started connecting with

other electricity utilities in Detroit and in New York State (Hampton, 2003). Around this period, the

HEPC also started using coal fired stations to generate extra electricity and continued to expand coal

production throughout the post­war period (Hampton, 2003). Starting in the 1960s, the HEPC started

building nuclear power stations and by the 80s had the largest fleet of nuclear stations in the world. In

1974, the Tory government of Bill Davies passed the Power Corporation Act which reorganized the

HEPC into Ontario Hydro (Hampton, 2003).

The newly created crown corporation was mandated with providing electricity to Ontarians at cost and

ensuring a secure supply of electricity in the short and long run. In order to do this, Ontario Hydro

invested heavily in several nuclear reactors, a move which would prove to be disastrous for the

organization. The construction of the Darlington Nuclear Generating Station was particularly problematic

for Ontario Hydro (Hampton, 2003). The project had an initial price tag of 3 billion dollars but quickly

turned into 14.4 billion dollars as a result of new safety mechanisms, incurred debt and high interest

rates. Expected demand had also not materialised and Ontario Hydro did not collect the revenues it had

expected to collect over this period (Hampton, 2003). Thus, the increasing debt and negative press with

regards to these issues bolstered the claim by later conservatives that Ontario Hydro needed to be

privatized and subjected to market forces.

The Fall

In 1995, Ontarians elected the Tory government of Mike Harris in what has been called the “Common

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Sense Revolution”. The Harris Tories were notable for being much more conservative than their

predecessors; they wanted to privatize as many government services and assets as possible and reduce

taxes to a minimum. From the beginning, the Tory government had signaled its intent on eventually

dismantling Ontario Hydro. In 1997, the Harris government issued a policy document: White Paper –

Directions for Change: Charting a Course for Competitive Electricity in Ontario (Canadian Union

of Public Employees, 2003) . The document states various reasons for restructuring Ontario Hydro,

reasons which will be discussed shortly. The document also signaled the government's’ intention to

dismantle Ontario Hydro, but did not mention privatization(Canadian Union of Public Employees,

2003).

In 1998, the Harris government passed the Energy Competition Act which effectively broke up

Ontario Hydro into the five independent entities mentioned above (Canadian Union of Public

Employees, 2003). In 2002, the government opened up electricity rates to market forces with

disastrous results, this will be examined later in the paper. The Harris government also had plans to

eventually privatize both Hydro One and the Ontario Power Generation, but the government was

successfully challenged in court by CUPE (Canadian Union of Public Employees, 2003). The Ontario

Court held that the Harris government did not have the statutory authority to sell off Hydro One and

needed to either introduce a new law or win a mandate for it during an election or referendum

(Canadian Union of Public Employees, 2003). The Harris government also had directed municipalities

to sell off their publicly owned distribution utilities, turning these into for profit entities. The Tories were

eventually replaced by the McGuinty Liberals and these privatizations plans were shelved (Kahnert,

2010). Upon coming to office, Premier McGuinty stated that he was not interested in privatizing Hydro

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One and Ontario Power Generation (Kahnert, 2010). He said “Deregulation and privatization hasn’t

worked and we can’t go back there. I’ve drawn a lesson from that. Number one, we’ve got to keep

Hydro Public. (Kahnert, 2010)” But some observers argue that the McGuinty government does have

privatization plans; on December 15, 2009 McGuinty announced plans to sell of OPG and Hydro One

(Kahnert, 2010). Thus, it remains to be seen what will happen to the rest of the government's interests in

the electricity system.

Reasons for restructuring

There were a number of reasons provided for why it was important to dismantle Ontario Hydro. The

Harris government’s White Paper provides some important insight into their reasoning for doing so. The

document was a result of an intensive study by the government to develop a strategy to meet a number

of energy policy objectives: affordability, reliability of supply and competitiveness (Ministry of Energy,

Science and Technology, 1997). The document states the government’s firm belief that restructuring

Ontario’s electricity system will meet these objectives (Ministry of Energy, Science and Technology,

1997). In addition, the government claims restructuring the system will create good jobs for Ontarians,

provide the lowest possible costs, ensure a safe and environmentally sustainable supply and restore the

financial competitiveness of the electricity system (Ministry of Energy, Science and Technology, 1997).

The main argument provided by the Harris government to restructure the system was to encourage

competition. According to the document, competition will lead to lower costs because customers will be

able to shop around for the best price, incentivizing companies to cut costs and prices in order to attract

more customers (Ministry of Energy, Science and Technology, 1997). The Harris government argued

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that Ontario Hydro, being a monopoly, had no incentive to keep costs low and therefore would not

generate the lowest possible prices (Ministry of Energy, Science and Technology, 1997). By giving

customers more choice, all private and public entities within the electricity system will be forced to

innovate and seek ways to reduce costs (Ministry of Energy, Science and Technology, 1997).

The Harris government, in its White Paper, also argues that restructuring the electricity system would

lead to more private investment and more jobs in Ontario (Ministry of Energy, Science and Technology,

1997). By introducing competition into the system and lower electricity prices, more businesses will

want to locate to Ontario and take advantage of the lower electricity rates (Ministry of Energy, Science

and Technology, 1997). In addition, the document claims that competitive firms invest more prudently

than monopoly firms (Ministry of Energy, Science and Technology, 1997). They make smarter

investments and are better able to manage risk (Ministry of Energy, Science and Technology, 1997).

With the threat of competition, they're also constantly looking for ways to innovate and drive down

costs (Ministry of Energy, Science and Technology, 1997).

Finally, the government argued that Ontario Hydro’s large debt was another reason to restructure the

organization (Ministry of Energy, Science and Technology, 1997). They argued that Ontario Hydro had

been poorly managed and that a competitive firm would not have made the choices which lead to the

accumulation of such debt (Ministry of Energy, Science and Technology, 1997). Nowhere in the White

Paper was privatization mentioned, but many pundits at the time suspected that the Harris government

did have plans to privatize all of the government's interests at a later date. This suspicion was confirmed

when Premier Eves, Harris’s successor, announced that the government would sell off Hydro One. In

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the following section we will take a closer look at the various arguments that have been provided for

why the electricity system should be fully privatized and why it should remain under public ownership.

Public ownership vs. Privatization

Privatization

This past October, the Ontario Progressive Conservatives released another white paper called Paths to

Prosperity to outline the party’s current position on electricity (Progressive Conservative Party of

Ontario, 2012). This document echoes many of the same arguments brought forward in 1997 but also

adapts them to current realities and goes further in arguing for privatization. The Ontario PCs argue in

this paper that the government needs to essentially get out of the power industry in order to pay off its

debt (Progressive Conservative Party of Ontario, 2012). They argue that affordable energy is key to the

province’s long term prosperity and that the only way to reduce prices is to open up the system to

market forces (Progressive Conservative Party of Ontario, 2012).

The Ontario PCs believe the government should return to its limited role and simply provide regulation

and long­term planning (Progressive Conservative Party of Ontario, 2012). They criticise the McGuinty

government’s Green Energy Act claiming that it has lead to higher electricity prices and surplus

reserves of electricity (Progressive Conservative Party of Ontario, 2012). The Ontario PCs are calling

for new legislation which would fundamentally alter the system to make it more competitive in order to

keep rates as low as possible (Progressive Conservative Party of Ontario, 2012). They believe the

government should not be a major player in the electricity sector and that “private capital should replace

public borrowing” (Progressive Conservative Party of Ontario, 2012). Their arguing for the partial or

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total sale of both Hydro One and Ontario Power Generation to either pension funds or to other

investors (Progressive Conservative Party of Ontario, 2012). The Ontario PCs are also calling for

municipally owned distribution utilities to be consolidated by a few private monopolistic firms, as is the

case in the natural gas sector (Progressive Conservative Party of Ontario, 2012). Thus, it is clear that

the Ontario PCs are in favour of fully privatizing the province’s electricity sector. Considering the current

Liberals have a minority, the PCs could seek to get such legislation through in the near future.

There are other arguments provided in support of privatization, of electricity and in general. Indeed

during the past three decades, Canada has witnessed a sharp increase in the privatization of government

assets (Boardman & Vining, 2012). Following the privatization frenzy of the Thatcher government in the

United Kingdom, Canada has followed the lead in privatizing many federal and provincial assets

(Boardman & Vining, 2012). Between the mid 80s and the mid 90s, Canada experienced the most

privatizations in its history (Boardman & Vining, 2012). These included the Canadian National Railway,

Air Canada, Teleglobe Canada, Petro­Canada and in Ontario four hydroelectric stations were also

privatized (Boardman & Vining, 2012). Proponents of privatization argue that due to rising government

debt, there is no other alternative but to sell off government assets (Boardman & Vining, 2012). They

also argue that privatization leads to better economic outcomes because increased competition and

marketization leads to decreased costs and increased profits (Boardman & Vining, 2012). The profits

can then be taxed through corporate taxes and then the revenues can be used to increase social welfare

through funding programs like health care and education (Boardman & Vining, 2012). Thus, they argue

that in the long run privatization benefits consumers, the government and taxpayers (Boardman &

Vining, 2012).

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Privatization proponents also argue that government run monopolies are less efficiently run than private

firms (Boardman & Vining, 2012). They believe government monopolies use inputs inefficiently and that

the absence of competition leads to less innovation and cost­cutting (Boardman & Vining, 2012). Free

markets on the other hand lead to more efficient production because competition forces each firm to cut

costs in order to reduce prices and attract customers (Boardman & Vining, 2012). Competition also

offers more choices to consumers whereas government monopolies restrict the consumer’s choices

(Boardman & Vining, 2012). Thus, they argue that privatization, in the area of electricity, would have

the same results; more competition, more choices, more innovation and lower prices. This is essentially

the core reasons provided in the mainstream for why privatization is good and benefits everyone.

There are of course other reasons, less openly talked about, for why some Ontarians would like to see

the electricity system privatized. According to Paul Kahnert (2010), spokesperson for the Ontario

Electricity Coalition, privatized power usually ends up benefiting less than 1% of the population; the

shareholders. Kahnert argues that the pressure to privatize electricity in Ontario is coming from investors

on Bay Street. Kahnert argues that since the recent financial crisis, investors have been looking to move

their money into safe investments. As a result, they have turned their attentions to public services;

services which the public depend on and will likely continue to demand for the foreseeable future

(Kahnert, 2010).

Indeed, there is a lot of money to be made, and private investors have historically made a fortune from

government asset sales in the past. Hydro One and Ontario Power Generation would be worth billions

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of dollars and as demand for electricity and price rates keep increasing, revenues will likely continue to

increase considerably (Kahnert, 2010). Therefore, Kahnert argues, private investors are doing

everything they can, like influencing public opinion, to encourage the sale of what is left of Ontario

Hydro and local electricity utilities. Proponents of privatization may counterargue that private investors

can also be pension funds and that ultimately privatization will benefit the province as a whole through

lower electricity prices and increased government revenues through taxation. As we shall see in the next

paragraphs, these claims have not materialized in jurisdictions where electricity is privatized,

strengthening the case for public power.

Public ownership

There are a number of arguments provided for why electricity should be publicly owned in Ontario and

elsewhere. These arguments generally revolve around the need for reliable and affordable power. There

is also a concern for democratic control, accountability and to what purposes should surplus revenues

from the system be used (Canadian Union of Public Employees, 2003). The question of pricing has

probably been the main one brought up by proponents of public power (Canadian Union of Public

Employees, 2003). Adam Beck and his allies had argued that private power was undesirable because

capitalists are naturally looking to maximize profit and so would be incentivized to keep rates as high as

possible (Hampton, 2003). Because electricity production, transmission and distribution is capital

intensive, few firms are able to enter and exit the market freely (Hampton, 2003). Electricity production

and distribution is usually believed to be a natural monopoly; meaning it makes sense to only have a few

firms running it.

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Ontario witnessed this price shift first hand in May of 2002 when the Tories deregulated electricity

prices (Canadian Union of Public Employees, 2003). In June the average price was 2.6 cents per kW

and in a few months hovered around 8.2 cents per kWh (Canadian Union of Public Employees, 2003).

There was a public uproar and the Eves government was forced to backtrack and put a cap on prices,

above which the government would provide a rebate for (Canadian Union of Public Employees, 2003).

Many groups like CUPE criticized this move because they felt that Ontarians were the ones who would

have to pay for the rebates (Canadian Union of Public Employees, 2003). Other jurisdictions have also

experienced this price shock as a result of deregulating electricity rates. Alberta experienced a very

similar scenario in 2000 when Ralph Klein’s PC government also deregulated rates Prices jumped from

5 cents per kWh to 25 cents per kWh in less then 5 months, causing that the government to also freeze

rates in an effort to calm public outrage (Canadian Union of Public Employees, 2003). Because publicly

owned utilities are not­for­profit, they can charge customers at cost and can be mandated by the

government to cut costs in order to keep lower prices (Canadian Union of Public Employees, 2003).

Alberta’s public electricity utility for example had one of the lowest electricity rates in North America

before the Klein government deregulated prices and subjected them to market forces.

Advocates of public power also point to the unreliability of privately owned electricity systems. It is

often argued that private firms in the electricity market, especially when they hold a monopoly, have little

incentive to keep power running at capacity (Canadian Union of Public Employees, 2003). When

shortages occur, they can charge extra and reap even more profits. This use to occur frequently before

electricity was brought under public ownership in the early 20th century. In 2000, California had a

deregulated privatized electricity system and experienced a significant shortage of electricity for more

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than a year (Canadian Union of Public Employees, 2003). Three energy giants, including the notorious

Enron, created a supply gap which kept rates artificially high. The result was massive state wide

blackouts, the largest the state has ever experienced (Canadian Union of Public Employees, 2003). The

experience, now known as the Western US energy crisis, caused the California state more than 40

billion dollars (Canadian Union of Public Employees, 2003). Enron would go on to file for bankruptcy

following a series of accounting fraud allegations which caused its shareholders billions of dollars.

Reliability has also been an issue in Ontario and New York State. In August 2003, both regions

experienced a significant blackout; over 50 million residents were left without power, some for days.

FirstEnergy Corp, a large utility company based in Ohio, has been blamed for causing the blackouts.

Some like Democratic Congressman Dennis Kucinich have argued that FirstEnergy neglected its

responsibilities by laying off workers tasked with taking care of the companies transmission lines

(Canadian Union of Public Employees, 2003). The US­Canada Power System Outage Task Force

released a report in 2004 that confirmed these allegations, stating that FirstEnergy Corp had "failed to

assess and understand the inadequacies of FE’s system, particularly with respect to voltage instability

and the vulnerability of the Cleveland­Akron area, and FE did not operate its system with appropriate

voltage criteria" (US­Canada Power System Outage Task Force, 2006).

Proponents of public power therefore argue that market­based deregulated electricity systems have the

potential of being unreliable due to conflicting economic incentives. In the California scenario, electricity

firms used their monopolistic market shares to create a gap in supply and did better, profit wise, when

the state experienced shortages. Public utilities on the other hand are legislated to maintain adequate

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supply and to ensure the secure and reliable delivery of electricity services to residents. Public firms are

also usually under strict safety rules, meaning they cannot lay off essential workers simply to cut costs.

The case for public power rests on the above core concerns; reliability and affordability. Proponents of

public power argue that private firms have historically not been able to meet these two objectives,

despite what privatization advocates might claim. The next and final paragraphs will briefly comment on

recent efforts by the McGuinty government to bring in more clean energy into the system and how this

relates to the concern over ownership.

Green energy and public power

In 2009, the McGuinty government passed the Green Energy Act to expand clean energy production

in Ontario, encourage energy conservation and incentivize the emerging green economy (Ministry of

Energy, 2012). The act has been praised by environmentalists like David Suzuki as one of the most

environmentally progressive piece of legislation in North American history (Ministry of Energy, 2012).

The act is notable for introducing a feed­in­tariff program in Ontario, designed to subsidize the

production of renewables in the province (Ministry of Energy, 2012). The act also requires beneficiaries

of the special rates to create manufacturing jobs within the province (Ministry of Energy, 2012). Thus,

the act has lead to increased production of renewables in Ontario and has contributed to local

economies (Ministry of Energy, 2012).

There has been some criticism of the McGuinty government’s clean energy strategy. Commentators on

the left argue that the GEA has benefited mainly large green energy producers and has not adequately

subsidized community based cooperatives and small energy producers (New Democratic Party of

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Ontario, 2011). Conservatives on the other hand argue that the GEA has been too generous in

subsidizing green energy production (Progressive Conservative Party of Ontario, 2012). They argue the

Liberal government is picking winners and losers and interfering in market forces (Progressive

Conservative Party of Ontario, 2012).

Although the GEA represents a step forward for mitigating climate change and developing clean energy,

we will need to ensure that green energy production and distribution remains largely under public

ownership and democratic control. As we have observed above, monopolistic energy firms can and

often due use their market power to gouge consumers and maximize profits. Small producers and

energy cooperatives on the other hand are often too small to impact prices in a meaningful way.

Therefore, in the interests of maintaining a reliable and affordable electricity system, it may be necessary

in the present and future to encourage the development of community based energy cooperatives and

publicly owned large green energy production in order to balance the need for public power and the

aspiration of many Ontarians, rich and poor, to get involved in energy production.

Conclusion

I have attempted to demonstrate, through comparing arguments and empirical evidence, that public

power is more desirable for the public interest then a privatized electricity system. Private power claims

to be more competitive, reliable and less costly, but empirical evidence proves the contrary.

Jurisdictions like Ontario, Alberta and California have experienced sharp increases in prices and

shortages of supply as a result of attempts to deregulate and privatize their respective electricity system.

In the case of Ontario, it will be up to Ontarians to decide what to do with our electricity system. There

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is indeed a struggle over power occurring in Ontario; both sides are gearing up for what will be a

historic dialogue on the merits of privatization vis a vis public ownership. According to Kahnert (2010),

the result will greatly influence the fate of other public services like education, water and health care.

Ontarians should inform themselves of what is at stake and, in my opinion, choose to say yes to public

power for the public good.

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