Ontario: Deregulation of Hydro One

The Ontario Tories marched into office on a wave of popularity after the victory of the "Common Sense Revolution". Today, it is evident that their common sense was rather short sighted. Their solution to Ontario's problems was privatization and cuts in social spending. They've gone after our education, our water, our health care system, and a lot more. Now, they’re going after our power. The common sense of the PC is in line with that of those who deregulated Alberta and California's power. It didn't take that long for the people of these places to realize the true value of this kind of "common sense".

A lot more arises out of this issue than what we see on the surface. As we have seen, privatization can lead to increased costs for power, not because it is suddenly more expensive to produce when deregulated, but because there is the need to make a greater profit off the backs of the working class. There would also be nothing in place to stop discrimination against rural customers. Those who live in rural areas would end up paying more because it’s further out of the way and cuts into profit. The same thing has happened in Alberta. Their government deregulated power while maintaining that the consumers would experience nothing but benefits in the form of cheaper electricity. The reality of the situation is that the “consumer” experienced nothing but a drain in their bank accounts. “Taking into account the increase in natural gas prices, the average cost of generating electricity shouldn’t have gone over 6.38 cents per kWh in December 2000, yet the average price was 18.99 cents - almost three times the estimated cost,” as reported by Rick Wallace with the Parkland Institute at the University of Alberta.

Another problem with deregulation is the inevitable tendency of capital to centralize. Some power companies will go “belly up” while others will be bought out by bigger ones. This will result in less competition, which according to the capitalists is what is necessary to ensure a healthy market. The remaining capitalists will be able to exercise “market power” to the detriment of the consumer. This is part of what happened in California, it is when the capitalists are in a position to charge whatever price they wish for their commodity. Yes, we have “anti-trust” laws prohibiting a monopoly in the private sector, but how many headaches and how much money do Ontarians want to go through and waste settling disputes over how much property a power company owns?

When Hydro One is the only power company in Ontario, and it is publicly owned, the government will respond to pressures put on it by the people to make changes. If it does not, the party in power may risk losing the next election. Although the degree that a parliamentary government is accountable to the people is questionable, it is still much more accountable than a privately owned for-profit company. If deregulation of power succeeds, those who own one of our necessities of life would be completely unaccountable to those who require that necessity. The capitalists would argue that companies would conform to the pressure of the market or they would go out of business. It can take a lot of time, effort and resources to force a big company out of business (not to mention the chaos unleashed when a big power company collapses). This would be a waste when the same service could be provided and be accountable by the government.

So what is the solution to this problem? Genuine socialists should have no illusions that the present state of the nationalized industries is perfect. Currently they are bureaucratically run using capitalist principles. They are not run democratically in the interest of workers and the community at large. The only viable solution to this problem can be found on a socialist basis when workers control the means of production for the good of all. Then our power needs and environmental concerns can be met. An environmental and social plan for power production will be measured in generations, not fiscal quarters - sustainability is the only sensible strategy when planning for the common good. Electricity is a necessity for our way of life; let us not give it up only for it to be sold back to us for a higher price without a fight!