March 2006: McGuinty's Shocking Deregulation

Ontarians being denied right to decide electricity policy
March 1, 2006

The Ontario government is giving away the right of the province’s citizens to make decisions on electricity, the environment, and major social policy. Premier Dalton McGuinty, without a mandate or popular support, is making Ontario part of the U.S. electricity market. If the government doesn’t change direction soon, Ontario will become a have-not electrical energy province, with big U.S. energy corporations in the driver’s seat. Fighting with Americans over softwood lumber and beef is tough enough. Just imagine having to struggle against them to keep the lights on.

With all the province’s major newspapers editorially supporting the McGuinty Liberal government’s decision to continue with the former Tory government’s policy of deregulating Ontario’s electricity system, there has been little or no debate on this issue. This is unfortunate, considering that nearly all polls have shown that the overwhelming majority of Ontarians oppose deregulating electricity—an essential source of power they all need. And this despite the fact that McGuinty during the last provincial election proclaimed that “the electricity market is dead,” leading us to believe he was opposed to deregulation.

With the media busy debating conservation, coal-fired generation, and nuclear power, Premier McGuinty is busily moving Ontario’s electricity system firmly under the control of Canada’s free trade agreements (NAFTA and the WTO). These agreements will preclude all future public debate and erase the Canada-U.S. electricity border, replacing it with a market of electricity producers and sellers.

The free trade agreements allow us to maintain control over our electricity system, but only so long as we don’t deregulate it. In that event, Ontario law can be overruled by NAFTA. This would mean a loss of control over exports, prices, and the environment, as well as the end of subsidies such as electricity produced using government land, water, or low government borrowing rates. Such a loss would mean that future decisions about Ontario’s electric power system would no longer be made by Ontarians.

As McGuinty signs more and more electricity contracts with foreign energy companies, such as the now bankrupt Calpine (U.S.) and Mitsui (Japanese), we will soon be at their mercy. When there is a dispute, these corporations will submit it for an arbitrary ruling by a secret trade tribunal whose members have no interest or concern about protecting the lives and livelihood of the people of Ontario. Their only interest will be to ensure that the terms of NAFTA or the WTO are enforced—and these terms were written mainly to benefit the corporations.

In addition, the big energy firms have a great deal of influence with U.S. politicians and bureaucrats, many of whom were previously associated with these corporations as executives or consultants.

The free trade agreements will prevent us from reducing exports of electricity to the U.S. to prevent shortages in Canada—just as they now force us to keep shipping most of Canada’s oil and natural gas to the U.S. even as we drain Canadian reserves and our prices soar. The only way to maintain adequate electric power in Ontario will be to outbid Americans for our own Ontario-produced electricity. Eventually and inevitably, domestic prices will rise to U.S. levels. Forcing Ontarians to pay U.S.-level electricity prices will devastate the province’s major industries, including auto, steel, forestry, mining, refining, and tourism, as well as the hospitals and schools that depend on a strong provincial economy for their tax-based funding.

NAFTA and the WTO will also force Ontario to use the least trade-restrictive measures to protect the environment. Whatever side of the argument the citizens of Ontario may be on, most will surely agree that whether to give free trade or breathable air top priority is a decision that should be made by them, not by a foreign trade dispute panel.

We can’t afford to put the future of Ontario’s economy, environment, and public services into the hands of the big energy corporations. For nearly a century Ontarians have bought reliable electricity at regulated prices and made their own electricity decisions. It’s time for the people of Ontario to let Premier McGuinty know they don’t approve of his adoption of the former Tory government’s plan to deregulate electricity and deny them to right to decide their own future.

(John Wilson is an electricity consultant and engineer who has worked in the electricity industry in Ontario and the U.S. and served on the board of directors of Hydro One, Ontario’s principal transmission company. He is one of 10 electricity experts recently invited by Natural Resources Canada and the U.S. Department of Energy to write papers on the connection between deregulated electricity prices and the risk of blackouts.)