McGuinty’s Central Planning Sends Electricity Rates Soaring

The Financial Post has published an excellent article detailing the disastrous impact of central planning by the McGuinty government on the electricity industry in Ontario.

Template-5colFirst, the back story from author Parker Gallant:

It began in 2004 with the creation of the Ontario Power Authority (OPA). Four years later, under a new energy minister, the Liberals brought in the Green Energy and Economy Act (GEEA). Using authority under the GEEA, North America’s first feed-in-tariff subsidy regime was launched and the OPA was assigned the task of signing juicy above-market-price contracts for wind and solar development. Over the period, various so-called long-term energy plans were created using expert advisors. But they were abandoned. Eventually, the government moved everything into the offices of the premier and whomever happened to be energy minister.

From about 2005 on, Ontario’s power sector was controlled and developed via ministerial directive, arbitrary instructions to the power authority instructing it to launch massive new capital spending programs and expensive and uneconomic new green energy projects. The directives also ordered closing coal plants.

 

In essence, from the time it assumed power, the McGuinty government steadily undermined the remaining vestiges of freedom in the electricity market, replacing it with a top down regime governed by arbitrary fiat.

Ten years later, the result is “$10-billion in new ratepayer costs — or $2,055 per ratepayer per year — and another $2-billion or so annually from taxpayers’ pockets by 2016 and beyond.” Adding insult to injury, “At that time, Ontario will have no more deliverable electricity generation than when Mr. McGuinty began his management of the system after gaining power in 2003.”

Borrowing an analogy from the great historian Tom Woods, it is high time that our government treated the market for electricity like the market for toasters.

I’ll explain. There is no Ontario Toaster Authority (OTA). The toaster industry does not require subsidies by government to produce their product. At the same time, there is no toaster glut or toaster shortage. You can purchase one on almost every street corner. Every one, including the poor, can afford one. The price of a toaster continues to decrease while the quality increases. You can buy toasters to suit your needs, whether it is a specific setting for bagels or the capability of toasting eight slices of bread at once.

Don’t make the mistake of dismissing the toaster analogy as too simplistic as compared to the electricity industry. Have you ever tried to make your own toaster? This guy has.

You can read the entire article at financialpost.com.



  • Subscribe via RSS
  • About Gregory Cummings

    Gregory Cummings writes about Canadian monetary and economic policy. His writing has been featured at the Ludwig von Mises Institute of Canada and the Ludwig von Mises Institute's Mises Daily publication. Read more.

  • Categories

  • Popular Posts

    Google Analytics Popular Posts Alert :
    Please check/recheck/enter your Google Analytics account details (username and password).
  • Archives