Perils of Populism

The Ontario PC party released the results of its membership vote on a wide range of policy initiatives yesterday in advance of the party’s policy convention tomorrow. On topics that would influence Ontario’s electricity future, the results emphasize (in case anyone doubted) profound dissatisfaction within the PC base about the electricity situation but also expose the party to the perils of populism.

Many of the policy proposals and voting results provide a solid basis for an electoral and governing platform. For example, the party membership is very motivated to repeal the Green Energy and Green Economy Act (which the party has aptly dubbed the “Bad Contracts Act”), restore municipal planning authority over renewable energy projects, immediate stop signing any new energy contracts until they can be tested for their overall value, and exercise all consumer rights in existing energy contracts to contain costs.

Where the party could find itself in trouble is by pursuing a range of proposals that sound nice and are very popular with the party base but are fundamentally unsound ideas.

79.9% of the participating members supported stopping “the spilling of inexpensive water on clean renewable waterpower projects that have already been bought and paid for.” This policy recommendation confuses the symptom for the disease. While the ongoing wastage of hydro-electric resources in Ontario is scandalous, consumers would be worse off if curtailment of hydro-electric production to manage excess generation was banned. The flexibility of hydro-electric facilities to reduce their power output is one of the valuable services facilities like the Niagara generators provide. Throwing away that flexibility by pushing curtailment onto less flexible generators would worsen the plight of customers.

87.8% supported “remov(ing) the ‘smart meter’ charge that is currently embedded into your electricity bill.” The Liberal smart meter program has created yet another legacy of scandalous waste, but disallowing recovery of utility costs for existing smart meters would be stupid. In the order of $2 billion has been spent on smart meters and the only reasonable course for the future is to extract the best value possible from that investment.

Some of the policy direction supported by the party rank gets close to a real issue but not close enough to be effective.

For example, 90.9% say “rein in exorbitant executive salaries for government-owned energy companies.” The cost of labour across Ontario’s power sector is crazy high and has been for generations, but executive compensation generally benchmarks relatively low, unless you cherry pick a few choice examples of extremely low exec. comp. like Hydro Quebec and NB Power. Here’s a report done to support Hydro One’s current regulatory claims that documents how the most populated categories of non-executive managers are taking home pay up to 31% above the mean of a comparison group composed of other highly compensating firms. Note that if just the two most populous work categories in this study were paid at the median rate, the savings to ratepayers would equal the total executive compensation paid to Hydro One’s top executives. If a PC government is to address the root causes of high power costs in Ontario, one area that should be pursued is independent benchmarking studies addressing all corners of the electricity utility and agency sectors in the province.

If the Ontario PC intend to be a party that delivers on its promises, populism will not be a reliable guide to solving Ontario’s electricity dilemmas.

Leave a Reply

Your email address will not be published. Required fields are marked *