One thing you can be sure of in the next few weeks is that there will be plenty of high-impact political statements about electricity thrown around in Ontario. While much of the commentary is helpful at getting a busy electorate engaged in the political process, some of it could just as easily propagate misconceptions during this crucial period in the policy making process.
What the power industry is looking for – regardless of who forms the government – is a stable and predictable electricity policy regime that delivers reliability, and fosters prices that are both realistic and affordable. It may sound difficult, but in fact, the basis for such responsible management is pretty much in place. Radical change to Ontario’s electricity system is not necessary. There is danger however, in hastily conceived plans that could be cooked up on the campaign trail. Such plans could cancel out years of hard-earned gains and create new costs down the road. In a mature system, very few of the workable solutions are quick fixes.
How many times have politicians stood in front of a microphone and promised to bring down electricity rates, while preserving reliable service and protecting the environment? It is pretty much a necessary part of any political campaign. The amount of substance behind the hopeful words is what really matters. Unfortunately, relatively few voters have the tools to tell the difference between solid plans and overheated air. That is where the industry can help – making sure the practical implications of policy statements are properly assessed and understood by the voters and the leaders. There needs to be a way of helping people to recognize promises that are too good to be true.
A key problem is that politicians are under intense pressure, particularly during election campaigns, to make statements that will boost their popularity in the short run, often forcing questions about what actually makes good policy to a back seat in their campaign bus. To be sure, some amount of populism is necessary in every campaign. Leaders have every reason to try to sell some sizzle along with the steak. It’s not possible or practical to develop policy without considering the popularity and short term political implications. But considering popularity and being driven by it are two different things. One excellent test of Canada’s political process is the extent to which those provocative populist pronouncements are being used merely to sweeten what is otherwise sound public policy, or whether they are actually replacing policy. If the day ever arrives when political parties offer nothing more than competing baskets of sweet-sounding promises, with no workable plan for actually delivering on them, we will be witnessing the hollowing-out of governance; the replacement of statesmanship with salesmanship.
Electricity has been and will likely continue to be an issue throughout the current provincial election campaign. It is important for many reasons that the leaders and the parties focus attention on electricity issues and try to win support for well-developed policy proposals. APPrO members understand that politics guides public policy. But that is no excuse for policy that is built primarily on whatever makes a good sound bite this week.
Much of the public discussion will likely circulate around the question of the structure of the central agencies in the electricity sector (the OEB, Hydro One, the IESO, etc.) Important as these issues are, it should be born in mind that the cost savings available from re-jigging the central agencies are miniscule compared to the savings available from ensuring there are proper incentives in place for building power infrastructure in the most economic ways. Some misguided people are even floating the idea of re-amalgamating several power sector agencies, to create a new Ontario Hydro – apparently with little thought to preventing the kind of excesses and over-reaching that idea became famous for. (How to encourage inefficiency and unaccountability in one fell swoop!) If agency restructuring is to happen, discussions with stakeholders must be a first priority before any rationalization, so that efficiency gains for ratepayers are properly identified, and unintended consequences are avoided.
APPrO’s President Dave Butters wrote a few years ago that, “there is no silver bullet that will solve all of Ontario's energy challenges. Mobilizing the very large amounts of capital required to ensure Ontario's energy future will require policy coherence, regulatory co-ordination and efficiency, and an attractive fiscal regime. It will also mean we must move to a situation where prices reflect the true cost of power – clearly the government will have to balance this with the need for fair and competitive electricity costs to support the sustainability of our economy. It will be no mean feat to balance a huge array of competing priorities and interests, and to ensure we're getting it right. Still, if our policy and regulatory processes are clear, efficient and effective, these and many other attractive features will ensure we are a destination of choice for energy investment.”
You may detect some short term thinking in the statements of certain politicians during the coming election campaign. Base politics may be allowed to operate ahead of sound policy at times. But these facts are not cause for total cynicism. The better informed the voters are, the deeper they will look under the hood at what is actually being proposed, and the more likely leaders are to put forward positions that actually make sense as policy.
This message is not an attempt to tell anyone who to vote for. But it is a plea to dig beneath the surface, and ensure that all our political leaders know that, even during an election campaign, long-term viable policy must take precedence over quick-hit politics. Fortunately, the power industry is brimming with capable professionals who are ready to help assess the policy options and able to communicate sensibly to the voting public. Serve up the sizzle and the steak!
- Jake Brooks, Editor