Ontario Government Doubles Down on Central Planning for Electricity

After a scathing auditor general report about excessive compensation in the Ontario Power Generation (OPG) company, Wynne’s Liberal government has decided to take steps. She said: “We have a need for the government to have more control over compensation packages and we will be introducing legislation in order to put those controls in place”.

This can literally be understood as follows: under our Economic Central Planning policies, there is now a lot of waste and extravagance in the OPG. In order to eliminate this, we will introduce more Economic Central Planning, and hopefully things get better.

Well, let me go out on a limb and predict that they won’t. Ontario electricity prices will keep rising, compensations will continue to be extravagant, and taxpayers will keep shelling out billions to keep this system afloat. How do I know? Inner voice, I guess.

What’s also interesting here is that the OPG was never meant to be a government’s corporation in the first place. It was created by Progressive Conservatives in 1999 as a first step to privatization of Ontario’s energy market. Then, in 2003, the same Progressive Conservatives have cancelled the sale, because “We need excess (power generating) capacity” to have a real free market. Kind of like the Soviets who were trying to create “Material and Technical base for communism” before they flip the switch on it. Needless to say, neither have found what they were looking for.

And now we’re full speed ahead on centrally-planned, government-owned electricity generation, and when something goes wrong with it, well, that’s probably because it wasn’t centrally planned enough. How many times do we need to step on the same rake before we realize we’re doing something wrong?

Privatization will not solve all the problems, and certainly not immediately. In many ways, it will introduce pains that were not there before. But privatization is not about solving problems immediately. It is about putting feedback mechanisms in place that will solve these problems eventually. And if the problems cannot be solved, propagate the information about them in the form of prices, so people can adjust.

It is every government’s goal to keep voters happy, here and now, no matter what happens afterwards. It is also important to be seen acting, leading, taking charge and addressing issues. That’s what killed the OPG sale in the first place. And that’s what prompts the current government to introduce more and more government control.

Until the voters are educated enough to signal to the government that they would support privatization despite short-term pains, we will be getting more and more central planning – from both Provincial parties.

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