Feb. 29, 2012 - Issue #854: Gobal Visions
It’s the ideology, stupid
The cause of high electricity prices is right in front of us
Alison Redford has been working hard to present herself as a moderate who is interested in sound evidence-based policy. But her actions in the last week on one file in particular suggest that she's much more of a right wing ideologue than she's prepared to admit.
With just a few short weeks to go before an anticipated election call, Alberta's government is scrambling to do some damage control on a few high-profile issues that risk derailing the Conservative re-election train. One of which is the question of electricity prices, where the premier is willing to do almost anything to make the problem go away, except admit that her government's ideologically motivated policies aren't working and need to be reversed.
In 1996 Ralph Klein first took action on the idea of de-regulating electricity in Alberta, and moving from a government controlled system to one that would exist at the whim of the market place.
At that time, extensive research and analysis from groups like the Parkland Institute warned that a deregulated market would only accomplish two things: skyrocketing prices for consumers, and extreme profits for the industry. Despite the warnings, the Klein administration moved forward with deregulation based exclusively on their extremist right wing ideology and the belief that a free and unregulated marketplace is the answer to any and all public policy questions.
Today, Albertans are living with the results of that ideological stubbornness. Even though it has been, by all accounts, an incredibly mild winter, residential customers are finding themselves receiving record-high electricity bills, with many seeing an increase of close to 100 percent in what they are paying for their power. Because Albertans aren't shy about letting the government know when they're ticked off, Ms Redford and her team have been inundated with calls from voters angry about electricity prices.
If you're the ruling Conservatives, the last thing you want in the lead-up to a provincial election—especially with the opposition parties working hard to stir up anger and turn it into a central issue during the campaign.
So this past week, Premier Redford decided to take action, kind of. She froze the extra fees that are tacked on to electricity bills, and promised to set up an independent panel which would see if there is a way to "reduce volatility and costs" of electricity in the province.
Unfortunately, neither one of these steps is likely to accomplish anything significant for electricity customers in Alberta.
Because the extra fees are calculated using the actual price of electricity, freezing those fees at a time when prices are the highest they have ever been is akin to capping a child's candy consumption based on the amount she eats on Halloween. It will do virtually nothing to reduce what Albertans pay on a monthly basis.
The second part of the promise is even more clearly an effort to make the issue go away before an election. The panel is not likely to be named and appointed, much less report back with recommendations, before an election call. And the concept of an "independent" panel, after 40 years of collusion between government and industry in this province, is, frankly, laughable. This fact is highlighted by the fact that the "independent" panel that just reported back on the need for two new transmission lines recommended that the lines proceed, just as the industry had requested: a recommendation that was immediately acted upon by the government despite its impact on consumer costs.
Even if a panel were to act truly independently and recommend re-regulation of electricity in this province, the government would be under no obligation to act on the recommendation. Remember the panel that reviewed royalty rates in the province? Remember the Learning Commission? Mandating a panel to review something in this province is no guarantee that anything will change.
If Ms Redford and her government were seriously interested in doing something about electricity prices, she could take action today to make it happen. The only thing stopping her is ideology—not wanting to admit that the free market is not always the answer.
Ralph Klein knew it. Ed Stelmach knew it. And Alison Redford knows it. Deregulation has been an abject failure as a policy, and the only way to fix it is to re-regulate the province's electricity market. The ideology is flawed, and the public interest is paying the price. It's time to get over it. V
Ricardo Acuña is the executive director of the Parkland Institute, a non-partisan, public policy research institute housed at the University of Alberta.
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