Perspective

Fortnightly Magazine - March 15 1998
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TWO RECENT shocks could turn up the pressure on Canada's two state electricity giants to deregulate.

After January's ice storm, about half Quebec's population went without heat or light for up to a month (em at the coldest time of the year. Almost one-quarter of the provincial economy was shut down. It was the continent's worst-ever blackout and Canada's worst natural disaster. It cost Quebec 1 percent of its flagging gross domestic product.

The ice storm affected Ontario Hydro much less. That company is scrambling to replace the 10 percent of its electricity supplied by seven nuclear reactors being decommissioned. The shutdowns follow a scathing safety and management report last summer and will cost consumers $7 billion on top of Ontario's already high electricity rates.

Ontario built massive nuclear complexes to supply 60 percent of the province's power. Quebec built remote, hydro megaprojects, despite protests by environmentalists and native peoples. These self-sufficient megaprojects, born of the 1970s energy crises, made the provincial-government-owned utilities the world's second biggest electric utilities in dollar and unit volume, respectively. They supply more than 10 percent of North America's electricity but their combined service territory contains less than 6 percent of North America's population. They are also two of the world's biggest industrial-sector debtors, now saddled with high interest-rate debt in a low-interest-rate era.

Looking closely, one finds that these shocks share a common origin: too much command and control. But in adversity lies opportunity (em on both sides of the border.

Feeling the Pressure

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