I read that "Someone" has determined that a municipal utility has to have at least 70,000 customers to be viable (more about that later). Perhaps it is the same "Someone" that has determined that a municipality must have a population of at least 50,000 to be viable? Anyway we now have the sight of a feeding frenzy as local PUC's try to sell to the highest bidder to other PUC's. Cobourg buys Colborne, Port Hope sells to anyone and a company called Meridian is buying everything in sight, and the Provincial government is encouraging all this cannibalisation, let's make some suggestions why.

First let's assume that the cash the local Councils get will be spent on local projects. For instance Port Hope has committed at least $1 Million to the local library, $1 million to the Capitol theatre and $1.5 million to another project which escapes my identification right now and there are rumours that a full sized rink will be announced soon. Dollars to a donut that the final tally, for these projects, will be about the same amount of cash received for the PUC! In Toronto ideas have been floated that the sale of the Toronto Hydro will bail out the 2008 Olympic costs. If this building spree is replicated across the Province then the amount of money spent by the Provincial government on Capital grants and transfers will be negligible in the next few years. In order to encourage PUC's are to sell by November of 2000 and relieve the Province of future capital expenditures a tax of 33% of the final purchase price is being levied on all sales after that date by the Provincial government.

So if you feel comfortable that the Province is again downloading infrastructure costs onto the residential tax base ask yourself what you are going to get in return. In a recent brief to a Provincial task force the Ontario Federation of Agriculture speculated that Hydro rates will rise at least 20% because of restructuring. One newspaper, in its analysis of the situation, stated that because all this restructuring is designed to allow the power companies to sell in the export market the final price of the commodity will be just low enough to capture foreign markets in the US. But, the prices in those markets are much much higher than present Ontario domestic rates. So we can look forward to higher rates for many reasons, the least of which is the recent decision of the Ontario Energy Board to allow a rate increase of 10% for all PUC's in the coming year.
Personally I think that there is an opportunity here. The reason that 70,000 customers is deemed to be the minimum is that it is said, (by Someone), that only a PUC of that size can fend off predatory pricing aimed at large industrial customers by large PUC's. Well I say let 'em go. Residential customers subsidise industry's discounts. Get rid of subsidies to industry, let them buy from the other guys and then the local PUC can service residential customers at a lower rate.

However the flip side to that opportunity is the cant of the free-marketeers : "allow market forces [ideology] to dictate economic policy and all will be well". Responding in kind I ask has anybody noticed phone bill and natural gas bills (not to mention the monopolistic cable rates) going down since introduction of deregulation or managed competition? I often think about the 2,000 customers of an Ontario rural phone company ordered, last year, to increase their monthly bills from $3.00 to $19.00, by the CRTC, in the name of market uniformity. With these kinds of market precedents and the move to "free markets" I think that anybody who tells me that competition and deregulation will reduce Hydro rates is seriously deluded or has shares in the new companies just waiting to be flipped.
 

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