An across-the-board electricity rebate serves to undo the important work being done to upgrade the grid by incentivizing people to waste electricity.
By Jason Allen
Published December 03, 2010
Around the same time that the story came out about electricity prices rising by 50% between now and 2030, the Globe and Mail published a thoughtful op-ed by economics professor Stephen Gordon that described why the Provincial Government's 10% electricity rebate/vote grab was a bad idea.
The argument is that if you want to help people who can't afford electricity, there's a better solution than letting everybody pay less: give more money to people who genuinely can't afford that power.
Gordon's argument - and I am inclined to agree at this point - is that by offering everybody an equal rebate on power, we negate any conservation that may have been encouraged by high prices.
Now I have written before about the sorry state of disrepair our electricity infrastructure has fallen into, and there are several issues on the horizon that make it all the more important that we repair that infrastructure now.
The first is the looming shortage of fossil fuels that will make repairing/replacing/upgrading built infrastructure considerably more expensive in the near- to medium-term.
The second, and it's one I haven't often heard addressed, is that one of the biggest threats to an electrical system is climate change.
Climate change, it has been broadly acknowledged, is responsible for the increase in two things: Average annual temperatures, and the incidence of extreme weather events.
Both of these things play havoc with a power grid.
Three summers ago, I opined that with a record-breaking hot summer being predicted, we would see rolling brownouts and/or blackouts by August of that year.
In my view, the province was going to have to start rationing power to continue to have energy to provide to job-producing industries, thereby reducing its availability to people who had their AC cranked down to 68F. Fortunately, I was mistaken.
Every year since then, I've made the same prediction, and last year, it came true. Kind of. Except instead of Ontario Power Generation rationing the power, the grid just started to sporadically overload and fail.
Several high-profile blackouts to large areas of Toronto were caused by failing infrastructure and the resulting fires. Smaller, similar problems occurred around the province.
Now, combine that with the prediction that this could be one of the snowiest winters in recent memory, and our dilapidated grid could be in for another rough ride.
Nothing stress-tests built infrastructure quite like an Ice Storm, or good ole four-foot snow drifts. Feel free to ask anyone in Victoria how badly a good snowstorm can impact built infrastructure.
Unfortunately, where we are situated geographically sets us up for the double whammy of extremely hot, humid, power-draining summers, and potentially burying snowfalls during the winter - all as a result (either direct or not) of our insistence on driving one-to-a-car to our jobs in downtown Toronto every day for the last 30-40 years.
All this is to say that as painful as it is, it is crucial to make these investments to upgrade/repair our grid now, before the province either doesn't have the money, or doesn't have the resources (e.g. relatively inexpensive fossil fuels).
Offering an across-the-board rebate, however, only serves to undo the important work being done to upgrade the grid, by artificially lowering the price of power, and further incentivizing people to waste electricity.
It has been noted by others that really the only way to change individual behaviour is to provide financial disincentives, and the power situation is no different.
On the other hand, investing in a stable grid doesn't help the thousands of people who may be shut out of the energy market altogether, due to the accompanying rising costs (read: be left freezing in the dark).
Gordon's idea of a direct subsidy for energy to low-income households is one that demands serious consideration.
This article was first posted on Jason's personal website.