Gene Balfour Blogs

Electricity regulations & Libertarian principles

In this bulletin, the Green Energy Act (GEA) is analyzed under the Libertarian IPR and NAP policy lens to determine if it complies with our principles. This Act empowers the reigning Ontario Liberal Party to operate expensive and harmful energy monopolies. For more about the GEA, please refer to the http://www.energy.gov.on.ca/en/green-energy-act/.

The use of square brackets [ ] will be used to signify the [property element] that is in play for the Analysis.

THE ANALYSIS

A. Libertarians apply the principle of protecting Individual Property Rights (IPR) to identify which of their legitimate property elements are traded between vendor and customer in order to consummate a mutually agreeable economic transaction between them.

The Vendor is an organization that employs and pays [Assets] people to serve and fulfill customers’ needs by applying their knowledge and work [Body, Mind and Efforts], and the vendor’s [Assets] (products, equipment, tools and/or services), to complete the trade under mutually agreeable terms.

The Ontario Power Generation is a large and fully integrated public utility that plays the leading role in the generation, transmission and distribution of electricity to customers. Other smaller utilities, such as Hydro One and the Toronto Hydro Electric System, also contribute to the transmission and distribution of electricity; Bruce Power contributes to electricity generation.

All of these enterprises have one thing in common: they are either government-owned or heavily regulated. The regulatory controls are enforced at local or provincial level and, as such, their “business” policies are subject to political considerations. Operating as monopolies in their prescribed geographic markets, they are protected from free-market competitors by regulations that either legally prevent competition altogether or else make it virtually impossible for competitors to enter and/or survive [Body, Mind and Efforts] in the energy market. The only exception occurs when they are permitted to participate under a lucrative government contract/license to produce non-carbon electricity sources (solar, wind, biomass) under F.I.T. (the Feed In Tariff program).

The Customer includes individuals or enterprises that bring [Assets] to the trade, usually delivered as money payments from personal earnings or savings if the customer is a person, or from earned profits or debt financing if the customer is a commercial enterprise.

B. Non-Aggression Principle (NAP) asserts that terms of trade must be mutually acceptable for a successful trade to occur. This implies no coercion or force is used.

The NAP violations for the above include the following:

  1. The Customer is prevented from accessing and choosing [Mind] alternative, non-governmental electricity providers owing to the massive, punitive and monopoly-enabling regulatory barriers that prevent such providers from entering and competing in the electricity markets. Monopolies are illegal in the private sector because they face no competitive pressures or incentives (other than political, in the case of government monopolies) to innovate or become more efficient, to offer better products and/or services at lower prices, or to treat each customer with the kind of respect that can only be earned when the vendor must compete for the customers’ business. However, electricity is a commodity that is essential for individuals and businesses to survive [Body, Mind and Efforts] and thrive in modern society. It is not a discretionary purchase. As such, the threat of Survival harm is perpetrated on all captive customers of the government electricity monopoly.
  2. Competing Vendors rarely attempt to enter this market, let alone succeed. This fact means that creative entrepreneurs who possess the talent and resources to out-compete the government monopolies will never be able to build successful business enterprises in these markets. Nor will they ever be able to employ willing workers. As a consequence, all potential new vendors are deprived of using their [Body, Mind, Effort and Assets] from building a business – clearly a NAP violation of the Survival harm. Furthermore, since they will be unable to hire staff to expand their businesses to meet customer preferences, then many of our best and brightest young professionals will never have access to well-paid careers in private sector electricity businesses. Clearly, Survival harm is triggered for both business entrepreneurs and many job seekers [Body, Mind and Efforts].
  3. Customers are also voters. In the private sector, customers can vote with their feet and their wallets/purses when choosing vendors to meet their needs. Electricity is not the sort of product that you can buy on Amazon or source from a foreign vendor.
    When governments create and enforce rules that prevent competition, democracy takes a back seat to government control. This leaves customers no choice [Mind] but to accept high prices, inflexible terms, less than adequate customer service, and frustration in knowing that they cannot act outside of government regulations. The property harm is also applied to one’s [Assets] (paying too much).
  4. Monopolies eliminate the choice [Mind] of viable alternatives to meet the full range of market needs by vendors willing to serve them. The choice of alternatives is essential for populations of people who possess widely varying Asset levels. Ontario’s electricity providers only provide an expensive, “one-size-fits-all” offering that effectively ignores the needs of poorer citizens with restricted budgets, or businesses that must consume lots of electricity for its business to operate. For many, this is a Survival issue. It has given rise to the recently coined colloquialism “the energy poor”.
    If the electricity sector had “no-frills” providers like Costco or Walmart, survival may not have become a hot topic of public and media discussion, but it has.
    Consider also that each person and business will have unique needs and would prefer access to electricity providers that can also offer “value-added” products or services for which some customers may be willing [Mind] and able to pay [Assets] extra. Ontario’s inflexible electricity monopolies fail to adequately serve unique market segments and thereby disadvantage everyone but the politicians, the electricity monopolies themselves and their licensed partners. In the end, customers are unable to make the best use of their limited [Assets] to buy, and pay for, only what they need, and no more!

Democracy does not exist when
Citizens are left with no choice but to
Submit to government monopolies.

As a Libertarian, how does the above analysis influence your thinking regarding energy policy?

First, ask yourself if you agree with Libertarian Principles 1 & 2. The life experience of every human being determines their Life Lens and, consequently, how readily he or she may accept these Principles. Persons who view themselves as victims - powerless in their daily quest for survival and prosperity - will not likely accept them. Others, who possess effective and useful survival skills and attributes, will embrace these Principles and the following comments will likely appear very sensible.

Libertarians defend individual property rights against aggressors of all sorts, including government regulators. Laws and regulations are instruments of power that are used to exert force on people to control their choices and actions. Governments create these instruments, and employ their agents of force (“enforcement officers”), to strong-arm compliance from persons subject to the provisions defined within these instruments.

A LIBERTARIAN REMEDY

On the electricity file, the OLP would apply Libertarian IPR and NAP policy lens to eliminate regulations that impede non-government options from entering and thriving in a free market electricity market. This would restore choice and competitive pricing to this market and eliminate the government mismanagement and political influences that are notorious in this sector.

To remove the harmful conditions that enable one person(s) or organization to intentionally harm another – especially by adversely affecting their survival prospects – is the central reason that Libertarianism exists and it is growing in popularity as more citizens come to realize that government growth over recent decades has grown well beyond the expectations of most citizens and this is most apparent today in the Energy sector.

What’s more, this uncontrolled growth of the “regulatory state” has had unintended consequences – excessive public debt and taxation, for example - that we cannot afford. Our goal is to free the productive economy (i.e. the wealth-producing and [Asset]-building business enterprises) from many unnecessary “anti-business” government regulations and taxes, and to replace these with regulations that defend Consumer Rights. Libertarian regulations will apply to, and defend, the legitimate “property” of every citizen with a minimum or ‘red tape’; they will also be applied equally under fair and unbiased laws in order to eliminate the “special treatment” from which that too many “special interest groups” groups have enjoyed unwarranted privilege at the expense of everyone else . In this manner, we can “have our cake and eat it too” – protection where we truly need it, and an unburdened Ontario economy that will drive up prosperity for all.

For a good article related to this topic, read: http://business.financialpost.com/fp-comment/parker-gallant-hiring-less-and-raising-prices-what-ontario-business-is-doing-to-survive-soaring-power-costs

Don’t forget - Principles matter, and Libertarian Principles matter best.

Enjoy the journey

Gene Balfour

Member, Ontario Libertarian Party since 2007: 2018 candidate for the Haliburton-Kawartha Lakes-Brock riding; Libertarian candidate in 4 past elections.

March 3, 2017

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