Tuesday, June 28, 2005

Rolling Blackouts Begin in Ontario

The high level of power usage Monday was behind a series of 15- to 20-minute power interruptions that started hitting 8,000 customers in areas east and south of Ottawa around suppertime.

Of course, the politicians and Hydro One executives and unions will find some doublespeak to call these events something other than rolling blackouts, but, when your power grid can't handle the draw so you shut it down to protect it, it's a blackout.

Hydro One got itself, and therefore us, into this jam by borrowing large when interest rates were high, thereby burdening itself with so much debt that it cannot afford to build capacity. Furthermore, supply is inelastic, so even if there was an ability to finance new capacity, we won't see that capacity come onstream until we have suffered hardship.

Prices for electricity in Ontario are going to skyrocket, and like anything the government gets its paws on, it will never come back down, even if or when the supply crunch abates.

This is what patronage results in folks. The wrong executives hired for the wrong reasons. Can't we learn anything from the U.S.S.R.?

How is that the Americans have sufficient power capacity to bail us out?